Monthly Archives: January 2010

Accounts Receivable Factoring Versus Card Balance Transfers

Posted on by
27

A new law helps small business owners transfer existing balances from other cards with higher interest rates so they can and then pay down the balance at 6.99 percent. The Credit Card Accountability, Responsibility and Disclosure Act of 2009, will take effect on Feb. 22, and it will prohibit banks from raising interest rates for one year, and require banks to give 45 days’ notice to consumers when a rate is to change.The new law also requires easier-to-read statements and some other safeguards to protect consumers.

Experts believe 85 percent of the debt from which consumers seek relief is from credit cardsat an average rate of about $12,000 in credit card debt.

Some banks promise balance transfers with interest rates that are supposed to remain at the same rate until they were paid off, but many people are getting letters telling them they are upping their interest rate which they claim they have the right to do.

What many people don’t realize is that they can get cash advances in 24 hours from accounts receivable factoring. Factoring is not a loan – it is the purchase of financial assets, or receivables from a factoring company like IFG, and it differs from traditional bank loans. A bank loan involves two parties, while factoring involves three. Banks base their decisions on a company’s credit worthiness, whereas factoring is based on the value of the receivables.

Invoice factoring does not involve any minimums, maximums, and there are no long-term commitments like a credit card.

Only 10 Percent of Small Businesses Added Jobs in December

Posted on by
15

Today, Phil Izzo at Real Time Economics did an article yesterday on the fact that entrepreneurs really had bad year in 2009 – a bad sign because it is small businesses that create more jobs.

However, this news can be good news for people who survived, by measn other than borrowing money. Those business entrepreneurs who employed tactics like accounts receivable factoring, more than likely, are doing fine.

Izzo also talked about a new report on entrepreneurialism around the world, featuing a chart that indicates the year-to-year change of entrepreneurs starting business int he US is down – 24% whereas in Spain it is – 12%, and in the UK only down – 6%.

Although there is increasing business optimism, the National Federation of Independent Business published disappointing said only 10 percent of small businesses added jobs, while 22 percent of surveyed owners cut employment in December.

“Small business owners are plagued by weak consumer demand and occasionally constrained by tight credit conditions…” said Izzo.

Invoice factoring is a viable option for business financing, and can help to fuel an expansion, buy new equipment, raise immediate working capital or ease cash flow problems. factoring can often offer a practical and instant solution.

All you need is to sell products or services to businesses, and if your customers have good credit, and if you have orders that you are ready to ship, factoring might be of great benefit to you and your company.

Retail Discounting Report

Posted on by
15

Retailers are managing inventory levels and even though economy is improving, jobs and housing are two key indicators affecting the consumer. Experts don’t think retailers can expect large increases in consumer spending until there is improvement in jobs and housing.

With a slight growth in spending during the holiday season of 2009, retailers saw a 2.9 percent increase in sales in December. (Source: Thomson Reuters.)

0.7% Increase in sales at department stores
4.7% Increase at apparel stores
5.3 % Discount stores increase

In 2009, luxury retailers had up to 30 percent declines in sales and profitability. These poor sales figures mean larger discounts for consumers this year.

Some experts say they expect to see declines in sales this year similar to those in 2009, which were as great as 20 percent.

As a result of the financial crisis in 2008, retailers have learned to manage their inventory more efficiently in order to cut back on costs. Offering less merchandise on the floor prevents retailers from having massive discounts.

Many suppliers have realized that invoice factoring can assist them when they get department store orders for their apparel items, because they can use the tactic to make the items, pay employees, and stay in business because they can then keep selling and getting orders from other retailers.

Eight Benefits of Factoring in 2010

Posted on by
11

[video:youtube:OY-vodgsGKI]The eight benefits of invoice factoring include:
1) Speed: Unlike most capitol resources, the factoring relationship can be set up within days, and once set up the funding of invoice can happen between 24 to 48 hours.
2) Financial: Most of the funding decision is based on the credit of the customer.
3) Credit limit: As long as the client is invoicing a credit-worthy customer, factoring relationships can grow with the client so there may not be limits to access of capitol.
4) Discipline: Lack of discipline often causes companies to not pay loans regularly down the line. With factoring, there’s no lack of discipline — each time a customer pays the invoice it retires the mini-loan.
5) Equity: Factoring is considered an off-balance sheet form of financing, which keeps any net term liability off the corporate balance sheet, preserving the equity position in a positive manner.
6) Set up: The process of getting set up requires minimal paperwork and no lengthy negotiations compared to banks and equity venture funding.
7) Cost: The cost of factoring invoices is relative to the short-term nature of the transaction, not lasting more than 90 days — more than a bank, but less than a VC. Companies with thin profit margins are not good candidates for factoring to grow their business.
8) Growth: Having access to capital improves the financial position of a growing company. While factoring is a short term solution, it ultimately leads them to conventional bank financing.

“Here’s one typical example of how factoring works, and why it can be so important to a company on the verge of doubling in size,” said George Shapiro, chief executive officer of The Interface Financial Group (IFG). “This company has struggled to get a contract for a long time, which has created stress on their finances. They finally get the contract and send out the first invoice, but at the same time a dozen new hires need to be put in place. With factoring, the next day access to capital tied up in the invoice is available to the company, allowing them to hire people, make payroll two weeks later, and do more business.”

U.S. Employment Decreased by 84,000 Private Sector Jobs in December

Posted on by
37

Today’s ADP National Employment Report shows that private sector employment decreased by 84,000 in December. Nonfarm private employment decreased 84,000 from November to December 2009 on a seasonally adjusted basis, according to the ADP National Employment Report. The December employment decline was the smallest since March of 2008.

Even as the news improves for small business owners, many are seeking ways finacially to stay afloat. Accounts recivable factoring is an option that is helping countless businesses stay in business.

Here are some highlights from the December 2009 nonfarm private employment report:

Total employment: -84,000
Small businesses* -25,000
Medium businesses** -25,000
Large businesses*** -34,000
Goods-producing sector: -96,000
Service-providing sector: +12,000
Addendum:
Manufacturing industry: -43,000

* Small businesses represent payrolls with 1-49 employees
** Medium businesses represent payrolls with 50-499 employees
*** Large businesses represent payrolls with more than 499 employees

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