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Article Check - Factoring Financing: How to Grow Your Business Without Debt or Loans
Managing change in our lives and in our businesses is vital in the modern environments in which we live. There is much to learn from that old and cantankerous Dickens character, Mr Ebenezer Scrooge himself...The truth is, although he had an outward persona of grumpiness, deep down somewhere there was a man with a heart, seeing his life drift away from him.We all do this to some extent - to hide away our true selves behind a veil of something we are more comfortable with. Sometimes we appear intimidating, cruel or even harsh. We avoid the intimacy we really seek, because of past experiences.For old Scrooge, this became clear with the visit of the three ghosts, as well as what I find the most scary of all, the visit of Jacob Marley, his former partner, who seemed doomed to be stuck in that no-mans-land world between life and the ultimate infinity.So, what happ
Most of BSP Inc.’s customers are large companies with a good reputation for always paying their invoices. However they always take between 30 to 45 days to pay them. BSP Inc., however, needs to pay their employees every two weeks and their vendors every four weeks. This discrepancy between the time that customers pay their bills and the time BSP Inc. needs to pay their employees and vendors has created cash flow problems in the past.
Furthermore, these cash flow problems have already caused Jane to delay payroll twice this year and have placed her trade (vendor) credit in jeopardy multiple times. This has also caused her to pass on a number of significant business o
As Branding and marketing professionals, we have an in-depth understanding of the importance of a marketing plan. However, not everyone recognizes the benefits of investing in a strategic marketing plan prior to launching strategies and tactics that seem intuitive at the time. The following few paragraphs attempt to impart our understanding of a well-written plan's importance by first defining some of key elements of the role of marketing in most organizations.Defines Focus: Your strategic marketing plan gives the company, and everyone in it, a benchmark to measure all marketing activities against. A well-developed strategic marketing plan not only gives you a structured strategic and tactical outline, but also defines your target audience, messages, goals, and objectives, in a way that allows flexibility. A structured plan provides a benchmark to measure all marketing activities and ensure that the investment they requ
Accounts receivable financing, also known as invoice factoring, is a powerful financial tool that has fueled the growth and success of a number of companies. Factoring enables companies to capitalize on their unpaid receivables by selling them to a factoring company for immediate payment. With factoring, companies immediately get paid for their invoiced work from the factoring finance company, while the factoring company waits to be paid by the customers. Factoring strengthens a business’ cash position by shortening the time to get invoices paid to 48 hours and providing the needed funds to meet current expenses and target new opportunities.
Invoice Factoring Benefits
As opposed to loans and lines of credit that require that the client have tangible assets and strong financials, factoring relies more heavily on the financial strength of the clients’ customer. This is a critical feature, since many new and small businesses do not meet the financial criteria of traditional lending institutions. However, many small businesses have a roster of financially strong customers that can be leveraged. Factoring empowers businesses to capitalize on their customer list, and provides them with a tool to transform outstanding receivables into immediate cash, without generating debt. Since Factoring is not a loan, it is an ideal financial product for the following:
o New and emerging businesses including small and home businesses, consultants and solo-preneurs.
o Businesses with financially strong customers
o Businesses that are preparing to grow significantly
o Business with intangible assets (e.g. consultants)
o Businesses that do not want to take a loan
An additional benefit of factoring is that the factor usually assumes part of the clients’ credit risk for the customer. This means that if the customer becomes financially insolvent due to bankruptcy and does not pay the invoice, the factor will assume the loss. This is a critical service for small companies who may not be able to afford the bankruptcy of a customer.
Costs
The costs of a factoring transaction – also known as the discount - vary based on a number of variables such as the financial strength of the customer and the amount being factored. Generally, the discount is a percentage of the invoice’s face value that increases with time until the invoice gets paid. Small businesses, those that have between $20,000 and $300,000 in yearly revenues, can expect to pay a discount rate of about 2% for every ten (10) days that the invoice remains unpaid. Businesses with factorable revenues in excess of $300,000 can expect lower discount rates.
Factoring at Work: Business Services and Products, Inc. Case Study
Business Services and Products, Inc. (BSP, Inc.) is a small fictional company, which provides business consulting and equipment to local companies. It has $300,000 of annual revenues and during the past year BSP Inc. has enjoyed significant sales growth. Although most business owners would be very happy to manage such a company, Jane Sullivan, BSP Inc’s president, is very worried about her company’s financial position.
Most of BSP Inc.’s customers are large companies with a good reputation for always paying their invoices. However they always take between 30 to 45 days to pay them. BSP Inc., however, needs to pay their employees every two weeks and their vendors every four weeks. This discrepancy between the time that customers pay their bills and the time BSP Inc. needs to pay their employees and vendors has created cash flow problems in the past.
