Monthly Archives: January 2012

U.S. Economy Picked Up Steam last Quarter

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The United States Commerce Department reported today that the American economy picked up a little steam last quarter, with output growing at an annualized rate of 2.8 percent. The indicators are that some U.S. companies closed out 2011 with record order backlogs. This alone signals solid manufacturing growth for the future. In addition, the growth pace was faster than in the third quarter, at which time gross domestic product expanded at a 1.8 percent annual rate. The downside — both of these numbers were below the average speed of U.S. economic expansion in the since World War II. It will require above-average growth for recovery from the Great Recession.

Still, the 2.8 percent rate is likely to be seen by many as something of a relief, given that just last summer many economists were predicting the country would soon dip back into recession. Few analysts are still forecasting a double-dip in the near term, but they say the recovery is likely to remain disappointingly sluggish.

This means that small to medium-sized businesses may continue to benefit from using alternative funding strategies such as invoice factoring. Since the growth in the fourth quarter was most likely driven by companies rebuilding inventories, once consumers begin to purchase these products, companies will need to be ready to stock their shelves with more items. So factoring can assist them in producing more product. This is how a company thrives and grows.

Last Year Economy Grew 1.7 Percent

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Although last quarter, in the October-December 2911 quarter the economy was at the fastest pace since the spring of 2010, economists say it won’t help reduce unemployment, and that all the data indicates slower growth ahead.
Overall, the economy grew only 1.7 percent last year. and the 2012 outlook is just slightly better. The Federal Reserve estimates that the growth for 2012 1ill be at around 2.5 percent. During Q4 Americans spent more on vehicles but unemployment is still a high 8.5 percent and many people remain reluctant to buy homes.

There are several facts leadijng to analysrs predicting more of an economic drag this year including the cuts in federal spending Weak or flat pay increases, slow growth in consumer spending, as well as a slower pace of company restocking.

This means accounts receivable factoring will remain strong as an alternative funding stratregy this year. Many small to medium-sized businesses survived and others will this year if they manage cash flow well. Factoring has always been an excellent strategy for accomplishing this goal.

SME Survival Mode: Factoring Receivables

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Internet businesses that have stayed in business for more than five years during the economic downturn say that tight credit at mainstream banks is what caused the issue. Online businesses typically are inexpensive to start up, and while the business grows it may take time before it is profitable.

Factoring receivables is a simple process – as it is not a loan; it is the purchase of financial assets and can assist a small to medium-sized enterprise (SME) keep cash flowing so they can pay their employees, order more supplies, pay bills, and also sell more. Factoring receivables is the easiest to keep the cash flow going.

anyone who is running a small business these days knows it is tough to save, and that you need enough cash to survive for about 120 days.

Accounts Receivables Factoring Aids Insurance Cash Flow Issues

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Then by the year 2013, wealthy Americans will see Medicare taxes rise to 2.35 percent, up from 1.45 percent, on earnings over $200,000 for individuals, and $250,000 for couples who are married. Tax-exempt contributions to flexible spending accounts for medical expenses will be limited to $2,500 per year. Plus, employers’ tax deductions for the cost of a retired person and their Medicare drug benefits will be eliminated altogether.

All U.S. citizens or any legal resident must have insurance by the 2014, and individuals and small businesses with up to 100 employees will be able to shop for coverage in what will be known as health exchanges. This is the year that will mark the time when insurers will be barred from rejecting anyone with a pre-existing condition. Any company with 50-plus employees who does not offer insurance could face penalties of $2,000 per worker who is not covered.

For most small businesses in the U.S., costs will go up in order to meet the new insurance coverage requirements. But there is one way for small businesses to be prepared to cover these costs and avoid penalties, is to begin a program of invoice factoring.

The state of the economy has been very tough for small business owners the last few years, so these times call for creative solutions to help a small business run better, and in order to sustain and grow, businesses need some cash on hand. When outstanding invoices stack up, single invoice factoring, also known as spot factoring, is one tactic that many companies have discovered can help them get by.

Accounts receivables factoring enables companies to get short-term working capital and improve cash flow to grow their businesses. Since most companies don’t get paid immediately for delivered products or services, factoring benefits businesses that do not get paid for 30, 60 or 90 days. You can get as much as 90 percent advanced against the company’s invoices.

Candidates for Invoice Factoring

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Are you and your company good candidates for factoring services? Factoring is not a loan but it is the purchase of financial assets from a factoring company like The Interface Financial Group (IFG). Factoring is much different from traditional bank loans because a bank loan involves two parties, whereas factoring involves three parties.

A banks will usually base their decisions on a company and their credit worthiness, while invoice factoring is based on the value of the accounts receivables. 51 percent of small businesses that have experienced cash flow issues in the last 90 days. Construction is one of several sectors that can benefit tremendously from construction factoring. No longer is the sub-contractor, or construction company, required to wait for payment before starting on the next phase of a project, or begin construction on a new project. Factoring enables a construction firm to realize a quick turnaround, within 24 hours, accounts receivable due for the completed stages of a construction project. Construction invoice factoring speeds up cash flow and improves the company’s ability to begin the next phase of a construction project.

There are very few factoring companies offering construction factoring…so, if you, or your construction firm is interested, or in need of, short term financing against completed construction jobs, or desires immediate payment for finished project stages, give us a call or fill out a brief inquiry form to get started. That’s right, immediate working capital is available now.

Other good candidates for factoring include medical, or trucking. The reality is that they could be janitorial to biotech. They could be start-up companies or companies in the midst of a growth spurt.

