Do your customer slow-pay on purpose, you may be surprised at who’s admitting to it.

Is the long tail of your suppliers killing you? The growth of your company may be suffering due to the actions of slow-pay customers. This is not acceptable and we know a simple and easy way to fix slow-pay accounts.

Over half (57%) of international businesses surveyed by Basware and MasterCard admit to having actively delayed paying their suppliers in the past 12 months.

This can be solved with by enabling working capital optimization also know as Factor financing (receivable invoices) which allows buyers to better manager their cash flow and for suppliers to get paid sooner.

“When three quarters of businesses have more than 50 suppliers and about two thirds send and receive more than 100 invoices a month, a culture of late payments impacts individual organisations as well as the economy as a whole,” said Esa Tihilä, CEO at Basware.

SLOW-PAY RECEIVABLE ACCOUNTS ECONOMIC SUPPLY CHAIN KILLER

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When asked –

  • Three quarters (70+ per cent) of decision makers think late payment is a fact of business and will always happen, despite 90 per cent acknowledging that payment delays have wider repercussions for businesses, such as the ability to pay staff or reduce investment.
  • Only about 1 in 4 businesses today have automated processes to manage payments efficiently
  • Two thirds (67 per cent) acknowledged that they have used payment terms as a strategic tool to help manage cash flow

If your business is tired of slow-pay accounts and strenuous cash flow gaps then click here to compare invoice finance offers..FREE! Unlock cash when you need it, as soon as you need it! More working capital at your fingertips in a matter of a few hours.

NOTE: LOUDHOUSE surveyed 1,015 strategic decision makers with a view of both Accounts Receivable and Accounts Payable processes and issues across ten countries (Sweden, Finland Norway, Germany, UK, Denmark, Netherlands, Belgium, US and Australia) in mid-2014 to gather the above metrics.

It’s Friday, “direct deposit day” (payday)

If you’re a business owner, you’re familiar with the excitement that comes with Fridays around the office. Employees are getting ready for the weekend and are exited for their paycheck! Some employees even get their check as “direct deposit” early Friday morning before work even begins.

What’s this mean for business owners – Payroll expenditures! See for business owners payday isn’t always as consistent and predictable as Friday employee pay is. Business owners have to wait for payment from customers and often times end up covering payroll and other daily business expenses right out of their own pockets.

Wouldn’t it be nice if your business could get paid on outstanding receivables before the work day even begins? 

What if you could have the same great feeling every Friday that your employees feel. Well you can! If your company is feeling the cash flow ‘squeeze’ from slow-paying customers and you want to get back on that good vibe kind of feeling when it comes to getting paid, then take a look at factor financing your receivables.

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Cash Flow “Squeeze”

What is Factor Financing and how do I get paid in 24 hours?

Companies sell their invoices or accounts receivables to specialized companies called factors. The factor advances most of the invoice amount upfront by simple direct deposit. You can get paid within 24 hours of invoicing your customers. Factoring will continue to provide your business with predictable cash flow everyday of the week, even Fridays so you’re able to cover payroll and other expenses without digging into your own pocket.

Be excited for Fridays, meeting payroll with confidence shows your business is a success. They always say “people sell people”, so if your employees are instrumental in helping drive new customers and maintain existing accounts then paying them is a good sign that your business is growing and on it’s way to becoming a great success.

Is your business Mobile? Check out Factor App – for invoice financing on the Go!

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Factor App for iPhone

Factor App for Android

We’re brand new to factoring (invoice finance) what do we need to know on day 1?

We’re new to factoring (invoice financing) our business is growing quickly and we need more capital to hire more employees and pay our weekly expenditures. What do we need to know, day 1?

-First

How Do I Find The Best Factor?

That’s an easy one. Companies that want the best deal use Factor bid. At Factor bid, factors compete to buy your accounts receivable invoices, so you get the best deal when factoring.

-Second

What Do You Ask

Scenario:  You have an open accounts receivable invoice on your desk.  You want to get cash for that invoice now instead of waiting the 30, 60, or even 90 days.  You heard about factoring, but know you are not informed enough to make sure you are getting the best deal.  Maybe you ARE informed enough, tried to factor, and did not get the best deal.  Ta-Da:  THAT IS WHY FACTOR BID WAS CREATED!

In this blog, let’s go over some key terms you will hear and what questions you should ask when choosing a factor that is right for your company.

Keep in mind that factoring your open accounts receivable invoices for immediate cash is much different that going to a bank for a loan.  Factoring is NOT a loan, you won’t be dealing with a bank.  As there are many different types of business financing, so there are many different factors financiers that serve a wide variety of needs with a wide variety of terms.  Not to worry, factor bid has you covered. We make it easy to find the best factor for your business needs. Our database of factor finance companies is the best in the world. Our software matches your business with the top factor finance companies in your specific industry, so you get the best offers and the factors with the most experience and knowledge in servicing your industry.

