Monthly Archives: July 2010

Repeal Of Small Business Tax Reporting Requirements Fails In House

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Today House Democrats Friday reversed the repeal of controversial Internal Revenue Service reporting rules that were part of health-care legislation. The measure to repeal the rules failed in the House on a 241-154 vote.

Why did this happen? Democrats have come under increasing pressure over the IRS reporting requirements. Business groups believe it will burden small business with extra paperwork. This is the first instance of Democrats broadly calling for repeal of a part of the health-care law.

Under the health-care law, businesses beginning in 2012 will be required to file a form 1099 to the Internal Revenue Service for each supplier or service provider to which payments exceed $600 in a single year. Currently, they are already required by law to report payments to non-corporate service providers. Hoever, the health-care law broadened that to include corporate vendors and purchases of goods.

Companies like The Interface Financial Group (IFG) offer small businesses alternative solutions to funding at www.ifgnetwork.com

Small Business Trends, Mistakes and Factoring

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Senate Republicans today rejected a bill that would aid small businesses with expanded loan programs and tax breaks. Republican leaders filibustered after fighting for days with Democrats over the number of amendments they would be able to offer.

This underscores how many people feel strongly about the badly needed assistance that small businesses need in todays economy. However, in all fairness, small businesses come and go and the reasons for failure are not what you would think. The most common reason is that funds run out before the business can pay for itself. One of the most common fatal mistakes for many failed businesses is having insufficient operating funds because owners underestimate how much money they will need and they are forced to close.They also may have an unrealistic expectation of incoming revenues from sales.

It is imperative to ascertain how much money your business will require; not only the costs of starting, but the costs of staying in business. Basically, you will need enough funds to cover all costs until sales can eventually pay for these costs.

One way to stay in business during this trial period, is via accounts receivable factoring.

Factoring May Prevent Small Business Owner Apathy

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Wells Fargo said the confidence levels among small-business owners has slipped to its lowest level in seven years,as the bank’s small business index fell to -28 this month. The index isdown 17 points since April. Calculated each quarter, the index isbased on a company’s forecast for the next year and its present financial health.

However this news did not affect everyone. Yesterday was the 5th Annual Small Business Day coordinated by smAlbany, a networking group in the Capital District. These small business owners enjoy always being on the lookout for ways to make their business relevant.

The same might be said for the many small businesses who have been practicing invoice factoring. They have discovered that it is better to factor their accounts receivables, and use the funds they get in less than 24 hours, to build more business. Also known as accounts receivable factoring, a factoring company will first conduct due dilligence before taking on your invoices — not of your company — but they will review the clients that owe you money.

Factoring Could Assist Non Creditworthy Companies

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The United States Senate is supposed to vote this week on a bill to funnel $30 billion of capital to community banks. Typically these anks cater to customers with small firms. Banks could leverage the sum to make $300 billion in loans that create jobs, according to a Senate summary. So if this goes through, it could more than double the commercial and industrial loans at eligible banks as of the first quarter. (Source: KBW Inc. )

Most bankers say that it’s lack of demand from creditworthy firms in a weak economy, and that the problem isn’t really scarce credit. The result may be more loans given to distressed firms and higher losses.

In reality, invoice factoring would allow a company to grow without having to borrow money, and this “use it as you need it” approach would allow small businesses to get cash quickly and easily – in as little as 24 hours – once the company is setup with IFG’s factoring services.? Requirements for factoring include a copy of the company’s current financial statements as well as a signed application.

Invoice Factoring and Economic Recovery Versus Bank Loans

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Banks make money by issuing loans to small businesses, and even though they are seeking more, but there aren’t viable borrowers. What’s more, the banks are now being criticized by the federal government for not lending to enough small businesses. Small businesses employ about half of Americans, accounting for 60 percent of new jobs.

Most banks have the cash to make loans, however research says that most loan officers are saying most applications fail. Loan apps typically fall into two categories, 1) business expansion, and 2) helping a business stay afloat. Employment growth has been negative for 10 of the 12 quarters since April of 2007. Source:Study by the National Federation of Independent Business – NFIB. The Market continues to be elusive, and overall consumer confidence is at an 11-month low, according to the same study.

The majority of businesses are trying to reduce their debt levels, so why would the average small business owner want to borrow money at this time. They don’t because with so much uncertainty, many small businesses can’t imagine going into debt via a loan.

As the administration keeps pushing for new lending, Washington is pushing large commercial banks to set up small-loan funds. The president of the Small Business Legislative Council, Jack Satagaj recently said, ” taking out a loan to invest in inventory in this climate requires a leap of faith.”

However, a business that has funds due to invoice factoring, and leveraging their accounts recevables, makes enough money in less than 48 hours to purchase more inventory.

