Looking for a business loan but can’t find one? Or worse, has your loan request been rejected? One of the toughest jobs for business owners is trying to secure business financing. Unfortunately, getting a business loan isn’t always easy. Although most banks want to lend money, they have strict underwriting criteria that they must follow. This commonly includes asking for your company’s financial history and looking for assets. However – not all small businesses have long track records or tangible assets. Does this mean that you can get business financing? No – it just means that business loans may not be the best alternative for your company.
Does your company give its clients 30 to 45 days to pay invoices? Most companies that offer payment terms usually run into cash flow problems. This is because few businesses have the required cash cushion to wait 45 days to get paid. That forces owners to either juggle vendor payments – or worse – turn away opportunities. There is a solution for this problem. It’s called invoice factoring.
Suppose that instead of waiting 45 days to get paid, you were able to get 80% immediately and the remaining 20% in after 45 days. Would that work better for you? Of course it would. And you can achieve this by factoring your invoices. The biggest advantage of factoring is that you get an immediate advance on your invoices. This gives you funds you need to pay suppliers and employees. It also enables you to take advantage of new sales opportunities without having to worry about juggling vendor payments.
An accounts receivable factoring transaction works as follows. Once you deliver your product (or service) you invoice your client. At that point you also finance the invoice through the factoring company. The factoring company advances you 80% immediately. You get the remaining 20%, less a small factoring fee, once your client pays the invoice in full.
One advantage of working with factoring companies is that they look at businesses in a different way than banks do. They consider your invoices from solid paying clients to be your biggest asset. And as such, they are willing to advance money against them. Of course, factoring companies also look at other criteria. But the main criteria are to have good invoices.
Factoring can be used in many industries and has a number of sub-specialties. Freight bill factoring is a form of factoring that is common in the transportation industry. Construction factoring and medical factoring are used in the construction and medical industries respectively. Factoring financing is a flexible solution that can be used across many industries and can help position your company for growth.
Posts Tagged ‘ Cash Flow Problems ’
Aug
Credit cards are often seen as the bad guys, leading to spiraling debt and financial hardship. Well, this really shouldn’t be the case if you use your credit card effectively. In fact, using a wisely can actually help you cut your costs by several hundred pounds a year. Even further, by playing your cards right, you can easily make money through spending on your card. So why are you still using cash?
They carry frightening baggage, with high interest repayment rates, and of course this is true – this is how the companies make their money. However, as a result of the competitive nature of the market, there are many special offers available that make the credit card more beneficial than cash. Firstly, d companies guarantee against fraud by securing certain transactions.
This means that if someone tries to thieve your money, you know the credit card will refund the payment so you don’t have to. Secondly, they have introductory offers like 0% for the first six months, which means you can effectively obtain a short-term loan provided you pay it back within the period. This can be really helpful if you’re facing temporary cash flow problems on the run up to pay day. Furthermore some cards offer cash-back incentives of up to 3%, meaning you’re effectively saving money every time you make a purchase.
Because there is such fierce competition in the market between the various card providers, it is possible for you to actually make money from using your credit cards. The free 6 month period on cards is great news for consumers. Simply take out one and transfer the balance to a high interest savings account. Provided there is no charge on balance transfers, and you always pay off the bill in full, all you need to do is let the money work for itself to earn you interest, and switch to a different card when the 6 months is over. You can expect a return of around 5% on your money per year, which is obviously a nice earner running alongside your other forms of income.
Credit cards aren’t all bad, but they can lead you into financial trouble. Do your homework before opting for one, and shop around to find the best deal that’s out there for you and your needs, whatever your purposes or intentions.