Let’s Start

Key Terms To Watch For

  • Accounts Receivable Invoice (A/R):  An invoice provided to a client stating that goods and/or services have been provided and payment is to be made in a particular time frame.  In the case of factoring, the accounts receivable invoice is also an asset that can be leveraged/sold for money.  A/R is found on the balance sheet and is an asset because it is to be paid within 90 days or less.
  • Advance:  The money that your company receives when your invoice is purchased by a factor.  The amount advanced is usually a percentage of the face value of the accounts receivable invoice.
  • Advance rate:  The percentage or amount of the accounts receivable invoice that will be advanced/paid.
  • Concentration:  The percentage in which a factor will fund a single customer you have.  
  • Confidential factoring:  Your customer is not informed that you are factoring their account / 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, usually referred to as (your customer).
  • Factoring:  A Business that sells their accounts receivable invoices to a third party (called a factor) at a discount of the gross amount of the invoice face value; for immediate cash.
  • Factoring charge:  A charge for taking over the administration, collection, and processing of the accounts receivable invoices, usually by your factor finance partner.  
  • 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:  This is the period in time where the factor purchased the invoice and when your customer pays in full.
  • Non-recourse:  This is the sale of the asset (outstanding accounts receivable invoice).  The factor assumes ownership of the receivable and the risk of collecting the debt.
  • Notice of Assignment:  A notice that your customer (the debtor) receives stating that their invoice has been factored.  This notice also provides the customer with the new payment address and/or process. “Chances are, if your customers pays slow, their already being factored by their other vendors, thus eliminating any fuss over you wanting to factor their slow-paying invoices.” 
  • Reserve:  A certain amount of funds that is set aside by the factor to cover bad debt expenses and payment shortages. (ie., kind of like an escrow account)
  • Seller (Transferor):  The one who owns the open accounts receivable invoice, but relinquishes ownership by selling it to a Factor.
  • With recourse:  The factor has the right to collect unpaid payments from the seller, in the event the debtor (your customers) does not make good on the payment / invoice.

 

Questions To Ask When Choosing A Factor That Best Fits Your Business

  1. Do you provide non-recourse factoring?  If so, what is the difference in the rate?
  2. What is the length of the contract?  Factors will typically want to partner with you for 12-24 months to have the opportunity to purchase more open accounts receivable invoices. This will also help them understand how your business operates so they can help you increase your profits and become more successful. 
  3. How fast can I expect to receive payment?
  4. Can my payments be deposited into my checking account, same or next day?
  5. What is your discount rate?
  6. What is your fee for late charges?
  7. Do you help us collect payment from late/no pay debtors?  How?
  8. Can I stop factoring any time I want?
  9. Is there a penalty to stop factoring?
  10. What if I want to factor with another company?  Is that OK?
  11. If I refer a friend’s business, do I receive a referral reward?

-Finally

We’re sure you’ll have other important questions that specifically affect your business. Here is a good tip, write down all your questions (preferably in an email) and send them to each factor that provides you a competitive offers; after submitting your invoices using factor bid on your desktop or download Factor App for your smartphone.

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How to fund your small business using assets you already have. Accounts receivable invoice factoring.

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How to fund your small business using assets you already have. Accounts receivable invoice factoring. Don’t wait 30-90 days, factor your outstanding receivables and get paid as soon as today.

  • Increase Cash Flow
  • Cover Payroll
  • Pay Business Expenses
  • Reduce Company Liability
  • Grow Your Business Faster
  • Stay Competitive Within Your Industry

HOW TO FUND YOUR SMALL BUSINESS?

Starting your own business for the first time can be quite similar to being a first time parent.  You are so excited the baby is coming.  You went to all appropriate doctor’s appointments, guessed at the sex of the child, painted a nursery, and even had a baby shower garnishing the support of family and friends.  Delivery time:  The baby is born.  You love the child the minute you laid eyes on him/her.  This baby is yours and you are the one entrusted to its care.  From day one, it is apparent the infant can do absolutely nothing on its own and you are the sole provider to help it grow.  Sure, there are family and friends around to help, but the brunt of raising the child is yours.  Within one month, you are sleep deprived, your thoughts consumed by the responsibility you must diligently undertake (with love).  It is worth it.  You love this child and they love and depend on you to nurture it.

Isn’t this much like our first experience of starting our own business?  You begin with this seed of an idea.  It begins to grow into a business model and you believe that with the right conditions, this small business could really flourish.  You visit the small business borough in your local area, purchase some books on starting your own business, bounce the idea off of family and friends hoping to gain support, and take the step to register your business name with the local and federal government.

Then it happens:  HOW TO FUND YOUR SMALL BUSINESS?

  • Scenario 1:  You are providing a product/service by yourself and do not have the time to do the work AND generate new clients AND work the office.
  • Scenario 2:  You have a plethora of clients that want your product and want it now.  You are a one to two man show and simply cannot fill the volume.  You need more people to handle the workload, but it is a big risk.  What if you are not paid for your product/service on time and now have to pay staff with funds that are locked up on some customer’s desk for work you already delivered?
  • Scenario 3:  You NEED the equipment or manpower necessary to take your business to the next level.  Where are the funds going to come from?  How are you going to afford it?  You already have quite a bit of money invested in other assets.