President Obama Urges Senate to Finish Small Business Jobs Plan

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In a news article on Reuters, President Barack Obama urged the Senate today to complete work on a small-business jobs plan. Obama hopes to approve the plan, which includes a $30 billion small-business lending fund. Small businesses account for a large portion of United States job creation.

The fund would provide $30 billion in capital that the government could invest in independent community banks with assets of less than $10 billion to increase lending to small business. It would support as much as $300 billion in new loans to small businesses.

Accounts receivable factoring could work in conjunction with new lending funds, as it would protect small businesses from falling into debt. The idea is to use funds due to your business net 30/60 or 90 days. Factoring companies like The Interface Financial group (IFG) can factor invoices in less than 48 hours.

People Polled Say They WIll Earn More in 2011

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A new July 16 Thomson Reuters/University of Michigan survey says less than half of the consumers polled in a think they’ll earn more money next year in 2011 than in this year of 2010.

That said, some smart small business owners remain optimistic because they know that accounts receivable factoring can help keep their businesses running until such time as the economy improves.

Five Tips for Financial Security Include Factoring

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1.Does your exit strategy for investments still make sense? What if the stock market or your own company’s stock takes another dive? Do you have a plan to secure the assets that have grown over the past year?How far will your money go before you sell out of the stock market?

2. Do you maintain a budget? Once your income begins to go up again, carefully monitor your spending plan and be certain to save a minimum of 10 percent of your total income, and if yiou can swing it, save twenty percent. If you review your budget you can easily determine your needs, and not make unnecessary purchases that are not in your budget.

3. Do you keep sufficient cash in reserve? Cash reserves need to be a minimum of three months more than you would normally have. If you already have three months in reserve, double the cash to six months of cash in reserve. The job market is tough, and it takes more time to get a job today.

4. Are you keeping up with your insurance? If you lose your job you may discover many coverages such as disability insurance when it is too late. Review your beneficiary designations and keep them up to date.

5. Are you prepared to use factoring in your business? Rather than go into debt, are you prepared to use factoring to catch up on things like insurance when unexpected bills come up? Most factoring companies pay in less than 48 hours, allowing youto catch up on debts.

Does your exit strategy for investments still make sense? What if the stock market or your own company’s stock takes another dive? Do you have a plan to secure the assets that have grown over the past year? How far will your money go before you sell out of the stock market?Accounts receivable factoring can help.

Factoring is a Short and Long Term Solution

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Remarkably, factoring can provide both a short term and longer term solution to small businesses during economically challenging times like these. It’s fast and efficient and unlike a loan, it does not appear on the balance sheet. Invoice factoring is simply a “use it as you need it” service today.

Invoice factoring is basically a ? use it as you need it funding option, therefore every invoice purchase is a separate transaction and does not form part of a portfolio lending approach. The transaction is modeled as a buy-sell transaction, and the process includes:

  1. Due Diligence – Once approached by a prospective client, IFG undertakes a thorough due diligence program that typically takes about 24 to 48 hours.
  2. Review Invoices – Once the due diligence is completed, the client is at liberty to offer invoices to IFG for purchase.
  3. Credit Verification – Upon receipt of the invoices, IFG will check the credit of the debtor named on each invoice and make sure the sale represented by each invoice has been satisfactorily complete.
  4. Debtors Notification – Once credit has been verified, each debtor is notified of the purchase by IFG and the client is paid for the invoices.
  5. Debtor Payments – At the end of the credit period the debtor will make payment directly to IFG thus completing the transaction.

Factoring Aids Pessimistic Small Businesses

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According to a survey sponsored by the National Federal Independant Businesses – NFIB – more small businesses grew very pessimistic about the economic outlook after facing of weak sales and uncertainty about politics during the last month. It is news like this that is causing many firms to begin the age-old practice of factoring.? 


The small business optimism index fell by 3.2 points in June, dipping to 89, and this was after posting several months of gains. Based on 805 responses to a random survey of NFIB members, this survey indicates that seventy percent of the decline for this month resulted from a deterioration in the outlook for business conditions and real sales gains. Very few small businesses plan to create new jobs, according to respondents. The survey also showed that only 10 percent of firms plan new hiring, that is down four points from May. About 8 percent of firms plan to reduce their workforce, up one point from the previous month.

What’s more, declining confidence among these very small businesses could mess up Democratic hopes of an improving economy before the November congressional elections and give Republicans an edge in their bid to retake control of Congress.The number of business owners planning to make capital expenditures over the next few months fell a point to 19 percent, three points above the 35-year record low, the NFIB said.The survey showed more firms are looking at declining sales, more than those expecting higher sales.? 

Many small businesses are cutting prices to attract customers and are liquidating inventories, in addition to trying tactics like invoice factoring, so they can at least pay their empployees and bills.