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Link: http://www.billboardmama.com/how-accounts-receivable-factoring-works-to-improve-cash-flow-p-562.html

Several companies face shortages during the startup stage, especially in today's economic state. Then there are the others who do not have the cash they need to grow their businesses.

This year, 2010, efforts should be focused on improving your cash flow or even getting professional assistance. But there is one strategy that works every time: accounts receivable factoring.

Factoring can help when all other alternatives run short. The practice of selling accounts receivables, or invoices, in exchange for instant cash, is a relatively quick and easy remedy for any cash-strapped company. After all, you could always make use of the money now (rather than waiting for 60-90 days) to purchase supplies and keep the business running.

Like any other kind of financial assistance, factoring comes with a price - but this is small as compared to the one that you have to face in case of a loan. Factoring firms will charge you fees in exchange of availing of their services.

In any accounts receivable factoring engagement, the factoring company, such as the Interface Financial Group (IFG), would first evaluate the creditworthiness of your customers by checking the invoices. You must be ready to show the following papers: - A current financial statement; An accounts receivable aging report; A certificate of incorporation or partnership agreement; - Proof of insurance, invoices and other business documents.

Because it is the factoring companies that will do the collections of the receivables, they want to protect themselves and ensure that the invoices will be paid on a timely fashion. Funds can be given to you in as fast as 24 to 48 hours - usually after knowing which invoices will be sold.

The factor may pay you 80 percent of the total amount of your invoices now, and then give you the remaining balance as soon as the customers pay their invoices. They of course, shall subtract their professional fees.

The fee of this kind of financial solution ranges anywhere between 3-7% of the total amount of the invoices. Factors' fees differ depending on the size of your invoices, the creditworthiness of your customers and the number of days in your cycle - for instance, 30, 60 or 90 days.

Accounts receivable factoring is not for everyone. Firstly, this alternative is limited to B2B organizations. Second, interest rates are almost always higher than those imposed by standard bank loans. However, since most factored invoices are paid for within ninety days the total amount of interest paid is generally smaller than that of a longer term bank loan.

Link: http://www.billboardmama.com/what-is-the-difference-between-a-business-loan-and-factoring-p-561.html

Presently, many small business owners are continuously looking for new ways of enhancing their cash flow - given the current state of the economy. In the past, the typical recourse is to go to a bank, but this move is not anymore feasible given the tight credit market of today.

In reality, many new businesses find it difficult to get a loan. You may have heard that Bank of America recently extended over $12 billion in credit to small businesses, and they consider a small business to be one with revenues up to $20 million. But the truth is that many small businesses don't qualify.

Anyone would not always think about invoice factoring, or accounts receivable funding, when his/her business would need cash flow or a working capital for the business. Why is this so? Because most business owners are programmed to look for financial solutions from their business bank.

Accounts receivable factoring is not a typical "bank product" so this alternative is perplexing for several business owners.

Normally, a business owner seeks for working capital, which is also referred to as a line of credit, or credit line. Traditional funding strategies dictate limits on funds available based on the pledged collateral assets.

Getting small business loans is advantageous for one who basically needs a lump sum of money immediately. If you can get one, great. But that's challenging these days. Thus, small business factoring helps provide a steady and reliable cash flow. And the cost of selling your invoices or factoring them in exchange for an advance of the funds? just a small percentage of the invoice value.

Benefits of factoring over standard small business loans or overdrafts include the following points: You get easy access to funds. In business loans, you need to wait days before the amount will be reflected in your bank account. In invoice factoring, funds can be forwarded within twenty-four hours. If you take out a small business loan, you're only allowed to borrow a fixed amount, and when you reach that limit, you'll then need to renegotiate with your lender.

Small businesses who borrow against invoices through factoring know that it's a more flexible solution because as their sales grow, their business grows. With this, then you can now focus on generating more sales - and not chasing payments - and this is good for your business.

Once you've engaged an invoice factoring company, remember all of the advantages it offers over business loans, overdrafts or other finance options like: For each invoice issued, the factor company will take a percentage of its value. Extra fees may be incurred if you choose to outsource credit management. Do not forget to take out credit protection as well because you will still be liable for bad debts even if you have already sold out those invoices.

