Five Myths About SMB Invoice Financing, Debunked!

5 myths about invoice financing debunked:

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Myth: 1 – Expensive – “A rate of 1.2% per month equates to 18% annually. That’s a very high interest rate compared to what my bank will give me.”
Debunked – True, rates are around 1.2% per month. However, receivables financing can offer no origination fees, no prepayment fees or un-used line fees often seen with a traditional line of credit. There is also no commitment; you can finance as needed. While rates on a traditional loan may be lower, the terms and conditions of the loan may cost you more in the long run, including the waiting and time to get funds.
Invoice Financing is based on the creditworthiness of your customers, instead of your business’s credit. This means if you’re working with larger clients that are more established, factoring will enable you to extend terms to remain competitive amount your competitors.

Myth: 2 – Appearance – “A company that sells invoices is in trouble with traditional sources of credit, and needs alternatives lending to keep the doors open. This may show my customers that we have very slim margins and are not making a ton of profit off of the business relationship.”
Debunked – Invoice Financing grows with your business. Traditional lenders like banks tend to look at the past and have stringent requirements and paperwork to qualify for a commercial loan. Financing your receivables actually keeps up with growing sales volume by extending you larger amounts of upfront capital as your accounts receivables increase. Invoice factoring is fast and makes your company more flexible to meet the demands of larger customers.

Myth: 3  Customers Relations – “I have been doing business with customer-ABC for the past 4 years and don’t want to jeopardize our relationship by adding a 3rd party payment collector. A financing company will pester my customers for payment, which will damage the client relationship.”
Debunked – As business professionals your clients understand that when you’re factoring it’s because you’re extending terms so they can pay you at a later date. They’re essentially using your money to grow their business faster, so you may as well use the factor finance company’s money to grow your business faster.  Some factors will also stay out of the transaction all together, this type of option is very popular among transportation freight brokers.

Myth: 4 – Too Early for Credit – “Our new SMB business has little to no credit history, and as a result we can’t get financing from our local bank. We heard that Invoice Financing companies have the same credit requirements!”
Debunked – Invoice Financing companies base their decision using your customers payment and credit history, not yours. Your customer (the debtor) is the one responsible for pays the invoice, so factor finance companies are mostly interested in their creditworthiness overall.  Larger, Fortune 1000 companies and government entities are the best customers for a small business to factor finance their receivables from because there is plenty of information publicly available to check their payment and credit history, allowing a vendor to piggyback on their credit rating, while increasing their own business credit history more quickly.

Myth: 5 – Loss of Control – “All payments coming to my business are routed through a 3rd party. I lose control of my accounts with a factor finance company. Plus I get stuck in contracts that restrict business rather than helping.”
Debunked – True, payments need to be made by your customers directly to the financier’s account. This is done for security purposes; the invoice is collateral for the advanced funding, and your factor finance company collects from the customer when they pay. At the same time, not all Invoice Financing companies are created equal.
When factoring, only customers that you want to finance must make accounts payable to your factor finance company. Receivables from customers that you choose not to finance can still pay you directly in the agreed upon time frame, usually net-30 or longer. All factor finance companies are a little different. With some there is not long term contracts and you can sell the receivables you want, when you want, which works great for seasonal business and oversize orders. Having to deal with a delayed payment cycle can strain existing resources and add unnecessary stress to your business. Debunking the myths of invoice financing can bring working capital to your business quickly and open new opportunities for many B2B and B2G small businesses.

Ready To Start: – Make sure that you’re getting a few offers from competing factor finance companies before you begin. Visit www.factorbid.com and within an hour you’ll have competitive offers to earn your business an buy your accounts receivable invoices for immediate cash. Factor bid is fast and easy and only takes about 2 minutes to start. You’ll be contacted by a few of the top factor finance companies that specialize in your specific industry within the hour of completing your customer application. You’re under no obligation to factor. Check out factor bid and get the knowledge and leverage you need to get the best deal when factoring your accounts receivables for immediate cash flow!

On The Go – Download Factor App – for fast and easy invoice financing!

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Paypal invoicing, tap unpaid invoices for immediate business cash

Did you know you can invoice customers using Paypal? Based on popular articles and groups we’ve discovered, Paypal has become a simple and great tool for invoicing.

The SBA has some helpful tips for small business owners, when invoicing customers for payment. According to a 2012 Wall Street Journal survey, 64 percent of small businesses had unpaid invoices more than 60 days old while 20 percent say the problem is worsening.

The overall effects of unpaid invoices is particularly troubling for small business owners – impacting;

  • business growth
  • hiring
  • updates to equipment
  • expansion
  • product development
  • not to mention your ability to pay bills on time

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Paypal has done a good job of making it easy to invoice clients. They remind you to add in details that your customers may need to process your invoices more efficiently.

The Standard information includes your billing address, date and other necessary line items, but don’t forget that some clients may require additional details. Details like a contract number, purchase order, tax ID or account number to help expedite payments. Check with new clients before invoicing them to make sure you are giving them the details they need.

It’s also a good idea to attach your work order, statement of work, contract, or other document that outlines exactly what you agreed to deliver. Make sure the documents are signed. This will help your client’s accounts payable department get the invoice approved and paid.

Avoid the lag:

Help your customers process payments with ease by offering online payment options. Amazon Payments, PayPal and Intuit all offer online payment services that can help you invoice customers faster.

Invoicing Stats:

Up to 64% of 850 small businesses surveyed last year – had less than $5 million in annual gross sales, reported having invoices that went unpaid for at least 60 days, and 20% said delinquencies were getting worse.

