Monthly Archives: September 2010

New Markets for Entrepreneurs

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In regions of severe poverty, innovative programs to build new sources of wealth provide lessons for entrepreneurs hoping to create new markets and economic opportunity. Leaders of Wharton’s Societal Wealth program outline the critical elements of entrepreneurial wealth building based on nearly 10 years of field research supported by Wharton alumni. The WSWP initiatives are designed to create economic enterprises that lead to self-sufficiency rather than dependency, which will have a lasting impact.

As always, uncertainty is a major element for any small business or entrepreneur. The social wealth projects–with the goal of improving society in addition to making money–are even more unpredictable.

However, one strategic way for small businesses to find and use cash to grow centers around a 4,000 year old tactic called factoring. This allows companies to move beyond reliance on loans, and borrowing money from credit cards to survive and grow. Invoice factoring or spot factoring, enables companies to get short-term working capital and improve cash flow and grow their businesses. Factoring makes business success more predictable.

Since most companies do not get paid immediately for delivered products or services, spot factoring benefits businesses that do not get paid for 30, 60 or 90 days by advancing up to 90 percent against the company’s invoices. A factoring company like The Interface Financial Group (IFG) purchases selected invoices at a discount.

Source: “Business Models: Creating New Markets and Societal Wealth.”

Old Bank Fees and New Bank Fees

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This year bank cash-advance fees and balance transfer fees have risen to 4 percent, up from 3 percent in July last year. Check out what to expect from one — Bank of America.

Bank of America said it plans to raise minimum balance requirements over the next 12 months and charge a monthly account fee for customers who can’t maintain those balances. Also, customers who enrolled in eBanking checking account will be charged $8.95 per month if they opt to receive paper statements and visit tellers instead of banking online.

And of course, increased annual fees were applied to a variety of Bank of America credit card accounts.

If you and your small business is struggling, bank fees and extra costs are biting into your profits. One way to compensate is to begin using an age old tactic to get paid for ourstanding invoices now – known as invoice factoring. In today’s economy there are many businesses seeking a factoring company to help ease the pain. A factor will take a percdentage so expect to get about 90 percent of the invoice.

Put Credit Cards Away and Start Factoring

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Are your credit cards putting you at risk? What if you cut them up and start paying with cash only. Think of all the finance charges you’d save. Or if you have more than two cards — use those for business only and put the rest away in a safe place. Just use them once a month and spend ten dollars, to keep your credit score up, and pay them off.

Without credit, you won’t spend more than the money you actually have, plus you’ll probably think more about making each purchase. One way to ease into this strategy is to try it for a month or two. See if you save money on not impulse spending. See if the credit card bills are comig down, and if your have high interest rates, call the card companies and ask for them to lower your rate.

If you own a business another excellent tip enabling your company to survive and grow is known as accounts receivable factoring. What this means is that you will simply have a factoring company pay you in 24 to 48 hours for your outstanding invoices, then your customers will pay the factor. You get the funds earlier than 60 or 90 days, so y9ou vcan spend the funds on your buisiness sooner. Invoice factoring is a great choice for small businesses during recessionary times.

New Markets for Entrepreneurs

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In regions of severe poverty, innovative programs to build new sources of wealth provide lessons for entrepreneurs hoping to create new markets and economic opportunity. Leaders of Wharton’s Societal Wealth program outline the critical elements of entrepreneurial wealth building based on nearly 10 years of field research supported by Wharton alumni. The WSWP initiatives are designed to create economic enterprises that lead to self-sufficiency rather than dependency, which will have a lasting impact.

As always, uncertainty is a major element for any small business or entrepreneur. The social wealth projects–with the goal of improving society in addition to making money–are even more unpredictable.

However, one strategic way for small businesses to find and use cash to grow centers around a 4,000 year old tactic called factoring. This allows companies to move beyond reliance on loans, and borrowing money from credit cards to survive and grow. Invoice factoring or spot factoring, enables companies to get short-term working capital and improve cash flow and grow their businesses. Factoring makes business success more predictable.

