Best Loan-Related Articles You Can Ever Find Online

Wisconsin Trucking Company Lowers Factoring Fees With Simple Switch

Aug 16, 2009 Lines Of Credit

Perhaps one of the few good things that have come from our recession is the dropping of lending fees. The cost of borrowing has gone down for many Commercial Lenders and a great place for you to trim some fat off your Profit and Loss statement is in reducing your Working Capital Lending costs.

It does not matter if you are currently using Invoice Factoring now or you have a LOC with your bank. Rates have been dropping everywhere with the increased competition for your business. So should your company be looking at options that can reduce your Working Capital fees?

May Financial Lenders will have fees for exiting the agreement early. With proper analysis, you can determine if it is worth the switch. Many times the long term gains far outweigh the short term costs. Plus, many lenders will cover these costs for you anyways, so it is a win-win situation.

Where to look for the Best Accounts Receivable Factoring Price? The internet. This is the best place to find your next Business Lender.

It can be quite a bit of work however in looking for a new lender. With the applications that will need to be completed and followed up on, many companies prefer to use a Commercial Finance Broker to save them time. And best of all, the broker will not normally cost you anything as they are paid by the lender.

Your best bet is to not deal directly with Factoring lenders for the simple reason that unless you are up on who does what type of Factoring and which ones they specialize in, you are setting yourself up for many applications and several hours going through the various lenders out there. The Professional Finance Broker will know which Funder will be best for your company. To find these Commercial Finance Brokers it is as easy as going to your computer and search ?AR Factor Quote? in Google and you will find several great sources.

Also with all the banks tightening the underwriting guidelines for traditional Lines of Credit, AR Financing is becoming the way many businesses manage their Operating Line of Credit. Even the US Government is now Factoring the Invoices of the Auto suppliers in Michigan now. A true sign that a Cash Flow Solution is better than a loan.

Tags: A R Factoring, Accounts Receivable Factoring, Accounts Receivable Financing, Commercial Factoring, Commercial Line of Credit, Discounting Factoring, Invoice Factoring, Line of Credit, Lines Of Credit, Receivable Financing, Small Business Factoring, small business financing

If Your Company Needs Cashflow, Consider A Factoring Loan

Aug 6, 2009 Lines Of Credit

Just the other day I had the owner of a business ask me about a Factoring Loan. I do not hear Accounts Receivable Factoring referred to like this very often, but from time to time yes, I hear this term as well as several other names for it.

Technically, Factoring is not a real loan; it is an advance on money that your company is already owned. While the accounting guidelines can be argued one way or another, the fact is, when a Factoring Loan is done, the Receivables are verified with the party that owes the money and further verifies that they are going to pay the invoices.

One could argue the accounting terms but the fact of the matter is that the money will be received from a 3rd party and the funds are an advance from money they are due.

Some of the other terms Accounts Receivable Factoring is referred to as are Invoice Factoring, Receivables Factoring or Invoice Discounting amount many others. Likely the most common term to substitute for Accounts Receivable Factoring is Accounts Receivable Financing.

On big plus for the Factoring Industry is the fact that the US Government has decided that it is going to start Factoring the Invoices issued to the Auto maker by the Automotive Suppliers in Detroit Michigan. Not that Invoice Discounting was an unheard of financing method before, but now that President Obama is now endorsing it, many companies that may have passed on this finance opportunity will now take advantage of it.

It has been a long hard road for many manufacturing companies over the last few years and the cash flow which is available to them to make payroll, pay suppliers and cover other operating expenses does not come too soon.

It has been painful to see the number of businesses that have fallen over the last few years due to the various economic issues we have been facing.

You can call it a Factor Loan, Invoice Discounting, Invoice Factoring what ever you like. It is a method to help with you cashflow. Be sure to speak with a Commercial Lending Broker in regards to your Business Financing needs as they have the expertise to know where to go with your application to get you the best deal in the best time frame and it will not cost you a thing for the Broker as they are generally paid by the lender so put one to work for you it truly is the best way to find the best program for you.

Tags: A R Factoring, Accounts Receivable Factoring, Accounts Receivable Financing, Commercial Factoring, Commercial Liine of Credit, Discounting Factoring, Invoice Factoring, Line of Credit, Lines Of Credit, Receivable Financing, Small Business Factoring

Why Companies Factor? Real Life Explanation

Jul 28, 2009 Lines Of Credit

Regardless of the type of company, the end result of rapid growth is often the same: insufficient cash flow. For example, when a manufacturing company is expanding rapidly, orders are coming in almost faster than they can be filled.

The product must be brought in and shipped out to their customer as requested but their collections from Receivables is from 2 months ago significantly lower than what is going out. This same situation will happen with a placement or service type company where the staffs that they hired to perform the tasks get paid weekly, but the collection cycle from their customer is net 30, which most often is actually collected around day 45. The employer must be able to cover these costs until they have received payment from their customer.