Over the past four years, big companies such as Apple Inc., Wal-Mart Stores Inc. and Ford Motor Co. have generally increased the number of days they take to pay vendors, according to Charles Mulford, the director of the Georgia Institute of Technology’s financial reporting and analysis lab.

“If you’re working with one of these large companies as your only customer, they have the power. They can go to somebody else, but you can’t go anywhere,” says William Dunkelberg, chief economist of the National Federation of Independent Business, a small-business lobby.

A Ford spokesman responded that 80% of the company’s $75 billion in annual purchases are paid within 40 to 45 days, a period that hasn’t changed in several years, and the rest are paid based on standard industry practices.

Some business owners say there’s often a trickle-down effect from slow- pay customers. “We have to go back to our suppliers and say we need to extend our terms,” says Chris Shult, president of Bevco Engineering Co., a 60-employee company in Sussex, Wis., that builds control systems for conveyors, MRI machines and other systems.

Mr. Shult says at least one of his Fortune 500 customers, whose name he declined to disclose, is pushing for a 120-day payment term. “The choice they give you is take it or leave it,” he says, adding that the company has invoices outstanding ranging from $50,000 to well over $100,000 apiece.

Since over 60% of small business have unpaid invoices, regardless of how you deliver the invoices, and how detailed and complete your invoices are, you may still be a victim of slow-paying customers. As big companies continue to hoard their cash to stockpile their own working capital, you can circumvent your dependency on slow-pay customers by factoring your invoices.

Tap Unpaid Invoices For Immediate CASH:

Factoring and “Purchase order financing” “trade credit” and “accounts receivable financing “ have emerged as important tools in helping small businesses, importers, suppliers, wholesalers, and distributors to take advantage of profitable deals.

Factor Finance Companies buy your unpaid invoices for immediate cash. You can get paid within hours of invoicing a customer for payment.

*It’s recommended that you get a few offers when choosing a factor finance company that best fits your working capital needs.

Factor Bid – gets your company a few competitive offers to purchase your accounts receivable invoices (unpaid invoices) for immediate cash. Get the best deal when factoring and the most money for your invoices, fast!

Working Capital when you need it…Cash Flow as soon as today for unpaid invoices. Give it a try, it’s FREE! You’re under no obligation to factor.

Visit www.FactorBid.com and select the ‘Get Started’ button.

 

Supply Chain Finance – Entrepreneurs start, run and grow your business

Weather you’re a tier 1 or tier 2 type vendor or a supplier company that sells goods or services to other businesses in the economic production chain, chances are you’ve experienced slow-pay in your company’s accounts receivables. But is this a problem for most operating businesses looking to grow their market share?

Proven Financial Resource

Invoice financing is used all over the world by companies large and small. Entrepreneurs unfamiliar with the idea of selling invoices at a discount to increase cash flow may be under an immediate assumption that a company selling their invoices is in trouble with traditional sources of credit and needs alternatives to stay afloat.

That’s not entirely true. Here’s why, invoice financing uses your company’s assets to access immediate cash. Invoices are considered assets because they’re money that your customers owe you for goods and services you’ve already delivered. Your credit is not even part of the lending decision when a factor finance company partners with your business. A factor is looking at the creditworthiness of your customers when deciding on investing in your business by buying your invoices for immediate cash.

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Flexible and Fast Access to Working Capital

Business like invoice financing because it’s flexible and grow with your business. You can access larger lines of funding as your business needs, or scale back and factor less during times when you don’t need more working capital.

Accessing cash tied up in receivables enables your business to keep up with growing sales volume and meet the demands of larger customers. Larger customers require longer time to pay and stretch out payments to 60 days or longer sometimes, leaving your business with substantial carrying costs.

Lower Company Liability and Increase Cash Flow

Redirect the responsibility of carrying and financing your customers by partnering with a factor finance company. A factor assumes the responsibility of your outstanding invoices; the liability that goes with potential non-payment of your receivables and the time it takes to collect money owed to your by your customers.

Let the factoring company finance your customers growth. Free up money owed to your company and put that money to work immediately. Waiting around to be paid is not a smart business practice. Factoring will help increase your working capital immediately so you can grow faster, take on more new customers, payoff higher interest rates or buy supplies at a discount price. As your profits grow, so will your bottom line. The cost of factoring becomes a cost of doing business and as long as you’re making more money at the end of the year and increasing market share within your industry then factoring is a smart business decision and you now can see why companies of all shapes and sizes are using it.

Stop wondering how your competitors are growing so quickly and start taking advantage of your accounts receivable assets. Get the cash you need to grow your business faster.

Recommended that you get a few Competitive Offers

It’s recommended that when selecting a factor finance partner you get a few offers from competing factors to earn your business and buy your invoices. Factor Bid is a free small business resource that enables you to compare invoices finance offers from competing factor finance companies in real-time. Visit Factor Bid, click the Get Started button and within the hour you’ll have competitive offers from the top factor finance companies eager to earn your business and buy your invoices for immediate cash.

Don’t wait 30,60 or even 90 days to be paid while your competitors push ahead and win more new customers, get paid within hours of invoicing your customers and use your working capital to stay competitive in your industry.

Business on the go Mobile Work force

If you’re business is on the go and you’re looking for the fastest and easiest way to connect with financing, download Factor App and within a few minutes you’ll be matched with the top finance companies competing to earn your business.

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