A/R Financing – Page 7 – NeeBo Capital Blogs

Non-Notification Factoring – NEW

Neebo Capital now offers non-notification factoring, below in this article we describe Non-Notification Factoring:

not notification factoring — Non-notification factoring, can help your company retain clients and grow cashflow.

The majority of factoring occurs with the full knowledge of the customer.

If you’ve obtained a mortgage from your local bank, chances are that at some point you’ve also received a letter from them saying that your mortgage was now being handled by one of the bigger banks.

Non-notification factoring occurs when the invoices are sold to a factoring company without the knowledge of the customer.

This service can benefit companies in three ways.

1. It preserves trust

Personal service has become incredibly important in our impersonal world. And the big banks, in particular, have earned the well-deserved reputation that they don’t care about anything except paying huge salaries who head their institutions. They certainly aren’t interested in the ordinary people whose mortgages or other accounts they hold.

That attitude has disenfranchised their customers. Smart business people do the opposite. They do all that they can to maintain the faith that their clients have in them.

And that being the case, if customers of smaller lending institutions were aware that their business had been passed to a different company, one which was out of their reach, then they might be tempted to take their custom elsewhere.

So, by keeping the changes in the ownership of the loans confidential, firms can prevent that from happening. In order for that trust to be maintained, however, it’s essential, that customers are still able to get the help and support they need from their local lending company.

2. It preserves the brand.

Think of laundry soap, for example. Consumers like choice. If all of detergents had labels that identified them as being from the same company, there would only be a few to choose from. But, by branding each of them separately, customers can pick the one they prefer.

The same idea holds true when firms sell their invoices to a third-party without the knowledge of the customer. Factoring companies typically buy accounts from many different businesses.

But, if customers became aware that in actual fact their invoices were in the hands of only a few companies, then they would feel that their ability to choose had been eroded. In effect, they would be unable to see the difference between dealing with one company or another.

3. It preserves loyalty.

Customers prefer to use their local bank branch because they want to support firms in their communities, and also because they like to make friends with those with whom they do business.

If they ever thought that the majority of their financial obligations were now under the roof of some other business that is out of their town, or out of their state, then they could be made to feel that the branch had betrayed them.

And that means they would be more likely to move their accounts to another business that they felt would be loyal to them.

Although banks and other business need to earn a profit in order to remain viable, they also need to recognize the importance of serving the customers they have.

If they breach that trust and limit their choice, then they will also lose their loyalty.

Non-notification factoring, if handled correctly, can help your company to achieve all three.

Should You Avail of Oil & Gas Providers Factoring?

Oil and gas companies also suffer from the numerous financial difficulties that plague long-term investment plans due to unstable cash flow, and this is why they turn to oil & gas providers factoring for help.

Although you may receive less than the face amount of your invoice, with invoice factoring you get the money you need to keep your business going

Consider this:

– Clients may take weeks or even months to fulfill their payments. This means the oil company will need to make do with whatever working capital they have to pay their employees, fund their business, and keep the company afloat.

– If the budget of the company is not enough they will have to turn to loans to sustain their production. This is not good for oil and gas providers due to the nature of their industry – loans are not often accredited to them because of the high risks and low chance of investment returns. Without a loan, production will have to be stopped, therefore reducing its profits.

– There are also many insurance and liability payments to take care of, that the production budget may not be able to cover immediately.

If you are a newbie oil and gas company, things will even be so much tougher for you. For the most part, new companies have little chance of securing a loan to start an oilfield operation because of their lack of credit history.

Accounts Receivables Loans or Invoice Factoring

Oil & gas providers factoring is a solution for both established and new companies alike. This is because they give both kinds of firms an opportunity that traditional loans cannot – instant cash flow that is guaranteed and insured.

Factoring often only takes 24-72 hours to process, making it much faster than a bank loan application. This is also several times faster than waiting weeks and months to finally get paid from the client who funds the oilfield operations. You could wait for weeks or you could get your payment in just a day or two. Your choice.

Is It Risky?

Of course there are always risks. The worse that could happen is if the client does not pay up. In this case the oil and gas provider will have to pay the factoring firm the money they got and then chase after the client so they can get paid. Unless of course if the factoring company offers some type of insurance where they will be the one to shoulder this risk in case it occurs.

The bigger risk is not getting the funds to operate your business. You won’t have money to pay your employees and you won’t have money to keep your operations going. So, if you want to secure instant cash flow that will keep your business operation running at all times then you may want to look into oil & gas providers factoring today, instead of taking the longer and often frustrating route of applying for a bank loan.