There are many solutions for companies when they are in a cash flow restriction which range from Commercial Mortgage backed equity lines to sale lease-back of equipment to Accounts Receivable Factoring. Due to the current economic situation, banks have become more conservative than ever and if you are looking for financing with them there had better be a really strong. Other alternatives are equity financing or Angel Investors which often result in a loss of ownership to the investor ” this type of financing is not for everyone.

The most growth of any type of financing right now geared towards the assistance with cash flow is the selling of a company’s Accounts Receivables which is called Accounts Receivable Factoring. Regardless of the fact that AR Factoring has been around for literally hundreds of year, it is still not a wide spread concept and even many bankers have not even heard of the concept. This type of funding generally will fund with 24 to 48 hours after an invoice is raised to a creditworthy customer regardless of the fact that the Invoice Factoring Company will have to wait up to 60 or 90 days to get paid.

The Accounts Receivable Financing Company will generally remit the initial amount up to 90% of the Invoice face value and then submit the balance of the reserve once the customer pays the invoice, less the small service fee for use of funds. The money that is advanced can be used for any purpose the company sees fit ” payroll, inventory, fuel, or maintenance what ever they need the money for.

There are many alternatives to bank financing today, do your homework in finding the best option for your situation and keep an open mind. Banks are not always the best answer and they certainly are not the only answer. Financial brokers today have a vast array of products to fit most circumstances and the best ones are up to date with the latest trends and options so they can place your financing with the best product on the market. Most Commercial Finance Brokers have access to funds for Accounts Receivable Financing, Export Factoring, Purchase Order Finance, Commercial Equipment Loans and Commercial Real Estate Mortgages.

Tags: Accounts Receivable Factoring, Accounts Receivable Financing, AR Factoring, Discounting Factoring, Export Factoring, Export Finance, Export Financing, Export Receivable Financing, Invoice Factoring, Lines Of Credit, Operating Line of Credit, Receivables Financing

Should You be using Accounts Receivable Factoring?

Jul 26, 2009 Lines Of Credit

You do not have to be in business long to learn how much of a struggle it can be to get a Commercial Line of Credit from a bank to help grow your business or cover shortages of cash flow. Many times the owners of these companies will find an alternative to the bank loan that they have been chasing. This alternative is called Accounts Receivable Factoring and it is getting more popular everyday, especially with the banking industry clamping down on their requirements making it even harder to get a Commercial Loan.

Accounts Receivable Factoring: What it is

Accounts Receivable Financing is the practice of selling your outstanding invoices or at a discount to finance or factoring company. The Accounts Receivable Factoring Company will then assume the risk on the Receivables in exchange for a cash advance to your company. The amount of cash that will be advanced is directly proportionate to the age of the invoices. The older the invoice is the less it is worth in the Factoring Companies eyes. In fact, if you have invoices over 90 old, the AR Factoring Company will generally not wish to purchase it. In your quest for Accounts Receivable Financing options, be aware the loan classification may be exchanged for Accounts Receivable Factoring, Invoice Factoring or Accounts Receivable Funding.

So Why would You Want to Factor Your Invoices?

Selling your Collections will Allow you to Sell more Goods: When you are not caught up in the day to day efforts of collection of your accounts you can focus more on the promotion of your company not to mention have use of the funds that would otherwise be tied up for weeks.

Wouldnt you rather have the Cash in your hand rather than sitting on the books? Very few companies like to carry Accounts Receivable, but it is a requirement unless you enter into a Factoring arrangement. Seeing that you have the majority of your money tied up in your books where you can see it, but not touch it can be very frustrating, especially when you have been uses for that cash.

Quick Financing: Invoice Factoring is one of the quickest ways to get a cash injection into your company. Most of the application process can be completed via the internet, telephone and fax.

When you find yourself entertaining the idea of an AR Factoring arrangement, be sure to calculate in the costs of this type of financing. While the cash injection is needed, you need to make sure the costs will not be prohibitive. Some industries work on an extremely tight margin today and the 1.5% to 5% discount to your invoicing may eat up too much of your profit so be aware of your profit margins and your costs.

Weigh your advantages with the drawbacks prior to beginning to work with an AR Factor. The reputable Factor Companies will allow you full disclosure of all costs and fees in relation to the facility. Be sure to consider all points.

Is the financing really needed? Is it necessary to your company to have it to operate or to gain a competitive advantage?

How does the Accounts Receivable Factoring fit in with your Business Plan in terms of process and margins? [Your Business Plan is an important element to your business, be sure that you have one.]

Are you ready for expansion? Expanding before you are ready can be a mistake.

Have you exhausted all other options for financing your business so that you are making an educated decision

What kind of shape is your industry in? Would now be a good time to take on additional financing?

