Cash Flow Mistakes and How Single Invoice Finance Can Help

cash flowA company’s cash flow is crucial because it depicts the actual inflow and outflow of cash and is thereby a great indicator of liquidity. Accounting-wise, it’s one that needs to be kept an eye on because sales does not exactly equate to profits or let alone currency. Remember sales on credit? Good thing we have Single Invoice Finance in the form of factoring and discounting.

The financing options have proven to be very useful to help business entities with their liquidity issues as well as to help them raise capital without having to go for a debt. As much as these methods are often used for emergency purposes, they are also a good solution to help ease the pain as resulted by these cash flow mistakes.

  • Lack of an Emergency Fund – Lastly, a cushion or emergency fund should always be present. This emergency cash allocation that is to be used in dire situations such as when liquid funds are not available due to certain factors and scenarios becomes useful as the need arises. This safety net can be a company’s saving grace.
  • Lenient Credit Terms – It is important that you take a good look at the terms and conditions set out to customers who purchase on credit. They need to be strict but reasonable, clear and specific. Moreover, it is a must to assess their credit score before extending the transaction.
  • Long Outstanding Receivables – Accounts receivables are not bad per se but if they become long outstanding then they cease to be quite the promising asset they were supposed to be. Long outstanding accounts mean that they have gone past their maturity. They remained uncollected and therefore useless and illiquid. Overtime they can even be written off as bad debts and therefore losses.
  • Mismanaged Accounting – To better gauge and assess one’s cash flows, proper accounting of all transactions are a requisite. There has to be a system set in place to raise red flags when disadvantageous circumstances arise. Accuracy and timeliness are also crucial here. If records are erroneous or are not recorded and made available in time then all efforts will remain in vain.
  • Overestimated Sales Volume – There is nothing wrong about optimism in business but everything has to be set on a realistic scale. Sales won’t triple in a month by some miracle. If one overestimates and makes use of unrealistic basis then there’s the risk of spending more thinking that demand is on a high.

Single Invoice Finance can do so much as to ease a liquidity and cash flow issue but it’s still best to avoid the aforementioned mistakes at all costs.

The Benefits of an Export Overdraft Arrangement

OverdraftDomestic sales can only do so much. The lure of international trade is real and the reason behind it is obvious, out there in plain sight. Opportunities abound but so do challenges; for instance financial risks, liquidity and collection. Luckily, there’s this thing we call an export overdraft arrangement.

An export overdraft is a type of financing particularly directed at entities that wish to take advantage of the world market without having to undergo the usual repercussions or threats that accompany it.

To export means to abide by international trade protocols and country-specific laws. It requires meticulous documentation, new market penetration, added collection responsibilities and of course the ability to dodge credit, interest rate and foreign currency risks. Let’s not even get started about receivables and cash availability.

But despite such challenges, entrepreneurs still want to do it. The cons may be present but so do the pros and they abound just as much if not more. But a smart business owner will want to mitigate such risks and challenges to the best they can. After all, who wants them tagging along with success? Nobody.

Export overdraft is a method that allows exporters to advance the value of their export sales invoices thus allowing them to receive cash almost immediately without having to wait for maturity. More often than not, receivables will lock up cash for prolonged periods of time preventing their immediate use and at times putting liquidity and solvency at risk. The longer a receivable remains outstanding, the higher the risks of non-collection. Cash sales are still there but majority of importers opt for deferred payments. They prefer to pay only until the goods have arrived to them or until they have been resold.

Because cash is received immediately, there’s less likelihood of losses due to the fluctuation in foreign currencies and delayed or default payments. Moreover, the duties related to collection shall be borne by the export overdraft provider. This includes all administrative duties and paperwork related to the job. Of course, this provides utmost ease for companies not only in terms of time and effort but also resources.

Export overdraft therefore also helps entities focus more on the income generating activities and operations instead of the backend duties. Plus, providers having had experience and expertise will often have a better grasp about a particular country’s culture, language and laws when it comes to invoices, payments and collections.

What You Need to Know About Spot Factoring Companies

spot-factoring-companiesSpot factoring companies are considered saviors for many reasons. They’re busy entities as businesses would often flock to them for help in terms of financing.

As the name suggests, they offer what we call single, selective or spot factoring. A term referred to as the strategic process of obtaining financial resources against individual invoices. It involved the freeing of any locked up cash within a particular trade receivable by enabling companies to receive cash in advance on a single outstanding invoice prior to its maturity and payment collection.

But with all that said, there’s still more to know about this financing medium’s providers. Today is the day we all discover that by reading on below.