Interested in oil and gas factoring for your business, click here

What’s Up, Doc? – Medical Services Factoring

Medical Factoring — , medical services companies need to maintain their cash flow. They have a constant need for the supplies that are required to conduct a number of different procedures

Just like any other business, medical services companies need to maintain their cash flow. They have a constant need for the supplies that are required to conduct a number of different procedures: everything from routine blood tests, to x-rays, all the way up to the more costly process of giving patients dialysis.

There is one difference that separates medical services from almost any other type of company, and that’s the fact that nearly all of their income is received via health insurance companies.

Doctors routinely refer their patients to medical services companies for screenings, treatments, and even transportation – activities that do not require the presence of a physician or the facilities of a hospital.

Upon arrival at a medical services office, the first thing that the receptionist will do is ask that person to complete a form, often several pages long. And on the first page will be a place for that person to enter his or her health insurance details.

Usually, there is a co-payment that the patient must contribute. This is to minimize fraudulent claims. But, the largest part of the bill issued for the service is paid by the insurance company to the firm providing the medical care.

The health insurance industry in the US is big business. But it’s also a complicated and time-consuming one. Doctors, medical services, and hospitals routinely file health insurance claims on behalf of their patients, but each insurance company has its own requirements and makes its payment according to its own timetable. Not only that, but there are dozens of them.

However, there is another side to invoicing that many firms never have to worry about, and that’s dealing with the US Government. That’s not to say the no other company gets contracts with them. They do. But contracts of that kind tend to be less complicated than those that deal directly with Government programs, such as Medicare and Medicaid.

An invoice that would normally be paid within 30 days by an insurance company could instead take three months or more, depending on how complicated the treatment was, and whether or not the patient and the clinic had completed all of the necessary documents.

All of these things can put pressure on the cash flow that medical service providers depend on to keep them in business.

And, as we all know, this kind of care can be very expensive. That means that the slow or non-payment of invoices can have a much greater impact on the survivability of these kinds of companies in the short term.

That makes factoring a particularly important option. So far, no one has been able to figure out a way to make the Government work faster or to write its regulation in language that people can understand, nor has there been any progress on lowering the costs of medical care.

And so for both of those reasons, medical services ought to consider selling their invoices so that they aren’t held hostage by those from whom they receive the majority of their income.

Accounts Receivable Loans: Should You Rely On Them?

Here is a question that a lot of entrepreneurs ask: Is it wise to rely on accounts receivable loans? These loans are often regarded as the quick way out of a financial slump for small and medium-sized businesses.

Entrepreneurs who are considering setting up their own business will have all the passion and energy to get started but will not have the funds to do so. They won’t qualify for a business loan simply because they have no financial history that the bank can assess.

The only other option for these entrepreneurs is to shove their dreams back in their pockets and wait for such time when they’ll have enough money to start their own companies. Others may have the capital to start the business but they eventually close down because they don’t have the money needed to keep their business afloat. This is especially true for companies that do business with customers who set up payment terms with them.

Accounts receivable loans are the answer they seek. Instead of applying for a loan – which they will either be refused of or given but with incredibly high interest rates – they can factor out production costs by selling their invoices early on. This allows them to get started on bigger projects offered by clients despite not having the resources to do so.

Weighing Benefits Against the Risks

If you look at it, you are getting your pay from a job before even completing it. That is basically what accounts receivable loans are. Your end of the deal is to make sure you finish the job you were paid in advance for. This way the invoice factoring firm will be able to collect the payment from your client. However, as mentioned, there are risks too. You may not satisfy the client with the project you’ve completed for them and they might refuse to pay. Some clients will simply disappear once you complete the project so you’ll end up paying the account receivable loan back and with penalty fees.

Yet you should not overlook the fact that you need money to keep your business afloat. This is why you need accounts receivable factoring. Just consider these benefits:

– Finances are secured early

– Invoice factoring only takes 1-3 days to get the funds, compared to the thirty-sixty days it takes for clients to pay you.

– The transaction fee for invoice factoring is very low and there are financing offers as well.

– Cash flow is established early on so you can begin production.

– The aforementioned risk of clients not paying can be covered with minimal insurance fees.

If you were to weigh both the risks and the benefits, you will realize that opting for accounts receivable factoring is the smart way to go. You want to get started and yet with traditional business loans out of your reach, you will find that accounts receivable loans are indeed a reliable source of financial stability for your company.

Manufacturing Factoring –Is It Beneficial for Your Business?

Manufacturing Factoring rates — manufacturing factoring is when you sell your invoice out to a factoring company. The company will purchase the amount of your invoice instantly.