Remember to review all documentation prior to entering into your Factoring agreement. The Factoring industry is not as well regulated as the banking industry so there is much room for unfavorable terms that may not be in your best interest. Though this is the case, having an Accounts Receivable Factoring arrangement may very well be the best thing you have ever done for your company and keep a health cash flow.

Be sure to speak with a Commercial Finance Broker as they will be in the know in regards to what programs are available to you and what will work the best, including bank programs. Just because the bank will not give you financing does not mean you can not get financing. Commercial Brokers have access to lenders for Accounts Receivable Factoring, Export Factoring, Purchase Order Finance and much more.

Tags: Accounts Receivable Factoring, Accounts Receivable Financing, AR Factoring, Discounting Factoring, Export Factoring, Export Finance, Export Financing, Export Receivable Financing, Invoice Factoring, Invoice Factoring Company, Lines Of Credit, Receivables Financing

The Ripple Effect Of A R Factoring

Jun 19, 2009 Lines Of Credit

Markets nowadays are highly competitive. For this reason, companies need to be in state of constant change and seeking to minimize their costs and increase working capital. Many companies are using Accounts Receivable factoring to do so.

AR factoring has a great impact in their environment. Not only they allow your business to receive a percentage for invoices that would otherwise be uncollectible, but are also sustainable to provide jobs. The State can also see the benefits of factoring when bills are paid by the customers.

What documents can you use on AR Factoring? Here you can only use documents related to accounts receivables and that prove how much your customers owe you and on concept of what. Consequently, you cannot use AR Factoring on mortgage loans.

The first thing to do is to provide the AR Factoring firm with all information about your customers, invoices and other documentation that shows the firm how much they owe you. After a screening process the factor will inform you what items they can collect and give you a percentage of those funds.

Following to this, the AR factoring firm and your company will put all terms and conditions in writing and both parties will sign a contract. The AR factoring company will use the information you provide on your customers to collect the money they owe you and reduce your numbers in the accounts receivable lines in the balance sheet.

Factoring has to be performed by either an AR factoring firm, or financial institution. Through factoring, you will be relieved of the collection process and will have someone do it for you. The factoring company will be in contact with your customers and you with them.

Companies get great benefits from AR factoring. The main one is the cash flow. But you company can also spare the creation of a collection department if it does not already have one. When hiring factoring services you no longer need to have such department.

AR factoring allows for companies to go on business and hire people in order to collect other company’s accounts receivables. These companies will provide you a service and your company will in exchange pay a percentage.

It is possible that each state also sees the benefits of factoring because more business stay open, more business open, and more people pay their state taxes through the bills.

Tags: A R Factoring, Accounts Receivable Factoring, Accounts Receivable Financing, AR Factoring, Commercial Factoring, Commercial Line of Credit, Discounting Factoring, Invoice Factoring, Line of Credit, Lines Of Credit, Receivable Financing, Small Business Factoring

What is Small Business Factoring?

May 26, 2009 Lines Of Credit

Small Business Factoring is selling those unpaid invoices reflected in your balance sheet as accounts receivable to a company that will collect them for you. The Factoring companies will do all in their power to collect those funds for your company and in return they charge a fee for the services. Most of them request 70 to 90% of the payment in advance and the rest at the end of the collection process. The fees these companies charge are between 2% and 5% of the total debt to be collected.

Small Business Factoring : when and why do we use it?

That is easy to answer: Cash Flow. 80% of the companies go out of business because they do not have enough working capital for their activities. When companies that in spite of their rapid growth fail to produce enough cash for payroll and liabilities, they quickly see themselves in trouble.

Small Business Factoring allows a company to sell their invoices to a third party, at a discounted price in exchange for an amount of cash in advance before the bill expires. Besides the benefit of having cash available earlier than expected to cover operating expenses and growth, factoring does not usually affect assets outside the company and involves the payment of a debt at some future time or on a certain date, and frees the internal resources normally devoted to keeping track of accounts receivable collections and performance.

If your company is expanding quickly, then Small Business Factoring is right for you. If you have a high number of accounts receivable in your balance sheet, then Factoring is right for you.

Naturally, Small Business Factoring has a cost. Nevertheless, you can add the total cost or a portion of it to your cost of sales due to the fact that it is the price of having increased cash flow available for your operations. Many companies increase their prices to be able to obtain discounts from their suppliers and have greater purchase power that results in more working capital.

The following factors are imperative in the calculation of factoring fees:

Risk: credit worthiness of the debtors (customers).

Administration costs. It is more attractive for a factoring company to manage a portfolio of large invoices rather than many small ones.

Time of collection. The longer it the factoring company to collect your money, the higher their fee.

Volume: in short it means the higher the volume, the lower the fees.

