Source of funds and your business growth

Once you know your needs, you need to determine where the money will come from (source of funds). Don’t overlook this important piece of your business planning. Of course the idea is for your business to generate enough cash flow to pay for business expenditures plus your personal living expenses and more.

Assets:

To start – list any assets and cash that you are contributing to start-up or for expansion. Show the full amount of any lease, loans, investments by partners or other investors, etc.

Personal Requirements:

List funds you need to meet your personal living expenses. This will help in determining your projected cash flow each month or quarterly.

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Cash Flow Projections:

One of the things to remember in preparing your business cash flow projections is you’re not trying to determine profit or loss yet, but instead the timing of money coming in and going out of your bank account.

Sales Forecasts:

The sales forecasts you’ve done are formulated to carry forward to your ‘Cash in’ – providing an estimate of cash in your business. This helps demonstrate any terms you may provide to your customers for payment.

example; If you agree to accept payment in 30 days, a sale in February will show up as cash to your business in March under line item “Accounts Receivable”

Cash Flow Gaps:

If at the end of your lists, you see cash flow gaps, places where you may be short on funds during a specific time of the month / year, you may need to consider alternative financing (factoring) to help cover those gaps.

Remember sales may vary during peak sales season vs low activities that can occur during slower times of your business cycle or even when vacationing takes place.

Accounts Receivable:

Accounts receivable is a legally enforceable claim for payment held by a business against its customer/clients for goods supplied and/or services delivered in completion of the customer’s order. These receivables are generally in the form of invoices raised by a business and delivered to the customer for payment within an agreed time frame. Accounts receivable is shown in the business balance sheet as an asset.

Factor Financing Receivables:

Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs.

Compare Invoice Financing Offers.. Free:

It’s recommended that you get a few competitive offers when deciding which factor finance company best fits your business financing needs. Factoring your receivables will help your business access immediate source of funds and cover any problematic cash flow gaps.

Factor Bid:

Factor Bid is a free online resource for small to mid-sized businesses. Visit www.FactorBid.com to get started comparing offers from competing finance companies to buy your accounts receivable invoices for immediate cash. No more waiting Net30 or Net45, get paid for your accounts receivables within 24-48 hours.

Here is what you need to ask yourself when seeking more profit from your business

A businesses desire to scale shouldn’t be entirely based on demand for their product or service. Demand will certainly play a large roll in how or when a business will scale. To Scale your business effectively means anticipating demand, not reacting to it.

If a company acquires two or three new clients and then realizes it can not fulfill their demands, business growth efforts are likely to collapse. This kind of activity leaves room for competition to move in and service unhappy or under-serviced customers.

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Predictable cash flow provides a business the flexibility it needs to stay competitive, grow quickly, fulfill new customer demands and generate more profit.  Do you know what your predictable cash flow is?

How Does A Business Realize Predictable Cash Flow:

Build in sustainability and scalability in order to make sure future cash flow is predictable. Examples;

  • Lock in customers – Offer incentives, sign contracts, improve customer experience to ensure customers are incline to work with you over the long haul.
  • Implement a consistent sales and marketing process – Design a process, train  your sales staff, put performance metrics in place and hold your team accountable.
  • Make delivery of your products and services scalable and repeatable – learn from your mistakes, identify cash flow gaps within your sales cycle and figure out how to eliminate existing problems.
  • Free up cash flow from slow paying customer accounts – Factor finance your accounts receivable invoices to get money your customers owe you today, instead of waiting 30 or more days.
  • Once future cash flow becomes more predictable, fulfilling new larger client accounts and efficiently servicing existing client accounts becomes much easier.

Don’t worry about the cost of doing business along the way. It takes money to make money and scaling a business successfully is challenging; mistakes will be made and you may even overspend occasionally. Learn from your previous business activity and implement a strategy to avoid similar mistakes the next time around. Hire people to help you strategize, attend local small business events to discover new ideas and most of all keep a positive frame of mind.

To get access to immediate working capital you may need to pay as you go so you can profit as your grow! Leverage assets within your business, like your accounts receivable invoices or promised payments, so you can increase cash flow and go after larger new customer accounts.

