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.

Visit here workingcapitalpartners.com.

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 http://workingcapitalpartners.co.uk

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.

emergency-fund

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

What is Export Finance and How Does it Differ from the Rest

You may have already heard about export finance and export overdraft but never really got to know what it is and what it does. Well today is the day that you find out so go on and read. You need to add to the cornucopia of your knowledge. Besides, you never know if you might actually need one in the future. It’s always best to be aware of your options.

First of all, it is designed to be furnished by small and medium scale enterprises that delve into the export market. Moreover, it is also used to support a growing entity’s cash flow needs especially when its export operations are deferred or prevented by strict supplier terms and the delayed payment by owing customers.

By now, you may already know that cash flow problems can deter and derail any company’s plans of expansion and growth. Even its regular operations can be disturbed and made unfeasible. Just because sales are up does not exactly denote the presence of liquid resources and actual cash. Plus, most suppliers have requirements that have to be complied with first in order for them to extend credit to companies.

The aforementioned dilemmas can be a huge hiccup to the export plans of a business. The opportunity is great and the returns are promising but there are road blocks. So how do you remove these boulders from your path? The answer is export financing.

export fundExport financing helps entities sell overseas and export their goods without the complications of the usual paperwork and the risks of not being able to collect. As an entrepreneur, these two are huge dissuasions to one’s plans and if they can be overcome with then the better.

In an export financing arrangement, payment for the goods and/or services provided are attained with the help of a financial facility or company that have expertise on the said service. Companies can go on and export their offerings in other countries and the facility will take care of the collection and in the assurance that documents, paper trail and collection are achieved. Of course, a fee will be required in exchange of the service but knowing the nitty-gritty and bloody transactions and requirements that one would have to do if one chooses to do the process on their own, the fees are very well worth it. After all, you have to aspire for growth and you can’t do it if you stay in one place forever.

If you want to know about how export finance works, click this page workingcapitalpartners.co.uk

Receivables Financing: An Effective Emergency Funding Option

In business, money matters. These financial resources are essential for a number of things. You need it to purchase raw materials, to pay for employee salaries and wages, to pay the lease and all other operational as well as general and administrative expenses.  Additionally, funds are needed to provide for expansion and other corporate ventures. Add in to the pile emergency and contingency cases which make it imperative for businesses to always plan the management and use of this limited resource. But when worse comes to worst and an emergency pops out, where can entrepreneurs get their needed funds? The answer is through receivables financing.

receivables-financing-ukRemember that even if sales mean profit, they do not always mean cash. Customers and clients do their purchase either through cash or through credit and in many cases, the latter prevails. The problem with this though is that even if customers do pay, the money is not always readily available for use should the entity need it. It will take time before it will be actually realized and held by the business.

The only way to hasten up the collection process is through funding your expenses or deriving cash from the unpaid receivables or so called customer invoices. This is achieved through receivables financing.

What happens in this type of funding method is that entities get to receive majority of the value of the receivables in advance before customers actually pay in full. Oftentimes, financial providers will give about eighty to ninety five percent of the receivables’ value with the balance less agreed upon fees only to be forwarded after full collection has been received from the owing customers. To put it simply, it’s like selling off your customer invoices to an institution, receiving the amount equal to its value and then going on with business as usual.

Another good thing about using receivables financing especially during emergency cases is the fact that they are very quick to process. In as fast as twenty four hours, the fund can be provided already. Additionally, even struggling and losing companies can make us of it as receivables finance providers do not bank on the financial status of the businesses seeking it but rather on its owing customers. No financial reports will even have to be submitted for perusal and one’s credit history and grade will have no impact on the application.

Business Lending Options for the Businessmen and Businesswomen

Knowing the types of business lending options and for when and where they are used is beneficial to all companies even if you are not looking for a loan option at the moment. Plus, it pays to be prepared. You never know when you might need one so it is best to keep abreast and know which alternative will be most beneficial for you and your company. So let’s proceed and discuss briefly the different types to it.

export fundingEXPORT FUNDING is the solution to help businessmen who are in the export industry. What export funding facilities do is that they provide you with the cash flow to support your exporting operations like sourcing, manufacturing and delivery of goods overseas.

TERM LOANS are those that come with a predetermined interest rate and are to be repaid either monthly, quarterly, semi annually, yearly or depending on the credit terms. These are by far the most common option in the list and are those that are often used in the corporate world by those with sound financial resources and established small, medium and large companies.

SECURED ones are those that come with an asset used as collateral or as a form of guarantee in the event of non fulfilment of obligations as stated in the agreement or contract. Such assets may be limited to those that are company owned or may encompass and include personally owned assets of the owners. This is common where the values to be borrowed often include a rather large amount.

COVENANTS are those that come with a condition to the borrower where failure to comply gives the lender the power and the right to demand full payment of the amount owed in full. Such covenants are arranged on a case to case basis. These may be a requirement to maintain equity, a certain cash flow level, limited allowable other loans and the like.

PERSONAL GUARANTEE is where the lender provides a personal guarantee for the business using his or her own credit history for qualification instead of that of the business. This one can still be beneficial but may be disregarded by companies with multiple owners as the risks to their personal assets are out there.

Moreover, there are many other business lending options for your business. It would be better to seek advice from your counsel or financial consultant as to what options can provide the most advantage on your part with the most minimal risks and costs. Having the resources to make a company operate is a key player in ascertaining success. It may be challenging and hard but with the right plan and strategies, you will surely get the results you want.

How to Get the Good Spot Factoring Companies

When it comes to raising capital for a company, a popular option among many entrepreneurs is single invoice or spot factoring. This is nothing to be surprised at as such funding method do have its perks. To name a few, here is a brief list:

• It is a quick and simple process.