Tags: A R Factoring, Accounts Receivable Factoring, Accounts Receivable Financing, AR Factoring, Commercial Factoring, Commercial Line of Credit, Discounting Factoring, Invoice Factoring, Line of Credit, Lines Of Credit, Receivable Financing, Small Business Factoring

Let’s take a Look at Small Business Factoring

May 25, 2009 Lines Of Credit

Every company has people that owe you money and those that owe you money. These are broken down in your Business financial statements as assets and liabilities. People or companies that owe you money are referred to as Accounts Receivable.

When you send out an Invoice to a customer for money owed to you, the amount is recorded as an Accounts Receivable until the amount is paid to you. Regardless of the fact that this receivable is money owed to you and is an asset, with traditional lending, you can not use it as collateral however Small Business Factoring does just this.

There are many different terms used as synonyms for Small Business Factoring such as Invoice Discounting, Invoice Factoring and Accounts Receivable Factoring. With this type of Commercial Lending, a company would sell or offer as collateral their outstanding Invoices to a Commercial Funder who would advance them a percentage of the face value of the Invoices. The advance rate will vary from Commercial Funder to Commercial Funder, but an average will be 85% of the Invoice face value.

Once the formal documents to set up the Small Business Factoring service, the Commercial Lender will then have first rights to your Accounts Receivable as this is their security for the funds advanced. This is really a win-win situation as you get the Working Capital you need for your business and they make a profit for their efforts.

There are several advantages to Small Business Factoring such as:

1. Cashflow Increased: With an available Cashflow, your company will be able to pay bills and meet payroll without having to worry about having sufficient funds.

2. Reliable availability of cash: Now you will not have to wait for 1 to 3 months to get the funds you need to operate. Now you will receive your money within 2 days of delivery of your goods.

3. Small Business Factoring in less reporting and fewer headaches than dealing with bank financing: You will not be required to do monthly reports to your bank to show why they should keep your Line of Credit in place.

4 Less strings to deal with. Again, as we all know, banks will tie up everything in value when they lend you a little money. Small Business Factoring companies will have far less rules and covenants to deal with in general.

To get more information on Small Business Factoring for your business, speak to your Commercial Finance Broker as they will have the resources for the Best Factoring Company for your business.

Tags: A R Factoring, Accounts Receivable Factoring, Accounts Receivable Financing, AR Factoring, Commercial Factoring, Commercial Line of Credit, Discounting Factoring, Invoice Factoring, Line of Credit, Lines Of Credit, Receivable Financing, Small Business Factoring

Discount Factoring. An injection of cash to your company.

May 23, 2009 Lines Of Credit

Buried under piles of accounts receivable, employers are desperate to pursue their debtors seeking a way to obtain liquidity. But unsafe for some and uncertain for others, Discount Factoring or Invoice Discounting will give your company a cash injection and it could become an alternative that would help heal the depressed financial statements and provide greater liquidity and dynamism to businesses.

In the last ten years, the use of Discount Factoring has become more and more popular around the world. Some banks have opened their own Factoring Departments. Experts say that one of the greatest advantages of Discount Factoring is expertise. The asset of these companies is the expertise they have in the collection debts. By using factoring, you will let someone chase after your debtors while you invest your time and your money in improving your business.

Factoring also goes by the name of Discount Factoring and it allows you or your company to sell the accounts receivable at a discount to a factoring company. You will need to pay the factor for its services and fill out a few forms. After that, you will get cash in a matter of 2 to 3 days.

Let us talk about the advantages of discount Factoring. The most important one: increased cash flow. This can be especially beneficial when you have a seasonal business. It reduces the need to resort to more loans and even enables you to get discounts and rebates from your suppliers because you are now more able to buy higher quantities of product. You can use Discount Factoring to liberate funding for marketing. It decreases the risk in losses due to high accounts receivable and it reduces the costs in credit collections. Additionally, it adds more formality to the collection process.

Let us see some of the advantages of Discount Factoring? For one, it provides liquidity. It also levels cash flows in case of seasonal sales. It reduces financial leverage allowing discounts and rebates from suppliers for bulk purchases. It is a tool to market products or services. Discount Factoring also fractures the risk of losses on accounts receivable. It reduces the costs in areas of credit and collection. Finally, it turns the collection process into a more formal one.

Improve the financial and monetary position, because it avoids increasing debt liabilities.

Obtain greater discounts from your suppliers due to prompt payments

Better prices and discounts from supplies when paying on time

Provide a flexible funding immediately available and balanced in relation to the volume of sales of the client organization

Have more working capital if your business is seasonal

Ameliorate your productivity by reducing operative costs.

Tags: A R Factoring, Accounts Receivable Factoring, Accounts Receivable Financing, AR Factoring, Commercial Factoring, Commercial Line of Credit, Discounting Factoring, Invoice Factoring, Line of Credit, Lines Of Credit, Receivable Financing, Small Business Factoring