  • Spot factoring companies provide their clients their needed resources by financing client invoices as they are generated and as they are needed. It is because the method is flexible and providers allow for liberty, Entities get to choose and handpick which invoice to use. They also get to decide how often the transaction is called for and when it will be used.
  • They’re no loan sharks. In fact, they don’t offer any type of credit. That’s because spot factoring is first and foremost not one. It is not a debt and therefore does not come with the usual strings attached such as but are not limited to simple and/or compounding interests, collaterals and foreclosures.
  • Providers may or may not absorb risks. Depending on the arrangement chosen, entrepreneurs may be able to shake off any risks of bad debts and non-collection. With a “recourse” option, credit protection is waived. Businesses are responsible for buying back the invoices which have not been paid by its customers to the provider upon its maturity. On the other hand, a “ non recourse” option shifts the risk to the spot factoring company who shall bear all losses in the event that the customer to whom the invoice is attached to defaults or delays their payment.
  • They offer onetime deals. Many businesses feel hesitant to work with and tap spot factoring companies for help. They are afraid of getting tied up in lengthy contracts and ongoing commitments which in the long run can be detrimental on their part. The beauty of the method is that it is a onetime transaction, selective and single as its name would hint on.

Finding an Export Funding Institution That’s Right for You

exportfunding1The international scene can be pretty brutal. It’s a beast. With competition at extreme levels on top of all the meticulous documentation, financial risks and other challenges, it can be too overwhelming for business owners. But why do many still want to export? Simple. The costs may be high and tasks aplenty but the opportunities are bigger than the two combined. One of the means by which companies get to minimize if not eliminate scrupulous documentation and threats is by virtue of what we call an export funding.

Export funding involves the use of a financing institution, who in exchange for the right to collect against export sales invoices shall provide the company with an advance of their value. In other words, cash shall be received before the invoice matures and prior to the customer sending in payment. Moreover, the burden of collection and documentation shall be shifted to them.

But even such a tried and tested method can’t be deemed bullet proof especially if companies fail to contact and partner up with the right provider or financing institution. That said here are three very important points to remember when finding an export funding institution that’s right for you and your business.

  1. Prepare ahead of time. This involves having to carefully assess your needs. At the same time, preparation includes research. Lots of it. The internet is a good place to start. Most if not all established companies have their own websites where they provide a list of their services as well as their terms and rates. Read about feedbacks and reviews from past and present customers too. That should give you a very good idea about the institution you might be working with in the future.
  2. Be accustomed to their processes. As you sell the right to collect against export invoices, you give them the right to demand payment from your customers. You allow them into your business at one point. Do their corporate values and procedures align with yours?
  3. Find out if they’re experts in your industry. Each company falls under a specific category or line of industry. It would be best to work with an export funding institution that’s not only seasoned but also has adequate experience when it comes to handling invoices of organizations like yours. Getting a provider that has experience and expertise in your line of business will make it easier for both parties to agree upon terms, discuss related topics and other similar concerns.

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Why Single Invoice Finance is Value for Your Money

Single Invoice Finance has proved to be one of the most effective means by which businesses get to derive cash without having to suffer the hefty consequences that traditional credit brings. How so? That’s what you’re going to find out today.

Having two major options under its belt, Single Invoice Finance can either be int eh form of factoring or discounting.

In factoring, businesses sell the right to collect against a particular receivable to the provider who in turn provides an advance equivalent to at least 80% of its total value. The transaction shifts the burden of collection from the company to the financing institution. The former then uses the cash as it sees fit. The latter on the other hand waits until maturity and collects from the owing customer. Upon completion, the remaining balance less the fees shall be forwarded.

In discounting, businesses use such invoice as security in exchange for an advance received of its value which it can use as it deems proper. The burden of collection remains with the company. Upon maturity and once collection is complete, the entity is bound by terms to repay the financial institution of the advance received plus fees.

Although slightly different, both factoring and discounting provides the same benefits as follows.

value for moneyFor one, they are easier to process. With lesser requirements and the creditworthiness of the customer considered (not the company’s), the application process down to the approval and the cash release is relatively fast. Some financers can even process this in a matter of twenty four hours.

Second, there is only one invoice to be used. Otherwise known as single or selective invoice financing, it is a onetime transaction. There are no contracts involved and the fees shall only apply to one. The entity shall also have the complete control and can choose which invoice to use. How often the service is to be had and when shall also rest in their shoulders.

Third, it’s a good way to inject cash into the system. Because it’s fast, it is a tried and tested method that helps a dwindling cash flow and helps strengthen working capital. It’s also one way to hasten collection.

Lastly, Single Invoice Finance is no debt. It’s not a loan or a credit or a liability. Therefore, it doesn’t have the strings attached to one such as interests and penalties. It is an asset transaction and is reflected in the books as such.