Anyone who is running a manufacturing business understands how tough it can be to keep the business afloat. To ensure you can still keep production running and to fulfill employee salaries and compensation you may want to look into manufacturing factoring. This is a system that is quick and simple and yet very effective if you want to keep cash flow steady in your manufacturing business. Here is a look at what it is and how it works.

What is Manufacturing Factoring?

Basically manufacturing factoring is when you sell your invoice out to a factoring company. The company will purchase the amount of your invoice instantly. Say you are contracted to manufacture a thousand bottles for a soda company and yet the payment is still weeks away, you can get your payment instantly by factoring the invoice.

Of course you won’t get the full amount stated on your invoice. The factoring firm needs to profit as well so you will most likely be approved for 85-95% of the total invoice value. This means the factoring company will hold the remaining amount until your customer pays the invoice. Then you will receive the remaining amount of the invoice, minus the factoring fee, typically 1-3%.

There are two things to be concerned with here: your credit standing as a company and the client. First of all, if your manufacturing company has poor credit standings you can expect to get a lower percentage when you factor out the invoice. This is to ensure the manufacturing factoring company they are covered for any financial risks.

Most of the time your credit is not even considered. Some invoice factoring firms take a quick look at your history but this is very rare. At the most, a bad credit standing will lead to a higher percentage cut and a lower payout for you.

The second problem is the client. As with any business a client may decide not to pay your invoice. But since you already sold your invoice to the factoring firm, what happens next? There are often two ways this can go. You will need to chase the client and secure the payment or end up having to pay the amount (out of pocket) to the factoring company. The other solution is to get your invoice insured so in case the client decides to run, you won’t need to worry about paying the amount owed yourself. It will be the factoring firm who will handle the damages and chase after the client. The burden will no longer be placed on you. Of course this also means your percentage is cut down a bit more.

Is This Beneficial to Your Business?

The short and sweet answer is a definite yes. Invoice factoring guarantees:

– steady cash flow in the business

– payroll is always met

– credit standing is not moved

– costs of production are met beforehand

You do not have to worry about taking out loans because now you get your compensation before the job is even started. You can meet the financial demands to keep production going. If you want to ensure that all your financial demands are met without having to risk taking out a high interest bank loan, manufacturing factoring is a very ideal option to look into.

A/R Financing: Is It the Right Option for Your Business?

A/R or accounts receivable financing is done to help companies free up some capital that are otherwise stuck in accounts receivable.

No business owner is a stranger to all the struggles of running a company, especially when it comes to dealing with cash flow shortages and coming up with enough working capital to keep the company afloat and growing. And in times when other modes of financing like applying for small loans are limited, business owners resort to A/R financing. But the question remains, is A/R financing the best option for your business?

A/R Financing Defined

A/R or accounts receivable financing is done to help companies free up some capital that are otherwise stuck in accounts receivable. In this method,

The amount of money the company will receive will depend largely on the age of the receivables. A company that has old receivables can expect less compared to the value of newer ones—this is what is known as “factoring”.

Is A/R Financing Going to Be Beneficial to my Business?

Business owners resort to A/R financing mainly because of the following benefits:

It provides for a relatively quick mode of financing. A/R factoring does not need an elaborate business plan or tax statements. It is really a quick cash option for businesses suffering from fund shortages.

A/R allows businesses to free up some capital. Most businesses have some of their assets and capital tied up in inventory. With A/R funding, those tied up capital can be used right away.

It allows you to skip the part where you need to outsource your accounts receivables to a third party manager. By passing off the task of collecting altogether, A/R financing helps you save on your resources and you can just divert your energy to other activities that are more productive and profitable for your company.

A/R Financing Potential Drawbacks

A/R financing can provide a business with a lot of benefits, but it may also come with some potential drawbacks. Probably one of the biggest considerations when it comes to A/R financing is the cost associated with it. If you think about it, a discount cost of 5% may not seem much initially, but if you’ll look at it over a course of several months or a year, then you’ll find that the accumulated costs far exceed the interest levied from a bank loan or credit. Remember that different financing companies offer varying A/R financing rates, so you really need to shop around in order to get the lowest fees and interest rates.

Sound business decisions are essential to the growth of the company. You need to make certain sacrifices in order to keep the operations going. Taking the A/R financing route can sometimes spell the difference between your company’s survival and failure. It would be wise if you invest some time in finding the best A/R financing deal for your business.

A Bird in the Hand is Worth Two in the Bush

factoring invoices, factoring company — Accounts receivable financing is like that. It gives you ready cash now and removes the risk that you might not be able to obtain the full amount at some later date.

There is a story behind this famous English idiom which dates back to the 17^th century.

The gist is that a sure thing right now beats a promise of better things in the future.