Since most companies do not get paid immediately for delivered products or services, spot factoring benefits businesses that do not get paid for 30, 60 or 90 days by advancing up to 90 percent against the company’s invoices. A factoring company like The Interface Financial Group (IFG) purchases selected invoices at a discount.

Source: “Business Models: Creating New Markets and Societal Wealth,”

NFIB Index Shows Increase in Small Business Optimism

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The National Federation of Independent Business (NFIB) survey has reported job losses in 10 of the last 12 months. The August optimism index increased to 88.8 from July’s 88.1, and while four of the index’s 10 components rose, one was unchanged. The average measure in the five years before the economic decline began in December 2007 was 100.6. The Interface Financial Group (IFG), North America’s largest alternative funding source for small businesses, uses the index to gage the small business marketplace. The August survey also reported job loss averaging 0.3 employees per firm.

What’s more, Bloomberg reports that, according to a private survey, confidence among U.S. small businesses rose in August for the first time in three months as the outlook for sales and economic growth turned less gloomy. Other recent surveys indicate that financials of small businesses are stabilizing, an important observation as it is a prelude to growth, which is expected to be slow through the remainder of this year and into the beginning of 2011.

George Shapiro, chief executive officer of IFG said, Although expectations for the economy and sales improved, both measures were still in recession territory, said George Shapiro, chief executive officer of The Interface Financial Group (IFG). This explains why the outlook for hiring and capital spending at small companies weakened last month. More jobs and increases in consumer spending are needed to bolster the recovery.”

Around 50 percent of NFIB survey respondents indicated that they will go to the bank for credit when required, even though the banks are currently not lending to small businesses due to increased requirements. Many banks have indicated that there is money to lend providing the financial statements are strong enough.

There are many companies that will not qualify for a loan, and this is where invoice factoring can provide cash for operations and to support growth until their financials will support traditional lending. Factoring enables a company to provide credit to its customers while at the same time obtaining cash for business operations and expansion.

The trends indicate that more and more businesses are now using factoring companies that advance up to 90 percent against invoices as part of their normal operations when they do not get paid for 30 to 60 or 90 days.The difference is that factoring is not a loan it is the purchase of financial assets, or a company’s receivables.

Three Small Business Jobs Act Benefits

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Let’s take a look at three key provisions the Small Business Jobs Act offers small business owners:

1. Thirty-billion dollars will go directly to community banks specifically for lending to small businesses. According to Senate reports, small business lending has dropped by 17.8 percent since the year 2008. The Bill’s money is expected to encourage small banks to increase lending, and once things get rolling, they expect the creation of around 500,000 jobs.

2. Startups will get bigger deductions in 2010 or 2011. The Small Business Jobs Act would increase the amount you are allowed to deduct in your startup costs from $5,000 to $20,000. Plus, you’ll more favorable deductions for real estate related to their business.

3. Microloans will be available for to help create small and home based businesses by aiding in their short term capital requirements. Prior, a business could only access a maximum of $35,000 in microloan funds. These microloans can be used for up to five years to pay existing loan payments to continue growing the business.That amount increased to $50,000 with the passage of this bill.

For more information on invoice factoring, contact www.ifgnetwork.com

There is one more thing that can be of assistance for growing start-ups, and there is not interest on the funds like there is on a microloan. And that is accounts receivable factoring. Plus you can get cash in less than 48 hours

Small Business Owners Say Recession is NOT Over

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According to a September 20 announcement from The National Bureau of Economic Research (NBER) the U.S. economy hit rock bottom in June 2009 — but it has been on the rebound ever since – ending of the recession that began in December 2007 and the beginning of an expansion. They said the recession lasted 18 months, which makes it the longest of any recession since World War II, mentioning that economic conditions since that month have not been entirely favorable and conceded that the economy has not yet returned to operating at normal capacity.? 

Most small business owners and consumers without jobs don’t agree the recession is over. In fact most small businesses continue to struggle, and many are barely making it. The ones that are are suing every financial tactic they can, including invoice factoring – since many of their invoices are outstanding, and clients are payin g more than 60 to 90 days out.

If you would like to know more about how factoring could benefit your small business, please review the Frequently Asked Questions on Factoring.