Furthermore, these cash flow problems have already caused Jane to delay payroll twice this year and have placed her trade (vendor) credit in jeopardy multiple times. This has also caused her to pass on a number of significant business op
Building up the list of incoming links to your site can dramatically improve your search engine rankings. SEO (search engine optimization) experts agree that these links weigh heavily on determining Google rankings. But how do you increase the number of sites linking to you? Here’s 10 easy tips:1) Ask for them. Find web sites that have some kind of mutual connection to your’s and then send the webmaster a request asking for reciprocal linking.2) Blog comments. Leave comments on blogs, especially those which have a similar target audience. Make sure your comment is relevant to their content and NOT just spam.3) Forum signatures. Participate in forums and have a link to your web site embedded in your signature. Find forums that are in line with your market and make sure that you are contributing to the discussion, not simply posting for the sake of getting a link.4) Article submissions. P
o New and emerging businesses including small and home businesses, consultants and solo-preneurs.
o Businesses with financially strong customers
o Businesses that are preparing to grow significantly
o Business with intangible assets (e.g. consultants)
o Businesses that do not want to take a loan
An additional benefit of factoring is that the factor usually assumes part of the clients’ credit risk for the customer. This means that if the customer becomes financially insolvent due to bankruptcy and does not pay the invoice, the factor will assume the loss. This is a critical service for small companies who may not be able to afford the bankruptcy of a customer.
Costs
The costs of a factoring transaction – also known as the discount - vary based on a number of variables such as the financial strength of the customer and the amount being factored. Generally, the discount is a percentage of the invoice’s face value that increases with time until the invoice gets paid. Small businesses, those that have between $20,000 and $300,000 in yearly revenues, can expect to pay a discount rate of about 2% for every ten (10) days that the invoice remains unpaid. Businesses with factorable revenues in excess of $300,000 can expect lower discount rates.
Factoring at Work: Business Services and Products, Inc. Case Study
Business Services and Products, Inc. (BSP, Inc.) is a small fictional company, which provides business consulting and equipment to local companies. It has $300,000 of annual revenues and during the past year BSP Inc. has enjoyed significant sales growth. Although most business owners would be very happy to manage such a company, Jane Sullivan, BSP Inc’s president, is very worried about her company’s financial position.
Most of BSP Inc.’s customers are large companies with a good reputation for always paying their invoices. However they always take between 30 to 45 days to pay them. BSP Inc., however, needs to pay their employees every two weeks and their vendors every four weeks. This discrepancy between the time that customers pay their bills and the time BSP Inc. needs to pay their employees and vendors has created cash flow problems in the past.
Furthermore, these cash flow problems have already caused Jane to delay payroll twice this year and have placed her trade (vendor) credit in jeopardy multiple times. This has also caused her to pass on a number of significant business o
With the inherent stresses that come with running a business, there is often little time to digest the complex intricacies of security software. According to recent studies many business owners eschew the notion that their digital assets may be vulnerable to attack. Although an attack or infection can be potentially catastrophic, many believe damage caused by viruses, hackers and worms only happen to others. They consider their data to be of little use or value outside of their organization. Even executives that acknowledge the existence of these hazards seldom have the time or the budget for security audits and/or an overhaul of their workflow procedures to comply with best security practices.Below are a few simple tools, tips and guidelines that can help your business take a proactive approach to data security. By implementing the following, your business data will be less susceptible to financial damage caused by acc
o Businesses that are preparing to grow significantly
o Business with intangible assets (e.g. consultants)
o Businesses that do not want to take a loan
An additional benefit of factoring is that the factor usually assumes part of the clients’ credit risk for the customer. This means that if the customer becomes financially insolvent due to bankruptcy and does not pay the invoice, the factor will assume the loss. This is a critical service for small companies who may not be able to afford the bankruptcy of a customer.
Costs
The costs of a factoring transaction – also known as the discount - vary based on a number of variables such as the financial strength of the customer and the amount being factored. Generally, the discount is a percentage of the invoice’s face value that increases with time until the invoice gets paid. Small businesses, those that have between $20,000 and $300,000 in yearly revenues, can expect to pay a discount rate of about 2% for every ten (10) days that the invoice remains unpaid. Businesses with factorable revenues in excess of $300,000 can expect lower discount rates.
Factoring at Work: Business Services and Products, Inc. Case Study
Business Services and Products, Inc. (BSP, Inc.) is a small fictional company, which provides business consulting and equipment to local companies. It has $300,000 of annual revenues and during the past year BSP Inc. has enjoyed significant sales growth. Although most business owners would be very happy to manage such a company, Jane Sullivan, BSP Inc’s president, is very worried about her company’s financial position.
Most of BSP Inc.’s customers are large companies with a good reputation for always paying their invoices. However they always take between 30 to 45 days to pay them. BSP Inc., however, needs to pay their employees every two weeks and their vendors every four weeks. This discrepancy between the time that customers pay their bills and the time BSP Inc. needs to pay their employees and vendors has created cash flow problems in the past.
