Monthly Archives: August 2010

Factoring is Used to Reduce Administration Overhead

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Factoring is also known to be called debt factoring, and it basically involves selling your invoices to a third party, or a factoring company. In exchange, ? they will process the invoices, alowing you to draw funds against the money owed to your business. Essentially, these companies provide a finance, debt collection and ledger management service.

Factoring iscommonly used by businesses to improve their cashflow but can also be used to reduce administration overheads. Businesses that supply this service are called factors or debt factoring companies.

Further, invoice discounting is an alternative way of drawing money against your invoices. However, your business retains control over the administration of your sales ledger. As well as providing finance, it offers valuable support services and credit insurance.

Factoring provides a fast prepayment against your sales ledger. It allows you, at a cost, to flexibly increase your working capital and improve cashflow.

Factoring is offered to businesses trading with other businesses on credit terms. It is not normally available to retailers or to cash traders.

 

Factoring companies can be subsidiaries of major banks and financial institutions, or independent businesses. Regardless, they will want to talk with you to learn more about your business, review your financial situation and study your business plan. This is how they evaluate your suitability for a factoring facility. Credit limits might be required – if so, you must agree how they will operate.

After signing an agreement, the factoring company will typically agree to a percent of the approved invoices, and typically payment is usually made available within 24 to 48 hours.

Check the notice period to the end of the service because many factors require three months’ notice, but some require longer. Negotiate if you are not agree with the notice period.

 

IFG was founded in 1972 to provide short-term working capital to help small to medium sized businesses grow. The IFG is organized and operates on a local level, providing clients with local knowledge, experience and business expertise in numerous diverse areas including accounting, finance, law, marketing and banking.

The company is headquartered at 7910 Woodmont Avenue, Suite 1430, Bethesda, MD 20814; Toll Free: USA 877.210.9748; Canada 877.340.6893; or visit: www.ifgnetwork.com.

 

Small Businesses Compete for Federal Highway Contracts

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Today, U.S. Transportation Secretary Ray LaHood announced $11.6 million in grants to help disadvantaged business enterprises (DBEs) compete for federal highway contracts in 30 states and Puerto Rico. Providing federal aid to DBE firms to improve their ability to compete for and fulfill federal highway contracts, these grants are from the Federal Highway Administration’s Disadvantaged Business Enterprise/Supportive Services (DBE/SS) program.

The Federal Highway Administration (FHWA) has been promoting the participation of DBEs in federal-aid highway contracts through state-managed programs since 1982. DBE/SS grants are part of an ongoing federal effort to help state departments of transportation train certified DBE firms on a wide range of business management practices, including procurement assistance and guidance on securing bonding. The goal of the program is to help DBEs successfully compete for federal highway projects.

Another business management practicebeing used has to do with invoice factoring. Many real estate developers and construction companies are also facing economic slumps thanks to the economy, and many are only barely getting by and are using construction factoring to survive from one job to the next. Many? factoring companies are educating small businesses on how to use their services.

To read the entire article click here.

How a Factoring Company Works

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Many business owners have turned to alternative funding methods such as factoring, otherwise known as accounts receivable factoring, because it offers clients 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.

A ? factoring company undertakes a thorough due diligence program that usually takes about 24 to 48 hours. Once the due diligence is completed, the client is at liberty to offer invoices to IFG for purchase. After receipt of the invoices, the factor will check the credit of the debtor named on each invoice and make sure the sale represented by each invoice has been satisfactorily complete.

Once credit has been verified, each debtor is notified of the purchase by IFG and the client is paid for the invoices. At the end of the credit period the debtor will make payment directly to the factor.

Obama Comments on the State of Small Business

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Last Thursday President Obama made remarks in a press conference about the state of small business. Then it was followed more bad economic news as jobless claims have risen again — it is the fourth rise in jobless claims in the past five weeks and reaches the highest level since last November 2009.

Then the Federal Reserve in Philadelphia reported that manufacturing in the mid-Atlantic states has dropped, and this is just after they had also reported from a new survey that banks have eased their lending standards for small business the first time in four years. The survey was of bank lending practices, and the Fed found that the easing in loan standards was occurring primarily at the country’s largest domestic banks, finding that it’s the first time it had found easier lending standards being imposed on small businesses since late 2006.

President Obama said that 60 percent of job losses are coming from small businesses, defined as those with less than $50 million in annual sales.For those small businesses that are losing ground, but still in business factoring just might be the answer. Many businesses are experiencing unpredictable cash flow. But it is tough to make incoming cash stretch to cover short-term obligations. One way to regain your financial balance is to work with a factoring company, which can provide you with working capital when conventional funding is not available.

Factoring is also known as debt factoring, and involves selling your invoices to a third party, then in return the factoring company such as IFG will process the invoices and allow you to draw funds against the money owed to your business. Factoring is basically a finance, ledger management and debt collection service industry. Commonly used by businesses to improve cash flow, factoring can also be used to reduce administration overheads.

Gain Cash Flow via Invoice Factoring

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Lately thanks to the economic circumstances globally, many businesses are experiencing unpredictable cash flow.But it is tough to make incoming cash stretch to cover your short-term obligations. One way to regain your financial balance is to work with a factoring company, which can provide you with working capital when conventional funding is not available.

Once your are set up with a factor, you’ll be advanced a large percentage of the face value of the invoice. Credit worthy accounts receivablea xan be traded in or cashed in for immediate cash that is available to you in less than 24 to 48 hours with The Interface Financial Group (IFG)

If you are waiting for the invoice to be paid in the next 30-45 days, or longer, the cost of doing business with a factor is the discount fee. These fees from an invoice factoring company range from one to ten percent, depending on volume, creditworthiness of the customer being invoiced and risk.?

