Grow your Small Business with financing help

How to grow your small business. Small to Mid-Sized Businesses are always looking for strategic ways to grow and become more profitable.

A good rule of thumb, make sure you have your capital contribution locked down as one of your very first preparation steps.

Funding can come from a variety of sources, including personal funds, a bank, outside investors and your accounts receivables.

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The First 3 Funding Options You’re Most Likely Already Familiar With:

  1. Personal Funds – Reach into your savings to fund your business growth, hire employees, cover day-to-day expenses and so on.
  2. A Bank – Drive down to your local bank, fill out paperwork and wait to see if you qualify for small business financing.
  3. Investors – Work up a business plan, executive summary, proforma, 5 – year profit and loss projections and start shopping your idea around to potential incubators and/or angel investors.

But number 4 you may not be as familiar with. Using your accounts receivables (money your customers already owe you) to finance your business growth. Get paid faster by reinvesting your earnings sooner with invoice financing.

Invoice financing has been around forever it seem, and small startups to huge companies like Snapple use invoice financing to increase their daily working capital and grow their businesses more quickly.

How Does Invoice Financing Work?

It’s pretty simple really. You invoice your customers for payment, and typically they send you a check within 30-45 days. What if you could instead invoice customers and get paid within hours! With invoice financing you can!

Invoice financing uses assets from your business (your accounts receivable invoices) to get your business immediate cash flow to hire additional employees, afford business expenditures, cover payroll, service new accounts and keep your business competitive in your industry.

If you’re not utilizing your invoice receivables as assets and your competitors are, they may be getting a leg up on you by affording them an opportunity to service new larger customer contracts and extend terms to those larger customers.

Don’t be forced to use your own profits to fund your customers business growth when offering net-30 to net-45 terms, instead use an invoice financing company and their money to fund your terms and strengthen your customer business relationships.

An invoice finance company will buy your invoices for immediate cash, so you get your money immediately and can reinvest in growing your business faster instead of waiting for payments while your customers use your profits to grow.

If you’re comfortable with the idea of selling your accounts receivable invoices for a small discount, in order to get paid immediately, then you should explore the benefits of invoice financing.

Get A Few Offers To Buy Your Accounts Receivable Invoices For Cash!

It’s recommended that you get a few offers when deciding which invoice financing company is right for you. You can visit www.factorbid.com and within a few minutes, you’ll have a few competitive offers from invoice finance companies to purchase your accounts receivable invoices for immediate cash. Factor Bid is free online business resource that you can use to get competitive offers from finance companies. You’re under no obligation to use any of the companies competing for your business. Factor Bid is completely free.

Get the knowledge and leverage you need to negotiate the best financing deal for your growing business at Factor Bid.

On The Go – Grab Factor App For Fast Invoice Financing Offers!

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Factor Finance 101, obtain cash flow in an orderly fashion

Businesses can factor their outstanding accounts receivable invoices as a way to obtain capital in order to cover business expenses while experiencing growth.

Cash is king and immediate access to ‘cash flow’ is sitting right on top of your desk, tied up in accounts receivable invoices.

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Factor Finance 101

Factoring – 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.

Quick Terminology to Know:

  • Account Creditor – Usually that means you, or the Business and provider of goods and services
  • Advance Rate – The amount of money fronted to the company factoring accounts receivable invoices – as a percentage of the total invoice amount (not the full invoice amount).
  • Customer – Referring to ‘your customer’ responsible for paying the outstanding invoice.
  • Debt Finance – Capital secured in exchange for a commitment agreement to pay interest in addition to the principal amount borrowed.
  • Discount Fee – A fee assessed by the factor finance company that you have an agreement with to purchase your accounts receivable invoices for cash. The discount fee is calculated by the amount of the invoice, the length of time it takes to collect the owed funds and the creditworthiness of your customer.
  • Equity Financing – Capital secured in exchange for an ownership percentage interest in a company.
  • Factor Finance Company – A company that provides operating capital to business owners by purchasing their open accounts receivable invoices
  • Factoring – The purchase and collection of accounts receivables
  • Non-Recourse Factoring – A period in which accounts purchased by a factor remain the factor’s accounts and do not revert to the account creditor if unpaid; due to an insolvency event. A factor accepts full credit risk for any and all accounts purchased during this period.
  • Recourse Factoring – A period in which accounts purchased by a factor are able to revert to the account creditor if unpaid due to an insolvency event.
  • Rebate – Percentage paid back to you, minus the factors fee, once the debtor (your customer) has paid the invoice in full.
  • Reserve – Money that is held back as security by the factor to reduce their total liability in collecting the total and full invoices amount from the debtor. [ie., the advance rate + the reserve = 100 percent of the total invoice amount]

Turn your receivable invoices into immediate cash flow by factoring. Factoring is the conversion of accounts receivable invoices into cash by selling those outstanding invoices to a third part (called a factor). Factoring is especially important for companies in early stage development, during rapid growth or even financial hardship.

