One advantage of invoice factoring is that a business owner doesn’t have to pledge personal assets or even have good credit to be able to qualify.  However, it should be made clear that factoring companies can’t advance funds to a new company based upon future contracts or revenues. In order to establish an accounts receivable factoring relationship, the client must have invoices that have been generated for services rendered or products delivered.  These services or products must be satisfactorily accepted by the customer in full.  In other words, a new company can’t receive funds for a contract for 500 widgets to be produced at a later date.  They don’t have to produce all 500 at one time time to receive advances, but they do have to invoice for the amount that was produced, shipped, and accepted by the customer. The factoring company is usually willing to work with new companies, but the initial capital required to start operations will need to be derived from other sources such as private equity, bank loans, or even longer terms by their vendors

Read the rest here:
Factoring and Start Up Companies

Any invoice factoring company that stays in existence for any length of time constantly verifies invoice totals, legitimacy, and other information related to the relationship.   Why is this necessary?  Because the only collateral the factor has is the client’s pool of accounts receivable and they have to make sure that collateral is valid and the payments will likely be made.   Unfortunately, there are those unscrupulous and desparate people that attempt to defraud the factoring company.  By not putting in place methods and systems to catch the fraudulent transactions, the factoring company is putting itself at risk. Actions by the client that might place great exposure to the factor: Submit a fraudulent invoice with a non-existent customer

Here is the original post:
Why Factoring Companies Must Constantly Verify Invoices

I have decided to add a series of posts that will illustrate how corrupt and biased the mainstream media is today. I occassionalyl hear a news story in which I wonder how different the coverage would have been had it been prior to January 21, 2009, the day President Obama was inaugurated. Here’s a story from a few months ago : Government health officials said on Monday that the United States will have barely more than a third of the 120 million doses of swine flu they hoped would be available by mid-October.160 million doses they originally predicted in July

Read the original:
What if President Bush Had Done That? Part 1

During these tough economic times, revenues and profits have suffered for many companies.  In an effort to acquire more customers, it’s tempting to extend credit to companies without investigating their credit histories.  This stategy can actually place you in a worse position if you deal with companies who pay slow or ultimately not at all. One of the advantages of accounts receivable factoring is credit screening.  Most factoring companies offer this service free of charge and they can steer you away from slow or non-payers.  A company with a slow payment history can devastate your cash flow.  Let’s say you manufacture a special order for such a customer.  You’ve outlayed funds for labor and overhead almost immediately.  You may have credit with your vendors for materials, but you’ll probably have to pay them in 30 days or less.  How would it effect your working capital if you had to wait 90 days to get paid by the slow paying customer?  Probably worse than if you hadn’t dealt with them at all

Originally posted here:
Why Credit Screening is Important to Your Business

You’re convinced that working with an invoice factoring company can provide your company with the working capital it needs to capture a greater amount of market share and increase profits.  You’ve filled out the application and provided all the other information the factoring company has asked for.   The factor then conducts a lien search to provide assurance that when they advance funds on the invoices, they will have clear title to the receivables if something goes wrong.  The lien search discloses that a bank has filed a UCC on the receivables when they granted the company a term loan.   Does this automatically kill the deal?  Not necessarily. The bank must be convinced that releasing the UCC on receivables will not hurt their position in the event of default.   Factoring companies and their clients are confronted by this situation all the time.  The common solution is to have an agreement between the parties that a portion of the cash advances on the receivables will go toward paying off a portion of the loan.  That lowers the amount of exposure to the bank, as they still have other assets like equipment and real estate as collateral for the remaining loan balance.  For the customer, they’ve lowered their debt and can now enjoy the advantages that accounts receivable factoring has to offer

Originally posted here:
Dealing With Bankers

I get very irritated when I’m trying to do business with someone and they don’t return my phone calls or emails.   I know people get busy and can’t always drop what they’re doing and deal with me, but I do expect some acknowledgement they have received my communication and will get back to me as soon as they can.  To not do so sends a message that says “you’re not very important to me or my company so I’m not even going to show you the courtesy of returning your call”.

Read the original post:
Promptly Returning Phone Calls and Emails is Good Business

Many healthcare professionals know about medical invoice factoring and how it can improve the working capital position of their practices.  But a little known, yet equally significant financing option is available for those practitioners who carry longer term receivables such as medical liens and worker’s compensation cases. These types of receivables can take years to settle and can really strangle the cash flow of the practice.   The good news is that OCF works with imaging labs, orthopedic surgeons, chiropractors and other medical groups to provide advances on receivables that stretch out much longer than the usual 90 or 120 day period.

Originally posted here:
How Doctors Can Get Financing on Long Term Receivables

Managing the cash flow of a business can be a challenging proposition even during the best of times.  But do so during a recession can really be tough.  There are some steps that the business owner should take to help stabilize cash flow during tough times. Become actively involved by knowing the working capital position of the business on an ongoing basis.  Some owners focus their entire attention on sales and leave the financial aspects to others.   The owner should meet on a regular basis with his accountant to review payables, the current accounts receivable aging, etc. Go through the latest income statement line by line to look for expenses to cut.  Be careful not to eliminate payroll or other costs that would have a detrimental effect on operations.

See the original post:
How to Improve Your Cash Flow During a Recession

Invoice factoring can provide desparately needed working capital to businesses that for whatever reason can’t qualify for traditional bank financing.  Many CPA’s and other professionals consult with small business owners who are in a cash flow squeeze, but either don’t know about accounts receivable factoring or are close-minded to it.  If the latter is the case, the professional should perform an analysis to determine if utilizing factoring will improve the bottom line of their client. Why are many CPA’s and consultants hesitant to make a recommendation to factor invoices to their cash-strapped clients?  The most likely reason is the cost.  Admittedly, it is not a cheap method of financing compared to bank loans.  But it should be understood that factoring companies perform other services in addition to advancing funds on receivables.  Factors usually offer credit screening, detailed receivables management reports, and professional collections.  Also, factoring is NOT  a loan.  It is an off balance sheet transaction, so comparing factoring fees to loan interest is like comparing apples to oranges. Most factoring companies expect a client to sign a one year contract.  During that time, the company can use the accelerated cash flow to make improvements in the business to the point where they may qualify for a bank loan.  In addition, some factors allow companies to submit invoices for a cash advance on an as-needed basis.  This is called spot factoring.

Read more:
Professionals Should Keep an Open Mind About Factoring

Invoice factoring is usually not meant to be a long term financing solution for businesses unless they are in industries have difficulty accessing working capital from tradional means.   Companies in the staffing and trucking industries often turn to accounts receivable factoring during the entire existence. One of the raps on factoring is the cost.  There’s no question that it is expensive.  But if you own a company that is struggling with cash flow and are having difficulty making payroll or federal tax payments, factoring companies can provide a lifeline for survival until things get better. In this kind of situation, which is more expensive:   paying the 3% factoring fee per month  or losing the company forever?   If your company is in an industry that has tradtionally performed well, but is currently a victim of the recession, you will likely be able to qualify for traditional financing in the near future

Here is the original post:
Factoring as a Bridge to Traditional Financing