Monthly Archives: February 2011

Business Credit Lines Can be Increased via Factoring

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Most small businesses in the U.S. have had access to a number of types of business credit for the last century. Bank credit lines that are usually backed by personal or business assets. Then there is non-asset based credit, such as credit cards used by many small businesses. Another type is trade credit, which is typically vendor-supplied, unsecured lines of credit for product purchases (This only applies to businesses that purchase raw goods or inventory for resale). Then there is equipment leasing and then there is factoring.

Cash flow is king so there ia real value in tapping into your customer’s credit. Invoice factoring enables small businesses to take advantage of their customer’s credit by obtaining advances against funds their customers owe. The way it works is that a factoring company establishes accounts receivable credit lines based on the credit of the customer, so it is not based on your credit, but on their ability to pay.

Report States 52% of Businesses Did Not Try to Borrow in 2010

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It seems that by the year 2006 the National Federation of Independent Business, NFIB, and their Research Foundation had data stating 90 percent of business owners who wanted credit were able to get it. Today, a recent survey from NFIB’s research division said the demand for small-business credit in 2010 continued to remain weak. Although it was up 7 percentage points from 2009, 52 percent said they did not try to borrow last year.

The report stated that “The change in momentum from constantly increasing competition and access to credit to an abrupt freeze, if not direction reversal, is tied to the current confusion exhibited by many owners and analysts when assessing small-business credit conditions. ”

Lack of sales is worse than lack of access to credit, and until economic growth starts happening again, businesses will need to look to other strategies such as invoice factoring, to sustain and grow. Factoring enables a company to receive cash in as little as 24 hours for outstanding invoices thta otherwise may not be paid for 30/60 or 90 days.

Read the full report here.

 

Only 36,000 Jobs Added to Economy; Small Businesses to Keep Employees

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It was reported today that as the economy generated only 36,000 net new jobs, our unemployment rate dropped sharply in January down to to 9 percent which is actually the lowest level in about two years. While many other economic indicators point to a strengthening economic recovery, this report proves how job growth remains the weakness of pour economy right now.

And in another interesting repoort based on a survey done by CareerBuilder.com, it seems most small businesses aren’t planning to make any changes to their headcounts this year. They survey recently polled hiring managers at more than 1,350 firms with fewer than 500 employees finding that sixty-four percent of those interviewed said they plan to keep their staff levels as it is in 2011. Only 21 percent of them reported plans to add full-time employees. Six percent said they expect to make layoffs and nine percent said they are undecided.

This is just all the more reason for small businesses to think carefully about this year’s financial strategies to sustain and grow. Each and every small business is different and has unique needs, so there is rarely one solution that works for everyone, but factoring is one financial strategy that does seem to work for everyone. In choosing the right working capital finance model for your business, there are many factors to take into account. One consideration is how far out your customers pay their invoices. f it is 60 to 90 days from the date of invoicing, then invoice factoring could be a great tactic. You will get paid withon 24 to 48 hours, and then can use thoise fiunds to buy supplies, do more business, sustain and grow.

Smart business owners watch these trends, and they always figure out ways to beat the odds, including finacial tactics like accounts receivable factoring.

Startup America to Encourage Small Businesses

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Monday The White Honse announced “Startup America” a program designed to encourage job-creating start-up businesses. This is supposed to encourage private sector investment in startups and small businesses, with the idea that if it works, it will reduce the high unemployment rate in the United States. In order to survice many small businesses have been redesigning their financial practices to include things like accounts receivable factoring. Many small and medium sized businesses (SMES) have had to really stretch during the last few recessionary years, and make do without cashflow. With limited time and resources, entrepreneurs often do not take the time to plan and learn about new tactics like factoring, which could get them out from under the mountain of debt, and help them sustain and grow.

Many of ther companies that have tried invoice factoring have made it through the credit crisis.