Category: Commercial

Tips for Boosting Customer Relations Which Can Maximize the Benefits of Small Business Factoring

When you’re involved with small business factoring, your relationships with your customers invariably comes into play. When you factor receivables, you get an advance on the money owed to you by your customers. Your customers then pay your factor on the due date and then you get the rest of your money (minus the fee charged by the factor) when your customers pay in full.

The fee and the advance are all determined by the creditworthiness of your customers. You pay a fine when your customers pay late, and you have to pay back the advance when they don’t pay you back at all.

So it’s very important that you have a good working relationship with your customers. Here are some tips about customer relations so you can maximize the benefits you get from factoring.

  • When you have new customers, set credit limits for them. A new customer is usually an unknown entity, and so you have no idea of how (or if) they pay their bills. You need to set a credit limit, so you can monitor their payment habits without risking too much.

Your customer should know about the credit limit, and they should know what steps they need to take in order to get better credit terms. Perhaps when they’ve paid in full and on time for a given time period, you can increase their limit.

  • Always set clear conditions and terms in your contracts. You must have a proper written contract with your customers, whether they’re old or new. If you’ve been used to verbal agreements with your customers, that has to stop if you expect to factor receivables.

Everything should be specified, every word defined clearly, and every figure clarified. There should be nothing unclear about the contract, and nothing should be open to interpretation. That keeps the misunderstandings and confusion to a minimum. And if the terms and conditions change, a new contract must be drawn and signed by both parties.

The amount owed to you must be specified. And the due date must also be very clear as well.

  • Try to forge a secure personal relationship with your customers. Building a strong personal relationship with your customers doesn’t just get you more sales. It also ensures that the companies you sell to pay the amount they owe in the time specified in the contract.

A contract may not be enough to deter your customers from paying late. But if you have a personal connection with them, they may be less inclined to destroy or damage that trust.

Customer relationships are essential for your business. And it becomes even more important when you’re engaged in small business factoring. By having a strong relationship with your customers, you can also make sure that your relationship with your factor is smooth as well.

How Medical Receivables Factoring Can Help Your Clinic Stay in Business

These days, it’s not entirely surprising to see clinics closing down. They stop doing business because patients aren’t coming in due to high costs of health care, or there’s too much competition in an area and you have to set your clinic apart from the rest. In all likelihood, you’ll need a quick infusion of cash to help your clinic operate and thrive. And this is where medical receivables factoring comes into the picture.

Medical factoring companies can help you because they can advance you the money owed to you by insurance companies. If you have enough capital, you can do the following to help your medical clinic rise above the competition.

  • Boost your advertising. With the money you get from the factor, you can advertise your clinic more effectively. Perhaps you can start a website, and if you already have one you may want to set aside a budget to improve it. You can make it more attractive, feature more articles, and perhaps also improve SEO so that your clinic’s website is ranked at the top of the search results when patients in your area are looking for clinics online. All these require the help of professionals, and they cost money.
  • Upgrade your equipment. You can also feature more advanced technological equipment in your clinic. Not only do these new tools help you treat your patients more effectively, but your clinic also becomes more attractive to patients.

You can get better diagnostic tools so that you can find out what’s wrong with your patients. You can give them more comprehensive and more accurate tests to help with the diagnosis.

You can also get new tools to help you get more patients. You may offer different solutions for certain ailments so that your patients will have several options.

If you think that your current equipment is still ok, then you can still use your funds to make sure that they are properly maintained. By helping your equipment last longer, you can get full value for them for as long as possible.

  • More personnel. It’s not easy to run a clinic all by yourself. That’s especially true when your advertising succeeds and you have an influx of new patients. You may run yourself ragged trying to take care of them all.

But with enough capital, it may be possible for you to hire new nurses and doctors. You may even hire doctors with a different specialty so that you can expand the range of your health services.