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ACCESS YOUR CASH!!!!

Do you know that you can get paid NOW for money owed from your open accounts receivable invoices?  What would your business look like if you had access to the money you need?  Right when you need it!  Why incur more debt? No one wants more debt on their books, like you get with traditional lending sources like bank loans and/or a line of credit!

How Does Factoring Build My Business?  

Factor finance companies are eagerly looking for small business owners like YOU to pay you cash TODAY for your open (outstanding) accounts receivable invoices.  That paper on your desk…yes…the one you have been staring at for the past 60 days…IS WORTH MONEY!!!!  You have the golden ticket right in front of you. Go to www.Factor.bid and submit your invoices now to get paid as soon as today! Simple, Fast Invoice Finance. 

HOW DOES FACTOR.BID WORK?

We are SOOOOOO glad you asked!  Factor.bid matches small business owners, LIKE YOU, with factor finance companies that want to buy your invoices for immediate cash.  Cash that is available within 24 hours!!!  You submit one of your open invoices (it’s easy: snap a picture, using Factor App, or upload a pdf copy), and within a few minutes you’ll have offers from the top factor finance companies in your industry to buy your accounts receivable invoices.

PLAY THE GAME!!!

Enjoy yourself.  Have fun!  Enjoy the game and play your cards well.  Only pick the best hand offered.  Put on your poker face!  Check out the hand of the guy next to you, and let the other player know what it was!  See if they are willing to provide you with better terms.  All the factor financiers know you are going to get paid for that open accounts receivable invoice sooner (with them) or later (on your own).  They want you to get paid SOONER!  And, they want to help you do it!

FOLD

If you are not confident of the hand dealt to you- FOLD!  You are under no obligation to play the game.  Just don’t ante up.  Fold and walk away.  You are free to decide whether their offer is right for you and your business.  Maybe this is the first time you are trying your hand at the game?  You tried it!  AND liked it (we know you did)!  Now you want to go a few more rounds to gain the confidence you need to make the best informed decision, and go with the factor financing option that is right for you.

HOW MANY OUTSTANDING ACCOUNTS RECEIVABLE INVOICES CAN I SUBMIT?

As many as you have sitting on that desk of yours collecting DUST AND NOT MONEY!  Send 1 to 1,000!  Remember:  Any open accounts receivable invoice is YOUR MONEY ALREADY EARNED that is UNAVAILABLE to use for your important business expenses.  It is nice to feel important and loved.  So, while your Accounts Receivable Administrator is feeling unloved and unappreciated by clients that are NOT PAYING YOU, these factor finance companies appreciate your hard work!  They LOVE that you completed your job!  They love that you are successful!  They want you to continue to be successful and grow!  THEY WANT TO HELP YOU!  They want to call, talk to you, partner with you, and UNLOCK THOSE FUNDS!

ADDED BONUS

There is a bonus round to this game.  Once you accept an offer of a factor financier, they will actually call the companies on the open accounts receivable invoices who are holding on to your cash and give them a friendly reminder to pay you.  As the clock ticks, they will continue to partner with you to get those funds released.  Now your Accounts Receivable Administrator is free to do all the other work that is piling up on their desk.  Your clients know you have a partner helping you get payments in a timely fashion.

So, go to Factor App and snap that picture or upload a PDF copy of an accounts receivable invoice.  Marvel as your small business grows from infancy, childhood, young adult, and onto full maturity.     

Download Factor App

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What is Accounts Receivable A/R discount finance and how can it help your business outperform your competition?

Outstanding and/or ‘open invoices’ represent invoices that have been sent out to a client for payment, but have not yet been satisfied/paid by the client. These invoices can be financed or A/R discounted for less than the face value to quickly raise capital and increase cash flow.

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The buyer of the A/R Invoices also know as the (factor) purchases the financial obligation at a discounted rate providing the selling firm (that’s you) with immediate cash. The factor now assumes responsibility in collecting the money owned by the original debtor (or the company you originally provided your product or services for.)

The invoice is sold at a discount, which is typically 85-90 percent of face value. The Factor requires a percentage of the invoice remains in reserve in order to reduce their total risk, in assuming responsibility for collecting the outstanding debt. Once the debt is collected by the Factor, you’ll receive the reserve amount of the invoice or the percent that was held back -minus any service fees.

Here is just one example of the fee scale from one small factoring company. Every Factor is different and you should use Factor.bid to shop your open invoices for the best deal when factoring.

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If this fee structure seems high, what is the costs of not factoring?

The Costs of not Factoring:

  1. Time value of money
  2. Benefit of improved cash flow
  3. Cash within 24 hours
  4. Pay Suppliers faster
  5. Receive discounts from suppliers
  6. Make payroll without using personal finances
  7. Offer longer terms to larger customers
  8. Attract more business
  9. Business growth without incurring more debt at your bank
  10. Lowers your business liability / risk in collecting payments

Will the financial benefit of improved cash flow to your business offset the fees associated with Factoring, And then some? In many cases Factoring is a smart business decision and can aid your company in growth and new found business opportunity.