Borrowing money to finance your business through its various growth stages as well as the economic forces can be achieved in a number of manners, but invoice factoring is becoming more famous, because it's an easy way to swiftly measure the return on investment (ROI). More significantly, with invoice factoring, there are no loans to pay back.

Link: http://www.billboardmama.com/invoice-factoring-tips-for-small-businesses-p-560.html

There was a recent poll asking successful entrepreneurs what they personally think affects the success or failure of a startup business nowadays. The 549 founders of different companies came from all industries, including computing, electronics, aerospace and health care. The top most critical success factors included learning from their mistakes and their successes, previous work experience, a strong management team and good luck. 98% said prior work experience was an essential factor as well. Interestingly, a tactic referred to as invoice factoring was mentioned by a few of these respondents.

Some of the most common questions on the government's Small Business Administration (SBA) website are: How do I get a small business loan ... or grant? How do I get started in a business? What are some tried-and-tested tactics that can help me attract investors for my business? What type of interest rate, terms or fees does the SBA require on its Guarantee Loan program?

Following are few of the real tried and true financial aids that can help any business grow, as small business entrepreneurs head into the year 2010.

First and basic of all, do not waste money. By making use of good financial strategies, you can stick to the plan to help lower operating expenses. Be mindful of your expenses, ascertain that you're not paying double for anything. Look at the year in quarters, then set aside time every quarter to review your expenses. By doing so, you're more inclined to finding areas where you can cut back on costs. For example, do you rent or lease a vehicle? If so, be aware that purchasing a company vehicle is a more strategic move since in can be reflected on your company tax returns and can be depreciated. In this sense, you will get a higher return on investment when this vehicle is paid off instead of when you lease it. But consider leasing your company's computers, which is usually a tax deduction, so that you can always trade them in for newer ones when the time comes.

The next financial business strategy is to start invoice factoring your outstanding invoices. Instead of letting invoices that won't get paid in 60 or 90 days remain idle, why not use them? However, if you come across a factoring company to factor one or more of your outstanding invoices, you can use the money wisely to invest in your business and make it flourish. Several factors today do what is referred to as "single invoice factoring" where they will spot one invoice at a time.

If you're in a hurry for some cash, you can try accounts receivable factoring; it can give you your needed cash in as little as 24-48 hours after your invoices are being reviewed and your vendors are pre-qualified. In this process, your credit history is not assessed, but your clients will be - so make sure they are as creditworthy as they can be.

As in any financial institution, factoring companies will charge you with a fee. First, the factor would want to review your invoices and assess the creditworthiness of your customers. Also, get ready with these documents because the factor would need these: a current financial statement, an accounts receivable aging report, a certificate of incorporation or partnership agreement, proof of insurance, invoices as well as other relevant papers.

You ask why you need to make sure that your customers will pay their invoices in time? Because the factor will have the responsibility of collecting your receivables. Once you have selected which invoices the factor will buy, they'll typically pay you an advance; for example, the factor might pay you 80% of the total amount of your invoices and then reimburse you the other 20% once your customers pay the invoices.

Fees for this type of service range anywhere between 3% and 7%. Factors' fees differ depending on the size of your invoices, your customers' creditworthiness and the number of days (30/60/90) until the invoice is due.

For more information regarding invoice factoring, go to www.ifgnetwork.com.

Link: http://www.billboardmama.com/factoring-and-the-unwell-construction-industry-p-451.html

The tightening of the credit market has been difficult on several businesses, particularly the construction industry which is responsible for building our nation's homes, corporate facilities, factories, apartments, offices, schools, roads as well as bridges. Therefore, the general contractors and sub-contractors still may be experiencing cash flow issues - meeting payroll or buying supplies -long into the New Year.

The industry is categorized into 3 basic areas: building (to take care of residential, industrial, and commercial buildings); civil engineering construction (to take care of roads, bridges, highways and tunnels); specialty trade contractors (to work on special projects like carpentry, painting, plumbing and electrical works.)