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Factoring will help to fill in the gaps created when your company delivers goods and/or services and when customers finally pay. The time in between is a gap, in which you’ve delivered but not yet been paid.

Many business owners worry that they don’t qualify for factor financing due to; not enough years in business or lack of adequate business credit. Well good news, factors actually base their decision on your customer’s credit history, not yours. If your customers are good creditworthy customers, then your business is most likely a very good candidate for accounts receivable invoice factoring.

Factoring is a simple and fast way to obtain business capital. Your outstanding invoices are considered an asset and you won’t add any new debt on the books by factoring. You can access a portion of your total invoice amount, usually up to 95% of the face value of the invoices. You’ll receive the other 5% of the invoice value, minus the factoring fees when the debtor (your customer) pays the outstanding invoice in full.

With factor financing you’ll be able to obtain cash to help your business without needing personal collateral or increasing interest expenses from other lines of credit you may be using. Remember, invoice factoring is not a loan and will not add debt to your balance sheet. You won’t accrue interest or penalties, like with traditional loans and the factoring fee is clear and agreed to by you and the factor before your first invoice is funded.

Factoring fees can be a flat fee or can fluctuate – so it’s important that you use factor bid when looking for the best factor finance company to finance your invoices, you’ll get a few competitive offers from factor finance companies eager to buy your invoices. Factor bid is free and gives the knowledge and leverage you need to make the best decision for your growing business, and ultimately get the best deal when factoring receivable invoices.

Build your business credit fast with factoring. With predictable cash flow on hand, your business will have access to money to payoff debt, pay overhead, salaries and accounts payables. This will help reduce your  business debt, increase on-time payment history and ultimately improve your credit history so you have more options from vendors and other financial institutions moving forward.

Mange your business operations more efficiently and hire employees to help maintain and acquire new customers. Let’s face it, you can’t do all the work! Let professionals help your business be a success today!

There is no reason your business should have to wait to be paid, while your customers use your money to grow their own business. Get paid within 24 hours of delivering goods and services by selling your accounts receivable invoices for immediate cash flow.

Factoring on the Go! Grab our free financing app called Factor App

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(Wondering about the terminology 101 and where it may have originated from? look no further – Somewhere along the line, “101” migrated out of academic institutional jargon and into popular mainstream slang.)

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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Factor bid gives you a few offers to buy your open invoices. Get competitive offers from the top factor finance companies and get paid as soon as today!

Factor.bid gives you a few offers to buy your open invoices. Get competitive offers from the top factor finance companies that specialize in your industry and get paid as soon as today!

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Turn Invoices Into CASH

Description

Factor bid gives you a few offers from factor finance companies competing to buy your outstanding invoices, freeing up your cash to purchase supplies, cover payroll, or expand your business. “A great option for small businesses that need cash.”

Eliminate the wait, get paid now

Factor bid eliminates the stress of slow paying customers. Waiting for payment on Net 30/60/90 terms is painful when you have a business to run.

A debt-free solution

Invoices represent revenue you’ve already earned. Why take a loan when you can unlock existing capital to get paid faster? Factor bid matches you with a few factor finance companies looking to buy your invoices for immediate cash, so you don’t have to wait.

Get paid in a snap

Snap a picture or upload a copy of your open invoice to begin. Within minutes you’ll have competitive offers to buy your A/R Invoices from a few of the top factor finance companies that specialize in factoring invoices in your industry.

Approvals as fast as 24 hours for your first advance

Once you choose the right factor finance company to partner with, you’ll be able to receive your first payment within 24 hours. Ongoing funding requests can be approved and released to your account in as fast as an hour.

Receive the funds directly to your bank account

Choose ACH as your payment option for 1-2 day delivery or choose wire for same day availability. Use the funds to manage and grow your business.

Thinking about factoring on the go?

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.     

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