*Free Small Business Finance Resource:

When you’re ready to unlock money trapped in your accounts receivables, visit www.factorbid.com to compare invoice offers to buy your invoices. Factor bid is a free service for small businesses. Factors compete for the opportunity to earn your business and buy your invoices. You’ll get the knowledge and leverage you need to negotiate the best deal and most money when factor financing your accounts receivable invoices.

 

Checklist “Factor Financing”, everything you need to know.

When deciding on which factor finance company is best for your business financing, implement this checklist to find out everything you need to know before factoring. It’s recommended that you get a few competitive offers to ensure you find the best factor financier match for your growing business.

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CHECKLIST | FACTORING

  1. Use Factor Bid to compare invoice finance offers.. Free!*
  2. Use Factor Bid to quickly match your business with factors that specialize in your industry!
  3. Does the factor have experience in your industry?
  4. How long is the factoring agreement?
  5. How fast do you get paid?
  6. Do you offer non-recourse agreements?
  7. What is the benefit of a non-recourse agreement?
  8. How will you communicate with the factor and what type of reports will you receive?
  9. How often will you and the factor need to meet or talk each week?
  10. How quickly does the factor collect debts?
  11. How does their debt collection process compare with your debt collection system?
  12. What is the factors idea of a ‘quick response’; hour, half-day, day, week?
  13. How do you get a customers credit limit increased?
  14. What happens if a customer breaches their credit limit?
  15. What accountability is in place if the factors performance is unsatisfactory – for example will you be penalized and forced to pay charges for debts the factor fails to collect?
  16. How will the factor handle debt collection? What is the process and methods used?
  17. When will statements be sent out?
  18. What happens if a customer disputes an invoice?
  19. How will the factor follow up with overdue debts? Daily, weekly, monthly?
  20. Does the factor send certified letters, make phone calls or send emails when payments are overdue by the debtor?
  21. What will happen when a customer’s payments are seriously overdue?
  22. What format will the final reminder take and when will it be sent out to the debtor?
  23. Does my company always get a copy of all communications, collections and final notices sent out to an overdue customer?
  24. What further action will the factor use to collect overdue debts?
  25. Will a collection agency be used to collect overdue debts?
  26. Will legal action be taken to collect overdue debts?
  27. What would happen if you wanted to change factors?
  28. Is there a notice period to stop factoring? If yes, how long (3 months) or longer?
  29. Is there a fee to stop factoring? If yes, what is that fee?
  30. What if you want to change the services provided by the factor?

Make sure and read the factoring agreement and ask questions about terms and conditions that you’re not familiar with or do not understand. What will it take to end the factoring agreement is their performance is unsatisfactory?

One thing to consider, if you’re not making money and increasing your business by then either is your factor finance company. Factors want your business to grow. They make more money in getting your fast cash if you’re more busy then when you started. Take advantage of access to immediate cash and use the factors money to grow your business instead of standing by while your customers use your money to grow theirs!

If you have additional questions that should be added to the checklist for factor financing, add them in the comment section for readers to review. Thank you.

Which is the best factor finance company for my business?

Factoring your accounts receivables can open your business up to much needed cash flow. A factor finance company will buy your accounts receivables at a discount (from their face value) for immediate cash. You can get up to 95% of the face value of your invoice within hours of invoicing your clients.

How do you find a factor finance company that can service your industry. Not all factors service every industry. Some factors specialize in specific industries.

SOLUTION: Factor Bid

Factor bid matches business’ with factor finance companies. You’ll get a few competitive offers from competing factors to buy your accounts receivables for immediate cash.

The best factoring company for your business will depend on the unique characteristics of your business and most important your specific requirements. For example; are you strictly looking for the lowest rate? If yes, then recourse factoring may be your best option. If you’re looking for back office ‘bookkeeping’ assistance and to lower your liability on collecting your open receivables, then non-recourse factoring may be your best option.

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Visit www.factorbid.com to get a few offers to buy your invoices for CASH!

The main aspect of any factoring company’s proposition is the structure of their facility, service offering and pricing.

Structure of a facility:

It’s important that the facility is structured to meet your business needs. Some lenders may not be able to structure a facility to meet your specific needs. That’s why it’s important that you get a few offers from competing factors within your industry. Not all factors will be willing to work with you once they run their in-house liability equation. This equation has a lot to do with risk vs. reward, the amount of risk they have to endure before they receive a suitable reward.

