APR vs Discount Fee’s

Every now and then we get a business owner looking for the difference between APR (Annualized PERCENTAGE RATES) and Factoring Discount fees.

As an analyst these questions can still confuse me. Business owners juggle many different financial tasks and terms. However there is a huge difference between factoring discount fees and annualized percentage rates.

The difference is complicated:

– Annualized percentage rates are dependent on a businesses risk over the year.

-Factoring discounts fee’s lower the risk to net 90 terms at the most.

*keep in mind if you try and compare an annualized rate with a short term rate(factoring discount fee), you must ALSO compare a company that can qualify for a long term loan and one that cannot. Those two companies are not the same, neither is the cost of funds.

Above is the definition, and as you can see trying to compare the two is like saying ducks and eagles are the same because they both fly. I say this because if you attempt to multiple a 30-day invoice fee by 12 you will not get a accurate number of the annualized percentage rate.

For example: When a factoring company funds your 30-day invoice with net 90-day terms, your invoice will be repaid between 25-45 days on average. This means the risk of the outstanding invoice is only over a short period of time.

This short term reflects the risk your company brings into the equation. Factoring companies accept this risk and offer a factoring discount fee.

On the other hand a bank will make a loan that they expect will be paid over a year or more, because they make calculations whether or not your business will be better over a period of time. If banks see any risks that your business cannot pay back the loan, the you get no loan!

Factoring companies will give your business funds within 24 hours to 3 days. Their lending is dependent on the creditworthiness of your customers.

Hope this helped
Chirs L.

Oil & gas Providers Factoring

This blog is written for businesses working in the oil and gas industry:
Oil & gas Providers Factoring
We all know how well the gas and oil industry has been performing. For many people, it’s been a spark of hope to push the economy forward. States that have oil sources (e.x. Pennsylvania, Ohio, Colorado), have seen an expansion in oil related industry growth and oil affiliated jobs. Most of all, this has lead to a significant increase in the amount of small businesses who provide for the oil and gas industry.

Many of these start-ups where created by individuals who have a lot of technical know how but usually not a lot of money. They start getting new business and their customers start growing. Many these start-ups in the oil and gas industry get into trouble once they realize that their company has weekly expenses however , Oil and Gas clients pay their invoices in 45 to 60 days. Sooner or later, they experience trouble paying expenses while they wait for slow paying customers to pay their bills. And that’s exactly where the factoring companies step in.

Quite a few factoring finance companies have noticed this and have started to finance oil field service businesses as an new extension of their existing factoring businesses. This area is become a powerful financing area and is going more mainstream. This makes the industry has strong customers and shows growth.

If your business is in the oil and gas industry and is in need of funding, give us a call 1-888-382-3766 or visit us online by clicking here

Accounts Receivable Financing

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Small Business reduce costs by Factoring Invoices

You are in business to make money, and today the business environment is not getting better as fast as many small businesses would like, so many businesses are looking for ways to cut costs. Factoring is a strategy most US businesses do not consider, because it is widely misunderstood.

Instead small businesses look for obvious methods they know such as comparison shopping for the best deals on affordable insurance premiums, re-negotiating a lease or mortgage, however there are also some creative ways to save money such as invoice factoring.

You could start hiring short-term employees. An employee leasing company can help you save considerable amounts on benefits ,as the leasing company usually offers benefits to its workforce by itself. Employing temporary employees insures that you will be only paying for work as you need it.

Try shopping for business credit cards without any annual fee and also the lowest interest rates. Also steer clear of cash advances as credit card companies charge fees on the advance as well as a significant interest rate. And when making deposits in the bank, attempt to make them early in the day so that you start earning interest the same day.

If you can,Go paperless. it is possible to lower storage and printer costs along with better efficiency mainly because paperwork which are e-mailed get there immediately, as opposed to the time it will take to send something by way of USPS also preventing postage charges.

as opposed to buying office equipment, consider leasing it. If you not possess the equipment this will mean you are not responsible for many service or maintenance charges.

Think about factoring to help relieve cash flow complications quickly. Many business owners aren’t familiar with factoring receivables, the cash flow strategy wherein a small business sells its accounts receivable invoices to a factoring company like Neebo capital at a discount in exchange for immediate cash.

Factoring Invoices isn’t a bank loan. Loans are based on your assets and the ability to pay it back. But when factoring receivables, the funds available are based on your credit-worthy customers and are virtually unlimited. The more invoices you have, the higher your credit line is.

It is a wise idea to try alternative sources of funding like factoring receivables.

The Distinction between Bank Financing and Factoring Invoices?

You will find two special instances when a business owner commonly runs into cash flow problems. The first is when the business is just starting out, and the second is when the business starts growing rapidly. Unfortunately for the small business owners, banks are not looking to extend you credit in either situation. However, you can find factoring companies like Neebo Capital who will work with companies in both situations.

The heart of American business is the start-up, and everywhere you look today you see a unique start-up. This is what makes the economy grow, but start-ups experience an especially difficult time getting qualified for a bank loan.