Gain Cash Flow via Invoice Factoring

Posted on by
2

Lately thanks to the economic circumstances globally, many businesses are experiencing unpredictable cash flow.But it is tough to make incoming cash stretch to cover your short-term obligations. One way to regain your financial balance is to work with a factoring company, which can provide you with working capital when conventional funding is not available.

Once your are set up with a factor, you’ll be advanced a large percentage of the face value of the invoice. Credit worthy accounts receivablea xan be traded in or cashed in for immediate cash that is available to you in less than 24 to 48 hours with The Interface Financial Group (IFG)

If you are waiting for the invoice to be paid in the next 30-45 days, or longer, the cost of doing business with a factor is the discount fee. These fees from an invoicefactoring company range from one to ten percent, depending on volume, creditworthiness of the customer being invoiced and risk.?

Five Top Financial Tips Includes Factoring

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In today’s economic times, it is sometimes challenging to make ends meet, particularly if you are running a small business. But the basics for how to be financially successful, no matter how much money you earn, remain the same, both personally and for your company. Here are the top tips for getting ahead financially.

1. Make a budget and stick to it For both your personal life and business, it is important to budget. Set spending and saving goals and stick to these goals.

2. Spend less money than you earn — It does not matter how much or little you earn personally, or how much the business makes, simply spend less and earn more. Take a look at those areas where you can cut corners which will usually result in big savings.

3. Make a plan for saving — Save first, because if you wait until you’ve met all your other financial obligations before seeing what’s left over to save, chances are you’ll never save. Put aside a minimum of five to ten percent of your income for savings each month before you pay bills or spend money.

4. Maximize any benefits — 401(k) plans, medical and dental insurance, or even flexible spending accounts are worth a lot. Make sure you’re maximizing these programs and take advantage of the ones that can save you money.

5. Think about accounts receivable factoring — If your company’s invoices are being paid 60 to 90 days out, and often times these are late, invoice factoring is an excellent solution to get paid right away.

Fed Reports Banks Ease Lending

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Today the Federal Reserve reported between April and July banks eased lending standards and terms to small businesses. This means the beginning signs of loosening up the tightening that occurred over the past few years.

This is actually the first time the Federal Reserve has seen an easing of standards on loans to small businesses since late 2006. The banks pointed to increased competition in the market for loans as oneof te important factor behind this recent easing of terms and standards.

The demand for loans has not changed significantly since the last time the Federal Reserve conducted a survey in April.

Furthermore, domestic banks also stopped reducing the size of existing credit lines for commercial and industrial firms. It is the first time banks have not cut such lines since these questions were added to the Federal Reserve survey in January 2009.

Easing lending standards because they are facing more aggressive competition from other lenders. According to the banks, small businesses have shifted their borrowing back to their banks from other sources such as credit.

Small businesses are reporting increased financing needs for inventory and receivables – which makes them prime candidates for factoring, rather than borrowing from banks. Invoice factoring provides cash to businesses within 24 to 48 hours, as long as they have already set up an account.

Reinventing Your Business Using Accounts Receivable Factoring

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Getting lazy or complacent in your business is not healthy, especially in today’s competitive, stressed economic environment. The problem is that when you become complacent you probably will not notice the damage until it’s too late. Top-performing business entrepreneurs aren’t afraid to take chances and keep expanding their business. They carefully watch their competitors, and think of ways to compete in a smarter way. They’re also not afraid to give their business a major overhaul to keep pace within their industry.

If a complete face-lift is what you have decided your business needs — whether it’s a new website, a new product for development, or a new branding ad campaign — you will need to plan and have the cash on hand to execute your new strategy.

Factoring is an ideal tool for this job, because it is rare that a company has enough cash on hand to implement a facelift, especially during today’s challenging economic times. However factoring invoices is something that will not burden you with interest rates like a loan. And you can get the cash fast – whether it is a single invoice that you choose to factgor, or all of your accounts revceivables.

If your clients pay 60 or 90 days out, then by all means think of using accounts receivable factoring for the cash you’ll need to do a facelift for your business. Once your client invoices are approved, you can have access to the cash in as little as 24 to 48 hours. It is a smart business idea to help you and your business stay ahead of the times.

Factoring News: Trusting Your Gut in Business

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Research has proven over and over again that successful entrepreneurs know when to trust their gut. This research is coming in from all kinds of research from a number of different fields incouding neurology, cognitive psychology and even economics. The research proves intuition is a real form of knowledge — a skill that anyone can develop and strengthen.

Gut instincts or intuition is something that could be of particular help in today’s chaotic, stressed economic world. Making the right business decisions under pressure sometimes means you need to use your intuition as opposed to when you have more time to be rational. But then again, trusting the gut also enables entrepreneurs to try new ventures, and in some cases develop new products or money saving strategies.

Lets take an example, what if you see the need for a product or new service and just know it will work. However you don’t have sufficient cash flow to develop and produce the product. You may not have the cash on hand to commission a market study or conduct a focus group, but you’re still willing to stake your reputation and money on the idea because of what your gut is telling you.

And if you need the funds to develop a product that you know in your gut is the right product for your customers, that’s when invoice factoring comes in handy. We all know that a business must have cash on hand in order to grow. Well if you need cash, and have outstanding invoices, then you can simply contact a factoring company like IFG and you could get the cash needed to begin development on that new product in as little as 24 to 48 hours.