Accounts receivable financing is like that. It gives you ready cash now and removes the risk that you might not be able to obtain the full amount at some later date. And it’s that uncertainty that can disrupt your company’s strategies.

All bank loans require some form of collateral. In most cases, it’s the item itself for which the money is advanced. So if take out a mortgage so that you can buy a house, then the house itself is the security. If it’s for a car or a boat, then the same principle applies.

The title on the item, that piece of paper that shows that you are the rightful owner, is held by the bank so that if you are unable to repay the load, then can sell that security and get their money back.

Sometimes, banks will loan what they decide is the value of the item, regardless of how much you have paid for it. And in the case of a house, they normally require you to have some skin in it, to the tune of about 20% of the purchase price. In that way, they feel that you are more likely to honor your commitment because if you failed to do so, then you would lose not only the house, but your money as well.

I’ve reminded you of how bank loans work in order to help you understand the benefit of using accounts receivable financing instead. Instead of borrowing against your invoices, you can sell them instead. In other words, it’s a sale, rather than a loan. That means you won’t have to pay it back, ever.

The accounts are sold at a discount. The seller gets ready cash, and the buyer makes a profit on the debts when they are fully paid. It can be a win/win for both parties.

If the debts are old, then the value of the accounts is likely to be less than if they were current. That’s because they tend to be more difficult to collect. Each company will have its own policies for this, and you should check with yours beforehand.

The “bird in hand” is cash today. The “two in the bush” are found in the hope that you might be able to collect the full amount in the future.

Let me ask you something. Is it worth the risk?

Rather than write off the outstanding debt now and receive nothing, wouldn’t you rather get something for it instead? Wouldn’t you prefer to shift that risk onto another firm?

When you’re bills aren’t paid, it’s difficult to concentrate on the really important things. But, if you sell your accounts receivable, that will free up your mind for what matters the most.

Factoring for Opportunities

I want you to imagine for a moment that everything is going exactly the way you had hoped in your business.

Factoring Opportunities — Firms need to have the flexibility to draw on additional funds so that they can take advantage of the opportunities as they arise.

Your order book is full. Your cash flow is healthy. Your customers are happy. Even your employees are happy.

Then, a prospect approaches you. He’s impressed with your innovation He has seen the quality of your work. He likes the fact that you always deliver on time. And now he wants to give you a contract that is too big for your current operation.

What do you do?

Your first thought might be to approach a competitor and join forces.

But, let’s add a wrinkle to that scenario.

Suppose that the contract is so sensitive that your prospective customer is willing to give it to only one company? In other words, you won’t get it all if you need to recruit another firm to help you out?

These examples are just two of many of the kinds of opportunities that may come your way.

Entrepreneurs from Eastern Europe, Ukraine, and south-east Asia have come to the West, not only to learn about business, but also to do it.

And as you know, the state of the economy in recent years has made it harder for companies to turn away business, even if it really isn’t what they are tooled up for or prefer to do.

So that means that firms need to have the flexibility to draw on additional funds so that they can take advantage of the opportunities as they arise.

That’s easier said than done, because traditional funding options normally aren’t accessible as quickly as they need to be in such situations.

Families tend to be strapped for cash. Banks have forgotten how to loan money to business, especially SMEs. Business angels or venture capital companies might be interested, but usually there needs to be an established relationship in place in order to raise money in a hurry.

And even when such an association exists, if they’ve already invested in you, it’s unlikely that they will be willing to advance another tranche to you, no matter how great the potential, because it will increase their exposure.

And so it’s really down to you.

To be sure, the best companies maintain a contingency fund. Five to ten percent of your annual costs is probably a reasonable sum to have in your reserves. But, that money is there to cover unforeseen expenses; not to use for an untested or unexpected opportunity.

And since you already know that no business deal is immune from contingencies in any case, why would you risk everything on one opportunity?

The sensible thing, of course, is to raise the cash you need in another way.

And that’s where factoring can come into its own. Instead of using it as a stop-gap to forestall unpleasant consequences, you could use the same service to enable you to capitalize on new business opportunities. And once you’ve taken advantage of one, you’ll be encouraged to compete for the others.

Types of Factoring Business

Types of Factoring Business

If you are contemplating the possibility of availing the services of a factoring business, then by now you know that invoice factoring (also known as “business factoring”) is one way of quickly providing your company with working capital. Factoring is a business transaction, during which your company gets instant cash by selling its accounts receivable invoices to a factoring firm at a discount.

There are generally two types of factoring services you can avail. The right factoring service for your company depends on who is held liable for the debts when some customers are unable to pay. The two types of factoring to consider are (1) recourse factoring and (2) non-recourse factoring.

