Category: factoring companies

Financial Startup Mistakes

startupThey say that entrepreneurship is a rewarding thing. That’s true. But let us not forget that the path to its success is a long and winding road. There is so much to do and learn and you have to be prepared to win otherwise expect to lose and then face the consequences that come with it. One of the aspects that have to be given attention to has to be the finances. This is a sensitive topic that oftentimes catches startup business owners on guard. Today let’s get to know some of the most common financial startup mistakes with the help of the team at WCP.

Financial Startup Mistake #1 – Investing too much on aesthetics is a huge blunder for startups. Sure, you need the best furniture and equipment but also don’t forget that you have a budget to work with. At this stage, you have to put function above all and if you don’t need it then don’t buy it.

Financial Startup Mistake #2 – Lacking in the resource department comes second in our list. Before you begin your venture, you must make sure that you have the resources to keep it alive. It’s not just about starting it. You also have to maintain and improve it.

Financial Startup Mistake #3 – Next comes a very fatal culprit which is credit. There’s nothing really wrong about debts to begin with. It’s the manner and reason by which they are used that makes it a hit or a miss. One must never rely heavily on liabilities to run a business. At the same time, all forms of credit taken must be carefully decided on and these have to be debt that the company is surely capable of repaying in the near future.

Financial Startup Mistake #4 – Many startups often forget about the ongoing or hidden costs to a business. There is more to it than meets the eye. Things like maintenance and repairs of a building, loss due to calamities and the like must be accounted for.

Financial Startup Mistake #5 – Lastly, many entrepreneurs begin with no finance professionals or accountants to manage its financial transactions and needs. Many try to wing it on their own and do their books without the help of an expert. It may seem cost efficient at first but it won’t be in the long run. Not only does it eat up your time and energy but you are likely putting yourself at high risks of errors.

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.

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 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.


UK Invoice Factoring Companies: What Options Do I have?

When it comes to financing through your receivables, UK invoice factoring companies say that you have quite a number of options to choose from, each one having certain uniqueness to their own. If you want to benefit from the numerous advantages of factoring then you better decide which type you’d like to use. These four are namely traditional, spot, with recourse and non recourse. Although these four have some minor tweaks to differentiate them, they still work pretty much similarly as they will get you an advance for selling the right to collect against the debt of your customers. Without further ado, let’s discuss your four options.

factoring companiesTraditional or Whole Turnover

This requires you to sell your entire sales ledger. Yes, all of it; every single one. This type is particularly beneficial to those who often see themselves subjecting their invoices to a factor on a repetitive and regular basis. Rather than paying a fee for each one, why not do it in bulk? Furthermore, this is good for those whose receivables are often long and will take time before enough cash is freed up for corporate use.

Spot or Single

If however there are only a few or some notable receivables that you would want to hasten up, then spot factoring is for you. In this arrangement you do not have to sell your entire sales ledger. You will have all the liberty in the world to choose what receivable to advance, when to subject it to a financing institution and how often you’d like or need to do it. The fee in this case is not for a monthly basis but will only involve the invoice involved.

With Recourse or Fund Limit

There are instances when the financing firm will offer an arrangement that frees them from incurring large amounts of losses for buying your receivables which your customers fail to pay. This arrangement is called with recourse. Here, you will be required to buy back the invoices that have not been paid in full. That is if there are any. Because of this clause, this arrangement comes with a fee that is far lesser than the others. It is quite cheap to be frank. When should you use it? A company with customers who possess good credits score and credit history will benefit most.

Non Recourse

In the event that you unfortunately suffer from bad debts and uncollectible accounts, UK invoice factoring companies suggest that you get a non recourse option. Here, all risks are passed on to the financing institution. Whether or not your customer pays, you get the advance and you won’t have to buy back any unpaid dues.

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