Service Levels:

Service levels may fluctuate from factor to factor. It’s hard to gauge the type of service performance you’ll experience before committing your company to a 12 month agreement. This is another reason to use factor bid to find the right factor finance company for your business. Factor bid personally on-boards each and every one of our participating factors. If we’re made aware of any  negative feedback from business owners, we reach out to the factors personally to see what the issues may be. Often times a little constructive criticism from a third party such as ourselves, help communicate and solve underlying issues and even prevent new ones from occurring.

Pricing of your factor finance facility:

In order to maximize your profits, you obviously want to minimize costs! It’s important not to sacrifice structure and service levels just to get the cheapest price. You may feel you are saving money, but if the service levels are so poor the small amount of savings may end up costing you more over the long run. Instead, use factor bid to get competitive offers at the exact same time, so you get the leverage you need to negotiate the best deal.

When factors know they’re competing at the exact same time for your business, they’re more likely to give you their most competitive offer upfront. Try factor bid today for free! You’re under no obligation to factor, however when you find how beneficial invoice financing is for your business, you’ll be glad you spend 2-5 minutes of your time to submit an invoice at factor bid.

Is your business mobile? Grab Factor App for factor financing on the Go!

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Factor App for your Apple iPhone Smartphone

 

 

Helpful tips when deciding which factor finance partner is right for your business!

Helpful tips when choosing a factor finance partner that best fits your business needs!

It’s recommended that you get a few offers from factor finance companies before deciding which factor best fits your business needs. Every factor finance company is different, make sure that you not only know how to talk the talk.., but also walk the walk -when it comes time decide who will be your new finance partner.

Scenario:  You have an open accounts receivable invoice on your desk.  You want to get cash for that invoice today, instead of waiting 30, 60, or even 90 days for the money to come in.  What is the fastest and easiest way to start factoring?

Business owners that want the best deal use factor bid to get a few offers from factors!

 

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I have question like, what is the rate, how long are we obligated to partner with a factor finance company and how quickly can we get additional capital to run our business?

Factoring Terms:

Talk the talk..,

Accounts Receivable (A/R): is a legally enforceable claim for payment held by a business against its customer/clients for good supplied and/or services rendered in execution of the customer’s order. These are typically in the form of invoices raised by a business and delivered to the customer for payment within an agreed time frame. Accounts receivable is show in the balance sheet as an asset.

Advance:  To make a payment before it is due by the debtor. In a factor finance scenario the advance is the money your company receives when your invoice is purchased by a factor.  The amount advanced is usually a large percentage of the gross value of the accounts receivable invoice, anywhere from 80-95%.

Advance rate:  The percentage of the value of collateral that a lender uses to determine the amount of a loan. For example, if one pledges a collateral worth $10,000, and the advance rate is 95%, the lender will only extend $9,500 in credit. This may protect the lender from risks, such as depreciation on the collateral. 

Concentration:  The percentage in which a factor will fund a single customer you have.  

Confidential factoring:  The customer is not informed that you are factoring their invoices.

Credit limit:  This financial limit is placed on your customers and is based on their credit rating.

Debtor:  The person or entity that owes payment on the open accounts receivable invoice.

Factoring: A financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.

Factoring charge:  A charge for taking over the administration, collection, and processing of the accounts receivable invoices.  

Factor fee:  The fee a factor charges in order to finance your accounts receivable invoices.

Factor financier:  The financial entity who purchases accounts receivable invoices at a discounted rate.

Funding limit:  The maximum amount of funding a factor finance company will pay you.

Funding period:  The period of time in which the factor finance company purchased the invoice and your customer pays the invoice in full.

Non-recourse:  Non-recourse factoring allows a company to sell its invoices to a factor without the obligation of absorbing an unpaid invoices. In the event a customer fail to make their payments or pay their invoices late, any losses are absorbed by the factor, leaving the business unscathed. 

Notice of Assignment:  A notice that your customer receives, stating that their invoice has been factored.  This notice also provides the customer with the new payment address.