Furthermore, these cash flow problems have already caused Jane to delay payroll twice this year and have placed her trade (vendor) credit in jeopardy multiple times. This has also caused her to pass on a number of significant business o
Recently, in cotton and cotton industries, the highest frequency of appearance may be the US Cotton Association International and the African cotton.When people open textile media, in cotton and cotton textile sectors, they often see the coverage of US cotton and African cotton. People are concerned largely about the recent activities of the US Cotton Association International in China, while African cotton comes into people's vision due to the grand opening of the China-Africa Cooperation Forum.When these excitements gradually retreated into quietness, people should embark on some consideration.US Cotton Marketing InspirationUS cotton merchants and US Cotton Association International have taken great pains to explore Chinese market, as China is the largest market to US cotton.US cotton has its advantage in price and quality, so it has won the favor of many textile enterprises.However,
Factoring at Work: Business Services and Products, Inc. Case Study
Business Services and Products, Inc. (BSP, Inc.) is a small fictional company, which provides business consulting and equipment to local companies. It has $300,000 of annual revenues and during the past year BSP Inc. has enjoyed significant sales growth. Although most business owners would be very happy to manage such a company, Jane Sullivan, BSP Inc’s president, is very worried about her company’s financial position.
Most of BSP Inc.’s customers are large companies with a good reputation for always paying their invoices. However they always take between 30 to 45 days to pay them. BSP Inc., however, needs to pay their employees every two weeks and their vendors every four weeks. This discrepancy between the time that customers pay their bills and the time BSP Inc. needs to pay their employees and vendors has created cash flow problems in the past.
Furthermore, these cash flow problems have already caused Jane to delay payroll twice this year and have placed her trade (vendor) credit in jeopardy multiple times. This has also caused her to pass on a number of significant business o
There is no more solid a foundation for your career in the world of nursing professionals than getting the best nursing education you possibly can. Whether your plans are to enter into a serious nursing career in a health institution, or to explore other fields such as mentoring undergraduates and fellow nursing experts, getting a quality nursing education will prove to be the single most valuable tool in helping you to reach your career goals.Formal Advanced and Continuing EducationMany institutions of higher learning include with their course offerings programs for aspiring nurses. For those who wish to enter into this wonderful field of health science, the opportunity to do so can be easily found. When considering nursing as a career, keep in mind the fact that nursing is becoming highly specialized. This offers the added advantage of allowing nursing students to not only learn nursing in a general sense,
Most of BSP Inc.’s customers are large companies with a good reputation for always paying their invoices. However they always take between 30 to 45 days to pay them. BSP Inc., however, needs to pay their employees every two weeks and their vendors every four weeks. This discrepancy between the time that customers pay their bills and the time BSP Inc. needs to pay their employees and vendors has created cash flow problems in the past.
Furthermore, these cash flow problems have already caused Jane to delay payroll twice this year and have placed her trade (vendor) credit in jeopardy multiple times. This has also caused her to pass on a number of significant business opportunities because she was unsure of the company’s financial ability to hire and pay for additional staffers. Unfortunately, BSP Inc. did not have a large enough financial cushion in the bank to afford paying employees while waiting for 45 days new clients to pay their invoices.
The following table provides an overview of BSP, Inc’s current financial position.
Business Services and Products, Inc (without financing)
Yearly sales:................................$300,000
Lost new sales opportunities:..........Unknown
Total Sales:.................................$300,000
Variable Costs(60% of Sales):.........$180,000
Fixed Costs(Rent, phones, etc):........$20,000
Total Costs:.................................$200,000
Profit (Sales – Costs):....................$100,000
Although the company’s prospects appear great, Jane may have to stall her company’s growth until she builds a large enough cash cushion at the bank to finance her company’s growth.
After careful consideration, Jane decided that a factoring line of working capital could help strengthen her company’s financial position. Furthermore, factoring her invoices would enable BSP Inc. to take on new customers and continue growing, knowing that she could capitalize on her slow paying customers. BSP Inc.’s financing agreement will provide the company with an advance of 70% of her invoiced services. This means that the company can get 70% of the face value of the factored invoices within 24 to 48 hours of submitting them to the factor. The remaining 30% of the funds, less the factoring fees, will be quickly rebated as soon as the customer pays their invoice.
This line of working capital strengthened the company’s financial position and bank account, enabling Jane to pay for new employees to service new contracts. Jane also decided to use the extra capital to pay her vendors early, obtaining quick payment discounts and helping to reduce the cost of factoring.
BSP Inc. customers pay their invoices within 30 days of receipt. The discount (factoring fee) for these invoices is 6%. Every time an invoice is paid, the factor rebates BSP Inc. the remaining 30% that was not advanced less the factoring fee. This means that once the transaction is completed, the factor rebates 24% (30% - 6%) to BSP Inc.
Thanks to the factoring line of working capital, Jane was also to secure an additional $120,000 worth of business, bringing her annual revenues to $420,000. The following table shows BSP Inc.’s financial position a year after using factoring.
Business Services and Products (with factoring)
Existing Sales:...................................$300,000
New Sales:.......................................$120,000 (factored)
Total Sales:......................................$420,000
Variable Costs (60% of Sales):.............$252,000
Fixed Costs (Rent, phones, etc.):...........$20,000
Cost of Factoring (6% of $120,000):.........$7,200
Total Costs:......................................$279,200
Net Profit (Sales – Costs):...
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