• It improves cash flows without an added debt.spot factoring companies

• It does not involve interests and therefore costs less.

• It leverages instead on customer’s financial status.

• It makes the company more liquid.

• It is not a form of a loan.

Now that you’ve had a little refresher, here a few ways to help you land on the good spot factoring companies to suit your financial needs:

• Invest on a good research.

We all know that in everything, planning is a key to success. Failure to do so can be catastrophic. Research is part of planning and it is therefore a must if you are looking at spot factoring and its service providers. Before getting on the engagement, you first have to understand its key concepts and how much of an impact it can do your company. Furthermore, you have to research well on who are the best factors in town, who are suited for your business and its industry.

• Ask your consultants and business advisers.

Do remember to go and talk with your advisers and consultants. Your financial analysts may have an opinion on the matter too. With the nature of their job, it is likely that they know of a few financial institutions that are in good standing and provides the best services. Also, they will be able to guide you in choosing certain options as well.

• Get some professional, reliable and unbiased references.

When asking around from colleagues, businesses partners and from acquaintances in the industry, see to it that their recommendations are free of bias. Their opinions should be backed up by experience and knowledge. For sure, some of them may have already subjected their invoice to spot factoring. Ask them about their experiences both good and bad. Pick up some useful information.

• Go on the World Wide Web.

Of course, the internet goes a long way. You can easily find spot factoring companies by simply typing on the search bar. To benefit best from this, make sure that you have read all the necessary terms, conditions and other related information to help you get to know these entities best.

 

Telltale Signs That You Should Consider Single Invoice Finance

Raising funds for your business is no easy task. In fact, having a business is no child’s play! Time, effort and not to mention capital, has to be put up. Before any profits are realized, so much work has to be accomplished first. As the old adage goes “No pain, no gain”. This holds very true for the corporate world. Capital, both monetary and industry wise, have to be put up.  Industry is all about finding the right people with the right talents for the job. Money is something that’s a little trickier than it sounds. Raising capital before putting up your company is one thing. Raising capital while on business is another. To help you with that here are some telltale signs which could mean that it is time for you to consider going into single invoice finance.

business losing“I hope my customers pay in time and where possible earlier…”

Not all purchases are made through cash. Some are made through credit. In some cases you want your customers to pay earlier but that is not completely possible. To recognize the value of your receivables, you can advance them through invoice finance.

“My bank loan is taking too long and is very restrictive and burdensome…”

Commercial business loans normally take long before approval. This makes them the least likely option for urgent expenses and disbursements.

“If we had more available cash, growth and expansion could be quicker…”

Because cash is often tied up in the invoices, they are unavailable for use for certain corporate ventures like expansion and purchase of new and better equipment.

“We have had a lot of opportunity loss lately…”

Opportunity losses are those that you incur when you fail to act on a particular prospect which could have increased profits. Lack of funds is often the biggest contributor to this.

“Our business partners do not like putting their personal assets up for collateral…”

Loans will always need collateral, both corporate and personal assets. Some investors and business partners do not like putting their personal resources at risk. Single invoice finance does not require your assets as collateral.

“We went into a nosedive during the previous period but now that things got better, we need funds to better operations…”

Single invoice finance will also prove beneficial for companies who have suffered losses and are slowly gaining back their profits. This is because most banks will not lend when they find you financially distressed. Invoice finance providers have no problem with this as they are concerned not on your financial status but that of your customers. Do remember that this is not only limited for use to losing businesses as it has in fact been employed by established ones due to its benefits.

 

7 Reasons Why You Should Consider Single Invoice Factoring

We’ve all known the different financing methods obtained by companies such commercial loans and receivables financing. Under the latter, two types can spring forth which are discounting and factoring. One common and popular type of the latter is what we call single invoice factoring. What is it?

It is frankly the same as the traditional type. It provides the same effects and has the same benefits. The differentiating factor is in the number of invoices. With whole turnover o traditional factoring, you sell your entire sales ledger thereby

1. It is quick and simple.

single invoice factoring ukWhen you need funds, especially in emergency situations, you want a process that is simple, crystal clear, easy and not to mention fast. If you need resources for expenditure due in five days then why would you go for a financing scheme that takes you a month before you get access to it? Single invoice factoring is simple and lighting fast. You can get hold of your needed funds in twenty four hours or less.

2. It can generate funds and therefore immediate working capital and cash flows.

Because of its swiftness, your business gets access to immediate working capital and a quick injection in the cash flow. This makes it easier for your business to pay suppliers thereby creating better relationships.

3. You release and get to use locked up cash.

You may have promising sales but the cash they generate may not be available to you. Also, you may have scored a particular sale but then you are not able to use its value. You’d have to wait out. Factoring can definitely hasten things up and you can advance the invoice’s value even before your customer pays.

4. You get to advance eighty five percent (85%) to ninety percent (90%) of the value of your invoice.

The remaining percentage to this will be forwarded only upon complete collection from your customers to whom the receivable is due. This remaining balance will then be less any fees.

5. It doesn’t require as much hassle as traditional loans.

You don’t have to provide quarterly and annual financial statements, asset listing, financial information on company owners, credit score and the like to the financial institution. This is because they will leverage not on your financial capability to pay but that on your customers instead.

6. It will not create a negative effect on your balance sheet.

Because it is not a loan, your balance sheet does not suffer increasing liabilities. In fact, you become more liquid as you can easily and quickly recognize and transform your receivables to cash.

7. It is cheaper and gives you more freedom than whole turn over factoring.

Lastly, single invoice factoring is far cheaper than the whole turnover type. You wouldn’t have to sell your entire sales ledger. You get to choose which invoice and when to advance its value.

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