How to Control Spending

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It really does not matter whether business is facing financial challenges, growing at a manageable rate, or booming, without oversight a company’s spending can easily spiral out of control. Have you established company spending policies? Because if you have not, it will be difficult to set boundaries, or create controls, let alone enforce spending policies. Anyone who runs a business – whether small or large – has expenses. As a small business matures the need for spending controls is eminent. Here are a couple of strategies to support the process.

One company known as ExpenseWatch.com can help you control expenses by offering best-of-breed modules for Expense Reports, Purchasing and AP Invoice Management, which can be subscribed to individually to control specific company spending issues, or as a fully integrated expense control suite. An open expense control platform, companies have the flexibility to integrate spending data with a wide range of business solutions used travel management tools, accounting/enterprise resource management systems and payroll providers, credit cards, budgeting applications, customer relationship management systems, ecommerce vendors and more.

If your business expenses get out of control thanks to a new product launch, or traveling for trade shows, there is another solution that can help you get funds in the door fast — factoring. As you may know, many companies pay their invoices 30/60 or 90 days out. If you have outstanding invoices for a job that you have completed, and are owed apx. $20,000 or more, invoice factoring might just be the solution to get funds in fast to cover outstanding expenses.

Here’s how it works. IFG looks at the creditworthiness your customers and can fund within as little as 24 hours. Most factoring companies do not expect to buy 100 percent of a company’s receivables, and there are no minimum or maximum sales volume requirements. IFG’s professional rates are competitive; each client’s circumstances will vary and may have an impact on the fees.

 

Because IFG offers clients a use it as you need it funding option, each 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. IFG first undertakes a due diligence that typically takes one to two business days. Once completed the client is at liberty to offer invoices to IFG for purchase. Upon receipt of invoices, IFG checks the credit of the debtor named on the invoice and makes sure that the sale represented has been satisfactorily completed. Once this is done the debtor is advised of the purchase by IFG and the client receives their funding. At the end of the credit period the debtor pays IFG directly. The transaction is completed.

Legislation Passes $30 Billion in Loans for Small Business

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Today the Senate passed a bill to make more federally financed loans available to small businesses. The legislation that passed in a 61 to 38 vote would make $30 billion in loans available to small businesses, and it also contains $12 billion in tax cuts.

Many people opposing the bill have argued that small businesses would be hurt by allowing taxes to rise for taxpayers over that income amount because many small businesses file their taxes under the individual rate. The argument has also been made that the legislation is also a jobs bill since small businesses accounted for more than 60 percent of the new jobs created between 1993 and 2008.

Regardless of this bill, small business owners are still suffering, and many people who have lost their jobs and are taking the risk to start their own small businesses. With an economy in shambles, starting out on the right foot is essential to their success. One secret to a successful new startup business is known as invoice factoring.

This 4,000 year old business tactic allows a business is a very simple financial transaction whereby a business sells its accounts receivable, or their outstanding invoices to another third party known as a factoring company or a factor at a discounted rate in exchange for fast cash with which to finance continued business.

Invoice factoring differs from a bank loan in three main ways. ? The emphasis is on the value of the receivables, or your financial asset, not the firm’s credit worthiness. Second, invoice factoring is not the same as a loan – Rather it’s the purchase of a financial asset also known as the “receivable” or an outstanding invoice that has not yet been paid. ? And third, a bank loan involves two parties whereas factoring involves three parties.

Business Tips on Preparing for Change

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With so many economic factors involved in business today, it is a good time to stop and evaluate how you can be prepared for changes. Following are five tips developed especially for small businesses:

1) Every six months or so, examine your corporate culture to discover any impediments to change. Some traditions and practices may need to be revamped to meet new needs for your business.
2) Talk about the change so that employees think in terms of change and help make it happen.
3) Always make expectations clear. Key employees should know that embracing change is part of their job.
4) Be sure to monitor company procedures and systems to be sure they support any changes.
5) Plan ahead for the biggest change of all: your retirement or exit from the company.

Another thing that may be of assistance while your company is going through changes is the support from accounts receivable factoring. It will give you the funds needed when accounts are paying slow, so that the plans you have made for change s can be met.