Reserve:  The reserve is the remaining percentage held by the factor finance company after the first payment is made called the advance. Once the invoice is fully paid, the reserve is rebated, less any fees. 

Seller (Transferor):  The one who owns the open accounts receivable invoice, but relinquishes ownership by selling it to Factor finance company.

With recourse:  The factor has the right to collect unpaid payments from the seller.

Follow this link to see a full list of factoring terminology

Questions you need to be asking factor finance companies when deciding which one is best for your business needs.

Walk the walk..,

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  1. Do you have other customers in my industry that use your factoring company?
  2. Do you fund within 24-48 hours?
  3. Do you provide non-recourse factoring?  If so, what is the difference in the rate?
  4. Do you offer back office support? Will you email,fax,call and maintain professional contact with my customer?
  5. Do I get me own account manager, that I can call, email and contact in case I need assistance?
  6. Can you ACH payments (direct deposit) funds into my bank account?
  7. Is there any fees for direct deposit ACH Payments?
  8. Can I split the ACH Payment and have the money deposited into more than one account?
  9. Can I get payment through Western Union outlet, where I can physically pick up cash?
  10. Do you need the originals (documents) in order to fund, or can I send in a copy or a picture of the original documents?
  11. What is the length of the contract term?  Factors typically partner with you for 12-24 months in order to help you grow your business faster. 
  12. How fast can I expect to receive the first payment?
  13. How much money do you recommend we keep in the reserve account, to cover insufficient payments, late payments, charge backs, etc?
  14. Once the customer fulfills the invoice amount, how long does it take before the reserve amount is available?
  15. What is your discount rate?
  16. What is your fee for late charges?
  17. Do you help me gain payment from late/no pay debtors?  How?
  18. Can I stop factoring any time I want?
  19. Is there a penalty to stop factoring?
  20. What if I want to factor with another company?  Is that allowed?
  21. If I ever want to stop factoring with your company, is there a fee to end our partnership?

TURN INVOICE INTO IMMEDIATE CAPITAL

Factor finance your accounts receivable invoices today using factor.bid to get a few offers from competing factor finance companies, eager to buy your accounts receivable invoices!

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Taking advantage of opportunities for your small business with invoice finance.

Small Business Opportunity

In order to talk about small business opportunities, we need to explore those areas we are not taking advantage of.  For most companies, discovering the power of financing your outstanding/open accounts receivable invoices might be a foreign concept.  How is a piece of paper reminding me that a client has not paid me for work completed going to ever benefit me?  That is a very good question, and we have a very important answer!

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How do outstanding accounts receivable invoices benefit me?

Here is how it works.  You have billed your client for the service/product you have already provided them.  The work completed involved time, money, and resources.  You need paid for that job.  There is now an open accounts receivable invoice sitting on your desk that you need money for.  

You have a few actions you can take to get that money:

  • Do nothing. You always wanted to become a short term lender while your customer’s business grows bigger and more profitable every 30 days your business covers their money owned to you.
  • Call the mafia…what’s that guy’s name again (just kidding!)
  • Call the customer with a friendly reminder that you are closing your books for the month and need them to send in payment – you understand they are just busy!
  • This is ridiculous.  This customer is never going to pay you and you know it.  Call a collections company and have them strong arm the client.
  • Use the Factor App and snap a picture of your outstanding accounts receivable invoice, or upload a pdf copy of the invoice.  Within minutes you will be contacted by  a few of the top factor financiers who want to get you PAID in less than 24 hours!

Why do factor finance companies want to relieve your business of stressful liability, get you immediate cash for open invoices, help your business create an organized and efficient accounts receivable process and provide your business with predictable cash flow so you can grow faster and be more profitable? Because “what’s good for the goose is good for the gander!” Which simply means, the better your business does, the better your finance partner does (the factor).

Having access to immediate cash flow is a powerful business resource today. Remove fear and/or hesitation when bidding for new contracts. Hire good employees that you need to complete jobs faster. Stockpile supplies at a discount. Financing your outstanding invoices is a smart business move and will help increase marketshare. The more of the market your business services, the greater your return on investment will be, ultimately yielding more profit for your business at the end of the year.

Use Factor App on your Smartphones to start factor financing now. Get paid as soon as today!

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