But there is more to construction than just new structures - this industry also works on site preparation, repairs, maintenance as well as improvements on old projects.

In addition, this industry takes care of the income and the lives of architects, engineers, inspectors, appraisers, carpenters, brick masons, electrical and drywall contractors, flooring and tile contractors as well as those who are working on asphalt firms. As such, these people could very much benefit from invoice factoring to help them get by during these difficult economic times.

Construction jobs are typically done by general contractors, who specialize in one type of construction such as either residential or commercial building. They're in charge of the whole job, and although general contractors may do a portion of the work with their own crews, they usually give out work to specialty trade contractors who typically do the work of only one.

These get orders for their work from general contractors, architects, or property owners. Owners, occupants, architects and rental agents, however, directly order repair work from these contractors.

Since the construction industry is very much reliant on economic business cycles, it is easily affected by changes in interest rates and tax laws. Changes in state or local regulations or budgets can lead to new construction or a cancelled job.

There has been an increase in factoring among contractors during the previous year, and it's helping to provide the cash flow required to pay suppliers, meet payroll and pay for insurance, even workman's compensation. Construction factoring enables companies to obtain funds based on their current accounts receivables, so they can go ahead with the next phase of a project, instead of wait till the invoices are paid.

Indeed, invoice factoring is very helpful to this kind of industry. With factoring, the need to wait for payment before the construction company begins the next phase or the next project is eradicated. With invoice factoring, the sub-contractor or construction firm can realize quick turnaround, from 24 to 48 hours, on accounts receivable due for completed stages of a construction project. With construction invoice factoring, the construction company, or the sub-contractor, can be paid immediately for accounts receivable invoices, which speeds up cash flow and improves the ability of the company to start immediately on the next stage of construction for each project.

Link: http://www.billboardmama.com/invoice-factoring-and-the-new-year-p-450.html

Around this time the previous year, plenty of businesses need to stop spending. But today, signs suggest that the recession is almost gone and small businesses can get on with their normal "lives." So now is a great time to consider what the recession has done to your business.

But go beyond your business - think about the the effect of the recession on your industry in general. Are the characteristics of your customer base changing? Or is it that your rivals have lowered their prices? How about their service offerings? Are you keeping up? Indeed, recession causes a lot of changes in your business - so it is high time that you give yours a major assessment this time.

If you and your small business have been experiencing layoffs, salary reductions or worse in order to survive the recession, there are some important things to keep in mind as things begin to get better.

First, many companies are going to begin hiring again, which means you could get some new people after another company goes out of business. But your employees also might get a better offer too. It's important to satisfy them, or else, risk losing them to your rivals. Many people are are going for jobs that allows them to make more money to pay off their bills after the last year.

In addition, be wary of what you spend money on. Now that business is getting better. Set your priorities: choose new computers over re-decorating. Think about long term against short-term debts.

Many businesses have learned how to utilize invoice factoring to survive the recession. And that strategy can be continued after the New Year begins. Indeed, it is a good alternative in keeping your cash flow strong, while still being able to address your debts.

And there's a better piece of news than just factoring - there's what we call "spot factoring." It is when one invoice at a time is factored. Take note that spot factoring, unlike a loan, is the purchase of financial assets such as receivables. Traditional bank loans involve two parties, while invoice factoring involves three parties. Another difference of these two financial options lies on the fact that in factoring, decision is dependent on the value of the receivables, while in bank loans, it's based on the person's creditworthiness. With invoice factoring, there are no minimums, no maximums, and no long-term commitments.

Single invoice factoring can assist your small business get back on its feet. Typically, businesses don't get immediately paid for products/services delivered. This negatively impacts cash flow and can make it hard for the business to generate new orders in a timely manner. With invoice factoring, however, businesses that do not get paid for 30, 60 or 90 days will have access to immediate cash - of up to 90% of the invoice total. Invoicing companies, such as IFG, simply looks at the client's customers - and if they're worthy enough, IFG can grant funding within 24 hours.