Daily Archives: September 25, 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.