First, a start-up doesn’t have any solid assets to secure loans. In reality, the company’s main asset is its accounts receivable, that sorry to say isn’t solid enough for a bank line because accounts receivable may disappear rapidly and with out warning. Banks look for assets which can be more tangible for example machinery, equipment, basically something actual physical that they can take hold of in the event the business defaults.

Alternatively factors provide cash depending on the stability of the company you invoice, your accounts receivable becomes your asset.

Failing Rates for New Businesses Are Too High

The second situation that could prevent a new company from obtaining a business loan is that banks will not contemplate loaning to businesses who are in business for fewer than 3 years due to the fact of the high failure rate for new businesses.

Keep in mind, factoring companys (Neebo Capital) have a different approach for lending capital to new businesses plus they aren’t turned off if your company is just starting-up. Capital lenders should stress to entrepreneurs that factors such as Neebo Capital the credit-worthiness of their customers and the quality of their invoices.

Furthermore, factoring companies such as Neebo Capital investigate the credit-worthiness of their clients customers. For a start-up is is important to be aware that the businesses they sell goods to have a good credit history as a way to gain easier access to capital from factoring companies.

Expanding Companies Do not Have Enough Credit History

Another time when entrepreneurs end up short of funds during fast growth periods. Most of the time, a fast growing company visits a standard bank in search of a much larger loan than what last year’s earnings could justify because they intend to use the loan to double or triple last year’s revenues.

Banks as we mentioned above will not lend a credit lines to new growing businesses.The bank is looking for tangible assets in order to lend the capital.

Factoring companies, alternatively, lend to start-ups and growing businesses.

In summary, companies who are just starting out or have begun to expand quickly can be approved for factoring even when banks have previously turned them down because the lending criteria differs. If you find your business in this situation pick up the phone and speak to a finance represenative at Neebo Capital for Free.

How to Implement a 2012 Factoring Strategy Into Your Business

Funding a business in our current economic climate is unquestionably a challenge. Especially with banks and lending institutions restricting use of working capital, numerous companies have found it challenging to fund their everyday operating expenses. Businesses that would normally be considered as financially strong are having a hard time managing cash flow and securing credit that is so essential to their needs and growth goals.

Dont loose hope there is a financial strategy that works in 2012…

This financing strategy is enabling companies to make use of their existing assets to finance their company. This strategy dates back over five thousand years and it is one that enables companies to make use of liquidity built up within their own assets to finance their everyday cash flow needs. Factoring Invoices is this financing strategy businesses can consider when conventional lending institutions are no more an option.

However, the issue then becomes: just how does a company incorporate Factoring their invoices into their business strategy??

When you are looking at factoring invoices, consider it is a form of outsourcing your companys account receivable . Factoring Invoices works by allowing companies to sell their clients un-paid invoices to a Factoring company like Neebo Capital. In return, the factoring company (Neebo Capital) will extend credit based on the value of the invoices and the capability of your client to pay back those invoices.

You win because your Company secures the business creditline you need, without having the responsibility of waiting for clients to pay. This improves cash flow and allows your company to use capital on hand to finance business opportunities your team has.

Neebo Capital has low rates, and a motivated staff to work through any financing hurdles that may face your business.

Understanding Profit Margins & Factoring

There is a point to think about whenever your business is looking to factor invoices. You need to think about your profit margins.Whenever you have to pay interest on capital you raise from outside sources, like Neebo Capital factoring company, you have to first decide whether you can pay for the added expense.

It’s a good idea in any event to know precisely the amount of profit you gain from every single sale you are making. If it is a product or service driven business it ought to be fairly easy to do.

To do this: deduct the cost of the product in advance of sale from the sales price minus all the added costs; shipping and delivery, taxes, commission rates, business overhead etc. It is also a good idea to work with your accountants to acquire a fixed percentage of the sale that represents your “overhead costs” such as rent, utilities, office managing.

With a service oriented business it is somewhat different, but when you treat an per hour wage like a product you can get an idea of the expenses involved with your jobs. An additional benefit of dealing with this exercise is determining precisely what it is you do that is the most lucrative.

Clearly you want to focus on activities or goods that have by far the most profit potential for your business. When factoring your invoices with Neebo Capital, the discount rate for supplying cashflow to help you increase your business is going to be an added cost towards the net profit we are discussing here.

For example if your business is a high volume- low margin venture, factoring may not be suitable financing. So knowing what your profit margins are will permit you to make the right decision when thinking about using factoring invoices with Neebo Capital as a tool for growth.

Does Factoring Work For Your Business

Our Intern Manny asked me to write a blog explaining to you, business owners ‘how factoring can grow their business’ So I am doing just that. This article was created with you and Manny in mind.

To start I need to say the economic crisis of ’08 has impacted us all, in regards to cash flow payment terms have been getting longer. Customers that would once pay in thirty days are now demanding 45 days to pay.

Clients that once paid in forty five days are now demanding sixty – many even go so far as demanding seventy or eighty days to pay.

This creates a serious problem for a lot of smaller businesses since many are not able to manage to wait that long to get paid. And Because of this, many businesses are forced to turn away these clients, or turn away new opportunities to generate business. For many, this makes a bad situation more shocking.