How Factoring Receivables Builds Websites

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A professional website is an important part of any business, large or small, in today’s marketplace. And it also must be a well-functioning website, because difficult to use sites are a turn off to viewers. There are ways to make a website more competitive. Plus, programmers and graphic artists can make the user experience enjoyable as well as memorable. Plus, hiring online marketing experts to develop those aspects of your web presence is also important.

Building a professional website does, however, require a financial investment — so if your budget is tight and it is time for an upgrade, then consider factoring receivables to quickly raise the funds needed to invest in your website. For the unfamiliar, factoring receivables is a practice wherein a business sells its accounts receivable invoices to a third party at a discount in exchange for immediate cash.

Factoring is ideal to cover short-term cash needs during periods in which these needs exceed cash flow.

SMEs Need Invoice Factoring to Sustain and Grow

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For today’s small to medium-sized business who is selling online, the good news is that paid advertising alone is no longer needed for driving traffic. Instead what people do want to see today is valuable content — any valuable piece of information that attracts leads to your website. This could include reports, webinars or even white papers. The way you can attract traffic to your website is via the lure of information that is perceived as valuable.

This is also a way to begin to develop a trusted relationship with your visitors. Simply create one piece at a time, and before long, you will have a nice library of work that raises your brand equity and generates fans, and ultimately leads.

One of the things that SMEs struggle with the most is sustaining business and growing while making ends meet in the meantime. Bills are always due, payroll must be met, and many times the cash flow is just not there. This is when invoice factoring can really assist an SME. Factoring can also help pay for some outside marketing expenses to aid in the overall costs.

Cashflow, Factoring, Talentflow are Key to Startups

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An entrepreneur today is educated on the importance of managing cash flow as as their company grows, but few even know what invoice factoring is all about. Plus, and it is a known fact that if and when they run out of money to support this expansion, they can go out of business. However, for a new or start-up business, something called “talent flow” is just as critical. The right talent, or people, include those with a desire to work at a startup, as well as the technical skills.

Recruiting talent at a smaller company goes two ways — the company must prove itself to potential employees as much as job seekers need to prove themselves to the company officers. This tough — especially when the company needs folks immediate.

What’s worse, some businesses simply don’t have the resources to bring on human resources professionals. Getting creative in the hiring department might mean factoring some invoices in order to find the right talent efficiently without spending a lot.

Shoot a video of the office environment, other workers, the look and feel of the office, and someone describing the job roles and responsibilities. Then post the video online at Craig’s List, or in local classified websites, or career sites such as Monster.

Invoice Factoring to the Rescue: SMEs Who Fail to Pay a Loan

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During the last few years, many small to medium-sized businesses fell into negative cash flow situations, and were unable to pay on a small business loan. Have you ever wondered exactly what happens if an SME fails to pay their monthly loan payment? It is not pretty. In essence, you could be sued by the bank that provided your business loan if you do not pay even if the business goes bankrupt. Why? Because banks usually sue the small business in order to recoup lost loan amounts, especially when it helps them with equity. And remember they are also trying to get ahead in the creditor line of the bankruptcy proceedings when they sue quickly.

But what if your payment is just late for 30 days? The answer to this question depends completely on the source and terms of your loan. Most lenders wish to stop the rising small business default rates. The U.S. Small Business Association’s (SBA) small business loan had a default rate of almost 15 percent of its outstanding loan guarantees by mid-year 2010. This means that if you have a loan backed by the SBA, your lender might seek the guaranteed part of the loan due to concerns of the default rates which are increasing.

If your loan was guaranteed, your obligated 100 percent to pay it back. And this means you will need to develop a financial plan if you foresee not able to pay your loan. Simply develop a plan based on financing and cost-savings options before you actually speak to a lender.

Another way to go is to think about alternative financing options such as invoice factoring. If you have a business that has receivables, it very well may be that you are sitting on your next loan payment. Factoring is an option for to increase the cash flow of your business today. Keep in mind, your bank will be forced to sue if you don’t eventually make payment arrangements. Lenders prefer to take a settlement or even renegotiate a loan. It is important to keep your financial promises. If you cannot, then contact the bank early and tell them you are in the process of looking into invoice factoring to vash in early on some of your company’s invoices from customers for the loan payment.

Bankruptcy should be your very last option. Instead, be sure to seriously look into using accounts receivable factoring instead … it might be the only way to save your business pretty quickly, so that you can then properly restructure any type of debt payments.

Slow Economy Slows Health Spending over Last Three Years

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According to some data released by federal analysts, as to be expected, the rate of the growth in U.S. health spending has been falling over the past eight years, and reached a historic low of 3.9% as the weak economy prompted more and more people to cut back on their medical care. For small to medium-sized businesses (SMEs) health care has been an issue for quite some time.

Interestingly, one group of SMEs have been using an age-old tactic known as factoring to continue their health care coverage during months when business was slow due to vendors paying late.

Analysts have attributed the slowdown to the economic downturn for the last three years. Although statistics are not yet in for last year, the Centers for Medicare and Medicaid Services said health expenditures in the U.S. totaled $2.6 trillion in the year 2010. That is about $8,402 per person. The growth was the smallest increase on record at only 3.8 percent in 2009, yet it was similar to that in the overall economy. Overall health spending accounted for around 17.9 percent of gross domestic product in 2010, which is exactly the same as the previous year.

In 2012 think seriously about invoice factoring from a reputable company like the Interface Financial Group (IFG) to assist in your extra financial burdens.