How to Plan Your Export Funding

export fundingExport funding has become one of the most widespread financing methods that aided a great number of businesses in putting themselves in the realm of international trade. It is a tried and tested tool that delivers the benefits of foreign trading such as growth and market expansion without the often prickly threats of financial risks (e.g. currency, interest rate and credit risks), strict legislations, scrupulous documentation requirements, collection hiccups and liquidity setbacks.

Not only has export funding been a ladder to small and medium scale enterprises and startups but it has also acted as a life saver for businesses in recovery. Even already established organizations find benefits in it, further increasing sales and strengthening profitability in a global scale.

To truly benefit from such financing medium, companies have to plan for its use from start to finish. After all, even a tool as great as it would fail to succeed if used incorrectly. In order to achieve its full potential and maximize the benefits that it gives, here is some expert advice on how to plan an export funding.

First, determine its effects on finances. Is the business really ready for exportation? Before thinking about whether or not to make use of such method, determine if the organization is really ready to trade on the international market. This is no joke and so operations as well as finances must be taken into consideration before anything else.

Second, determine needs and goals. It is crucial to identify the company’s needs in the export trade. Moreover, goals must be set. An endeavor won’t exactly be one if there is no end goal.

Third, identify territorial requisites. Each country that the business wishes to export to shall have its own set of rules and regulations. What these are and how to achieve them must be looked at and examined to determine if they are worth all the trouble and if the benefits of trading in such market will be greater than its costs.

Fourth, weigh out the alternatives. Is this financing medium the best option out there? There are many ways by which entrepreneurs can trade and bring their products overseas and export funding is only one of them. Part of planning its use will have to be scrutinizing if it really is the best option to take.

Lastly, find a trusted export funding company. They must not only be prompt in terms of providing for the invoice advances but must also be seasoned enough to handle overseas transactions. Their knowledge, skills and resources must be beyond par.

Single Invoice Factoring Dos and Don’ts

dos-and-dontsFinancing is one very sensitive issue that businesses make sure to handle with utmost care and caution. There are many methods and alternatives to choose from, each with their varying uses and set of pros and cons. One of the more popular options out there is what we call Single Invoice Factoring and today we’ll discuss a few sets of dos and don’ts to help everyone master the best use of the said method.

Do understand what it is all about. It would be outright silly to make use of it without fully grasping and understanding its procedures, uses, costs, effects, advantages and disadvantages. A smart and successful businessman thinks before he acts.

Don’t transact blindly. Choose the best Single Invoice Factoring Company in your area. Research well. Ask around for feedback and don’t hesitate to interview and inquire your shortlisted candidates.

Do assess customer creditworthiness. To avoid having any problems with delinquent customers and ultimately your factored invoice, make sure to only extend credit to those who are capable of payment.

Don’t mix it up with discounting. With factoring, the provider is responsible for the payment collection and the transaction is a sale of an asset, the right to collect. With discounting, the company retains responsibility over payment collection and is akin to borrowing with the invoice used as collateral.

Do remember that it is not a loan. It is by no means a liability transaction and therefore produces zero debt, interests and other strings attached to it. It is reflected as a increase in cash and a decrease in receivables instead.

Don’t worry about customer backlash. There is nothing wrong about factoring receivables so customers generally don’t hold it against companies. However, for reasons of avoiding confusion with payment, a confidential arrangement may be made so that customers know nothing about the factoring.

Do use it as you please. There is much flexibility and freedom in the use of Single Invoice Factoring. Companies can use it whenever they want to and as frequent as they would like. The choice of which receivable to use will also be the decision of the business and no one else’s.

Don’t factor each invoice individually. If you find yourself using Single Invoice Factoring for all your receivables, it would be best to switch to Bulk Factoring instead. It’s quite the same except for the fact that the latter advances all receivables as a whole instead of one by one making room for more cost savings.

Questions to Ask Yourself Before Using Spot Factoring

spot factoringSpot Factoring is an arm of Receivables Financing that enables business entities to choose a sales invoice and advance its value in exchange for the right to collect against it, all before the owing customer sends in partial or full payment.

Truth be told, it is a very powerful tool that comes with a slew of benefits making it one of the most laudable finance mediums of today. It is used by many entities, regardless of type, size and industry. But just like anything else that involves financial matters, it has to be taken with a grain of salt. After all, there’s no one size fits all method and its effects can be different from one user to the other. Research and analysis has to be done first in order to assess if it really is the method that suits the company’s needs best. With that said, we’re giving you 5 questions to ask before bringing Spot Factoring into play.

1.    “Do I understand how Spot Factoring works?”