Recourse Factoring

This type of factoring is usually more preferable because the cost is generally less. The lower cost is due to your company’s decision to still shoulder the burden of bad debt instead of passing the risk to the factoring company. Because the factoring company does not take on the risk, your company should get this agreement rather quickly, as the factoring company should have less stringent rules regarding your business systems. The factoring company will also be less stringent about the payment history of your clients.

After the agreed upon time—usually 60, 75, or 90 days—your company is required to buy back the invoice from the factoring company if the customers are unable to pay. Recourse factoring is recommended if your customers are reliable about the payment, because if many of them are unable to pay then you would have to return the money paid to you by the factoring company, with the standard fees and interest.

Typical Non-Recourse Factoring

Most factoring companies define non-recourse factoring to mean that your company has no further liability for the unpaid invoice should a customer become unable to pay due to insolvency. If the customer declares bankruptcy and becomes unable to pay after the appointed time (usually the same period of time as recourse factoring), then you are under no obligation to return the advance you received from the factoring company. However, if the customer won’t pay the invoice for any reason other than bankruptcy, then even with the non-recourse factoring agreement in place the factoring company will require your company to buy back the invoice.

In this type of non-recourse factoring, the factoring company shoulders the entire risk of unpaid invoices. If for any reason the customer is unable or unwilling to pay the invoice—they don’t have to be insolvent—then the risk falls on the factoring company. If the debt cannot be collected, the loss is on the factoring company.

The sole exception to this is when the customer disputes the invoice; for example, the customer refuses to pay because your company is accused of not providing the service or product properly. Because the factoring business is outside this dispute between your company and the customer, then even with this version of the non-recourse factoring agreement you will still be required to buy back the invoice.

This type of factoring is usually more expensive and a factoring business will typically charge about 2-5% more, because of the additional risk involved.

Factoring is a sensible way to keep the tax man away

BY: Chris Lanchech

I’m sure that you’ve heard the old saying that there are only two certainties in life: death and taxes. And to be sure, the only way to avoid the latter is to embrace the former.

Factoring your invoices is a sensible way to keep the tax man off your back and to retain ownership of the business that you worked so hard to create.

Not much of a choice.

But taxes have a way of coming due at the most inconvenient time. For some, it’s just after the busiest season of their year. From Thanksgiving to the middle of January, some firms can do 20% or more of their annual business. But, when the season ends, then what? Business often slumps for a couple of months at least.

And that can mean that when the tax bill arrives, you aren’t financially prepared for it.

I haven’t met anyone who likes to pay taxes.

Oh sure, you hear of people like Warren Buffett talking about how they ought to pay more tax, and how the government needs to change the law so that they will. But you’ll never catch any of them forgoing a legitimate tax deduction to do it.

And they’ll never donate anything to the federal government, either.

Donate? To pay the national debt? Yes. That’s what I said. It’s right there on your tax return.

You can check a box, and donate your refund to the federal debt.

Fat chance, I hear you say. And I agree with you. I mean, who in their right mind would do so?

My point is that apart from the odd billionaire who thinks that the law should be changed so they are forced to pay more, the rest of us, and no doubt that includes you, prefer to pay less. But the thing is that time and taxes wait for no man, and certainly no business.

The failure to pay taxes in the short term can give something as small as your town government the right to put a lien on your business, which can make them the owners, and not you, in the stroke of a pen.

And that means that you have to have an alternative method that you can draw upon quickly, in order to find the money you need to pay it when it does become due.

The risks are just too high to ignore it.

Factoring your invoices is a sensible way to keep the tax man off your back and to retain ownership of the business that you worked so hard to create.

It enables you to obtain the money you need sooner than you otherwise would expect to get it.

For example, let’s say that you have issued invoices worth $50K, and that you expect them to be paid in 90 days. You knew that your taxes would be due in a month or so, but you got so busy that the time slipped by before you knew it.

Then your accountant tells you that you have to pay it in 45 days. What do you do?

One option would be to

That would prevent a problem with the government.

Or, let’s say that you had a particularly good year, but you earned more money at the end than at the beginning. And that meant that instead of holding some of what you earned in reserve for your taxes later, you had to use it to keep the company going during those lean months.

But now, because of your unexpectedly high earnings, you have more tax to pay than you were able to prepare for.

One way to deal with that problem is to use factoring to cover the difference. Even with the interest rates at historic lows, you’ll find that the discount at which you sell your invoices will be considerably less than the interest you would pay on a loan.

Not only that, but you’ll avoid taking on any new debt.

And that has to be a bonus for you.