As a business owner you need to understand you do have options to combat these problems. Neebo capital.com have over 40 different lending options and we lend anywhere from $5k to $10 million revolving. However in this situation your best option would be factoring invoices.

Factoring invoices speeds up your income through a factoring company like Neebo capital.com and reduces you having to wait until 90 days to get paid by customers. Our factoring company gives up to 90% your invoices upfront, and the remaining 10% when the invoice is paid, minus a small fee (typically around .59 – 1.5%). as soon as your customer pays the invoice we give toy the remaining 10%

To make this process work effectively, you approve the transaction with us neebo capital.com, the factoring company before hand, after which you make the sales to your customer.

As soon as you carry out the work, you can invoice your customer and hand over the invoice to us, the factoring company. This would provide you with the immediate advance while Neebo Capital.com holds the remaining 10% of the invoice until it is repaid. Ideally by using this process repeatedly you grow your business by taking on new clients that you could not have afforded previously.

Being approved for factoring is more or less easy – at least in comparison to other forms of business financing methods. Take the time to fill out our short for on Neebocapital.com for a instant quote. There is no obligation.

Neebo Capital.com Explains Factoring Invoices

Welcome to NeeBo Capital, this article was written to give you a better understanding of how factoring invoices works.

As you know business owners need cash. However how do you get money for your small company when banks are unwilling to offer your company any type of funding?Our team would like to introduce you to accounts receivable factoring,a proven approach of obtaining investment capital swiftly. That way, you will make the payments required to keep your business afloat while reducing your risk amounts.Factoring invoices involves selling yourcompany accounts receivable to a company such as NeeBo Capital in order to obtain instant cash flow. The factoring company pays you an advance, which is a percentage of the total invoice (typically 80-95%). Your clients re-pay the factor, and you receive the remaining, minus a small factoring fee. This is a time tested method to keep your company cash flow growing.If many of your invoices are not paid on time, use NeeBo Capital as your factor. Your business depends on money to run, and factoring is a way to avoid waiting Thirty to 60 days for invoices to be paid. Factoring companys such as NeeBo Capital look at your customer’s credit history and offer you an advance and a fee.

Something to remember is the fact you do not have to factor all your invoices. You should not look to factor clients who usually pay rapidly and dependably. The loss of money from the factoring fee would be greater than the immediate benefits. By studying your invoices and choosing carefully which ones to factor you will increase your profits. You do not have to take the very first rate that a factor company offers.

In the event you do not feel like you are receiving a bargain, check if the factoring company can offer a reduce rate over time or even determine if you could get a greater advance at the start while the factor works with your customers. Most factor companies give lower fees to companies that use their services often. This benefits the factor in addition to your business by generating a partnership.So do not hesitate, start factoring your invoices with neebo capital.com today!

Payroll factoring | payroll factoring tips

Welcome to our Blog, this article is about payroll factoring, and the advantages/ tips of factoring your invoices to meet payroll.

On the list of effects of the recent recession is this : companies have turn into more guarded and conservative with their cash flow. One example is, lots of large companies are preserving cash by paying their invoices more slowly. In turn, it’s affected smaller companies who rely on steady predictable cash flow to be in a position to meet their obligations. Likewise, smaller companies are doing the same thing and trying to pay their invoices slowly as well. Ultimately, everyone’s cash flow is being affected.

The issue with this is that many small companies live invoice-to-invoice and a delay in invoice payments can quickly send their finances into trouble. And since few small companies have any meaningful cash reserves, a delay may effect their ability to pay suppliers – and more significantly – their ability to meet payroll. Missing payroll can have substantial negative effects that could ultimately lead to the closing of the business.

Your first line of defense to avoid a cash flow absence is to build a cash reserve. This can be easier said than done because most small businesses don’t have the means to build a cash reserves. When you can build a cash reserve, your company will be in a better position to weather the inevitable storms that will hit your cash flow. If building a cash reserve is not an option, then you should think about using a business financing solution that can allow you to cover payroll and other expenditures if things get tight.

Invoice payroll factoring is a business funding solution which might be used to correct cash flow issues relatively quickly and with out the hassles associated with standard financing. It works by repairing the problem at the source. It provides you a cash advance for your slow paying invoices, providing the liquidity you need to meet payroll and other crucial expenses. With an invoice factoring solution you can get rid of the uncertainty of client payments, permitting you to obtain a more predictable cash flow.

Among the advantages of factoring is the fact the most crucial thing you need to qualify for this type of financing is solid commercial customers. It’s ok if your customers pay slowly and gradually – provided that they pay dependably. Besides from this, your company needs to be free of legal and tax issues. And factoring can be deployed fairly quickly – usually in a week or two.

An additional advantage of factoring is that it’s dynamically tied into your sales. This means that it can be increased easily as your sales increase, provided that you are invoicing credit worthy customers. This makes invoice factoring the perfect solution for small companies with good prospects that are hindered by cash flow problems.

Visit NeeBo Capital today!