It is crucial that you do or else it would be impossible to make a good decision. One cannot fully determine its feasibility if one could not grasp its processes, purposes, costs, perks and drawbacks.

2.    “Which receivable will I use?”

Spot factoring is a one-time transaction. The company has the liberty to pick which receivable to use and when. Of course, opt for one that’s of significant value and will cover for your needs. Make sure that the customer is creditworthy to ensure a higher approval rate.

3.    “Where will the funds be utilized?”

Define the purpose of the fund. One simply cannot advance just because. There has to be some valid reason behind it and once the cash is received, it has to be allocated accordingly to ensure maximum use and zero wastage.

4.    “How fast will the cash be released?”

The strongest charm of Spot Factoring lies in its ability to derive cash almost instantaneously. Many providers are able to do so within twenty four hours but this isn’t true for all so inquire first before you decide on anything.

5.    “Is the provider trustworthy?”

Always choose a quality Spot Factoring provider. Research the area for companies that offer the service and run a background check on them. Look for any reviews and feedback and pay them a call and a visit to discuss available services and terms. Don’t jump on the first provider you find.

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Export Funding Tips

export-fundingExportation in its simplest explanation means sending goods for sale or exchange in other countries. In business, such transaction is a sign of growth and expansion. You’d think that if given the chance, everyone would jump in on the opportunity without batting an eyelash. Unfortunately, that’s not how reality works. There are many factors to consider before the jump. Foreign trade is no joke. It is serious business to say the least and one of its most challenging facets has something to do with export funding.

When a business decides to place itself in the foreign market, it doesn’t come for free. There are costs to it. First of all, the company will have to study and make various researches regarding a particular country’s market. Products may have to be modified to suit the market’s needs, culture, traditions and preferences. Second, part of operations will have to delve into the international scene which obviously comes with costs. And let’s not forget about freight costs, currency exchange differences, tariffs, taxes and duties. All these and more will require adequate export funding.

With that said, businesses need to gear up in terms of finances. Below, are some tips we’ve gathered from the experts.

·       Always start with a plan. – This is the first step to everything. Make sure that you don’t dive head first without a strategy otherwise you’re only opening yourself up for losses and turmoil. Exporting is no joke as we’ve said earlier. This only means that ample caution must be taken when engaging in it. A plan not only acts as a map but also serves as a reminder to keep your eyes on the prize.

·     Know your sources. – There are many options when it comes to financing. The key here is to determine which ones would bring in the most benefits at the least cost and disadvantage. Research, examine and analyze before you choose.

·    Estimate expenses. – Make a careful analysis of your needs to come up with an effective estimate of possible expenses. This should aid in determining the costs to expect and prepare for.

·  Budget wisely. – When resources have been acquired, make sure that they are allocated as efficiently and effectively as possible. This is where budgets and financial plans come in handy.

·  Be prudent. – When using your export funding, practice prudence. In accounting, this is where you expect the worst where expenses are best overstated and income understated in cases of doubt. This should prevent the likelihood of shortages in funds and overestimation of sales.Visit

Solving the Emergency Fund Dilemma

What happens when you need to get hold of emergency funds real quick? How does one solve this financial dilemma? Luckily for us the team at Working Capital Partners is here to help us find the answers.

Truth be told, financing is a tricky and sensitive but equally important aspect to business. After all one cannot run a company without the cash to do so. How are you going to provide for your expenditures?

There are many sources of funds such as equity from shares of stock or the owners themselves. There is the use of retained earnings too to provide for certain ventures. Moreover, entities can reinvest their profits back into the business. Of course, let us not forget forms of credit such as bank loans and mortgages to name two.

Now, there will come a time when such sources are not available or not feasible given the situation. There will be emergency needs that need immediate source of cash that can release it within a few days’ time or weeks.

In times like that, businesses can take on other forms of financing that will enable them to generate cash real quick. Below are three of them.

  1. Invoice Factoring – This method allows entities to raise funds from their unpaid customer invoices. In exchange for the right to collect against them, the factoring company shall issue an advance equivalent o 80-95% of their value. The remaining percent shall be withheld and released only upon full collection from owing customers less the fees. This basically hastens the collection process and can take as fast as 24 hours.
  2. Receivables Discounting – Quite like factoring, it enables the release of advance equivalent to one’s receivables. However, what differs is that the collection function shall be retained by the company. After completion, it then goes on to pay off the financing agent plus fees. It likewise can be arranged in a day’s time depending on the circumstances at hand.
  3. Interim Financing – This is a type of short term loan taken out in cases where a permanent financing medium has already been employed but is seen to come later than is needed. The interim loan shall provide for the immediate needs and shall then be closed out by the main fund line once it arrives.


So which among the three options suggested by Working Capital Partners fit your needs?

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