This is especially true for dental clinics. If you’ve been specializing in preventive dentistry, for example, then by getting new dentists on board you may be able to offer new dental services such as braces, aligners, and crowns.

With medical receivables factoring, your medical clinic can thrive when others have failed to survive.

How Attractive are Business Finance Terms These Days?

Financing is one of the most difficult barriers that small business owners have to overcome if they want to stay operational. Nearly every startup will require at least some seed money so they can get their business off the ground so if you don’t have capital, you would have no other choice but to borrow money.

Borrowing Money from a Bank

Commercial loans are the standard choice of many small business owners and they are often used to finance a major investment. These loans usually have fixed interest rates and are often paid monthly or quarterly until the loan matures.

There are two types of loans offered by banks to business owners and entrepreneurs: long term loans and intermediate loans. Long term loans can go for as long as 20 years, and they are best suited for the more established businesses. That’s because these loans require collateral and getting approved can be next to impossible, for startup companies. Intermediate loans, on the other hand, are short term loans that can run as short as a few months to a couple of years. Banks do not require collateral for intermediate loans but the amount of money you can borrow is minimal compared to long term loans.

Business Finance Repayment Terms

When applying for a business loan from traditional lenders, you must prepare a detailed and comprehensive business plan. You have to fully explain your proposed venture as this will help the lender determine the right kind of financing to offer you.

But before approaching a lender, you need to decide how much money you need to borrow, the type of loan you need, for how long you should pay it, and if you can actually afford to repay with interest.

Business finance terms may be different for each lender but generally speaking, the lender will require a portion of the loan together with the interest to be paid to them at regular intervals. The amount you need to pay each month (or quarter) will depend on the term set by the bank and the duration of payment. Be aware that the longer the term of the loan, the more (total) interest you will need to pay.

Business Financing Challenges

Most startup companies do not realize the challenges they would face when they try to raise some capital. Although there are definitely many options out there, getting the financing they need is actually not easy. You can seek the help of venture capitalists and other kinds of investors, or go to banks and traditional lenders but none of them will part with their money easily. You have to go through a very stringent evaluation process with very little chance of success. That’s because many startup small businesses do not meet the criteria that lenders set – such as stellar credit history, sound financial background, and length of business.

The business finance terms offered by banks are attractive – low interest rates and longer repayment periods – but very few small business owners can really take advantage of the financing they offer. And that is why many have turned to alternative lending. Faster processing time and higher approval rating make these cash advance platforms suitable for businesses that need capital, now.

A Working Capital Loan Will Generally Not Affect Your Working Capital

As every business owner or manager knows, one of the most crucial factors that can determine how a business will grow and succeed will be the amount of working capital it has. You need working capital to function. You use it to pay for your overhead expenses, payroll, and purchase products or raw materials for your inventory. This is why some businesses apply for a working capital loan. But what some may not realize is that a working capital loan will generally not affect their working capital.

What is Working Capital?

Part of the confusion lies in the fact that some business owners do not really understand what “working capital” is. It’s not just the cash you have that allows you to pay for all your operational expenses.

Technically speaking, working capital is what you have when you take all your current assets and then you take away all your current liabilities. The key word here is “current”. This means the asset is something that you can convert to cash easily (as in within a year or less). Your current liabilities are then what you need to pay for within a year.

So when you calculate your working capital, you try to determine how much cash your business has when you have to pay supplier invoices when they are due. You have to determine just how long you have and figure out how long it takes for your inventory to turn into accounts receivables and then into cash. You do the same with your supplier’s invoices and for your immediate needs, such as overhead and payroll. If your cash isn’t sufficient, then you’ll need a working capital loan to help you pay for what you need.

Working Capital Loan

So how do you get some working capital? There are several methods. One traditional way is to get additional funding from investors. For example, you can get some more cash in exchange for a percentage of your company. You and your investor may agree that your business may be worth exactly a million dollars, so the investor can give you $100,000 for 10% of your business.

You can also get a loan from a bank and other lenders. For example, you can get a set amount of money, or you can get a line of credit much like a credit card. With a line of credit, you have a maximum amount you can borrow, but you can borrow only what you need so you don’t have to pay interest in borrowed money you won’t need. With a working capital loan, you have more cash in hand, but you also get more liability because you still have to pay for that loan.

Conclusion

So this is why a working capital loan will generally not affect working capital. You do have more cash available to pay for your working capital expenses, but your assets and your liabilities remain the same. You increase your assets, but your liabilities increase by the same amount as well.

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Where to Get Working Capital for Construction Sub-Contractors

Where to Get Working Capital for Construction Sub-Contractors

On the face of it, the cost of factoring or purchase order financing can be rather high, compared to the cost of a typical business loan from a bank. But the need for working capital for construction subcontractors is oftentimes urgent, and bank loans take a long time to process. That means alternative sources of funding must be sought.

Subcontractors are always in need of working capital. Here are some of the problems peculiar to the construction industry:

  1. You won’t be paid for the job until it is completed. Right away, you know you need the working capital in order to take on the job. Without the capital, you absolutely won’t be able to fulfill the contract.
  2. The raw materials you need for the job are expensive. Steel, iron, glass, stone, cement—all these things aren’t cheap. You may take advantage of discounts by buying in bulk or by paying on COD terms. But that means you need to have access to your working capital.
  3. You need to rent heavy equipment. As a subcontractor, you’ll rarely own heavy equipment outright. Usually, you don’t really own equipment like concrete mixers and cranes. That means you have to rent them, and again the rent is often required immediately.
  4. You have to pay for labor. This is one expense that has to be met on time. You really can’t afford to be late on this particular expense. The average hourly rate for workers is $16.84 per hour, but some laborers may cost more than $28 per hour. Add the number of hours, and then multiply that by the number of days, and then multiply that by the number of workers you employ. The final tally can be exorbitant, and you have to pay regularly.
  5. You may have to do extra work. This is a common problem in construction. Often a client will ask for changes and extra work, and expect minimal or even no additional cost. It can be infuriating for subcontractors, but what can you do? This is simply human nature at work. Clients are finicky, and they change their minds often. There’s nothing you can do about that.
  6. Clients may go bankrupt. If you think you have money problems, you’re not alone. Unfortunately, lots of people have money problems of their own. The thing is, if you have money problems then it doesn’t concern the client. But if the client has money problems, then it concerns you because you’ll have trouble getting paid.

What you need to do as a subcontractor is to add all these expenses along with the cost of the working capital for construction sub-contractors. When you subtract all your expenses from the amount of money you receive as payment, what’s left for all your hard work? In most cases, the expense of the financing is worth it, especially when you consider that completing an order can generate more contracts in the future. In the end, lacking the working capital may be disastrous, and only the infusion of quick capital can save your business.

Two Financing Programs to Solve Distributors Cash Flow Problems

Distributors and Wholesalers Rates Starting At 0.69%
($50,000- $5,000,000)
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Distributors factoring
Like any other business, distributors face cash flow problems on a regular basis. This is particularly true for small and start-up companies who have to supply goods to their clients but need to wait for weeks and even months before they collect payments. Cash flow management is particularly important for these entrepreneurs as they also have to ensure that they are liquid enough to pay for their supplies, workers, office rent, utilities and other operating expenses. But how can a distribution firm settle these obligations when it has to wait for months before its clients pay up?

 

Factoring of Invoices

 

One way that a distribution firm can solve its cash flow problems is by factoring its invoices. Distributor invoice factoring is a reliable way for enterprises to raise money without falling into debt. In this set-up, a distributor presents its invoices to a third party lender who will pay in advance while holding on to the invoices until the clients pay back. The amount can be as much as 80% of the invoice.

 

Factoring of invoices presents several benefits to firms in the distribution business. One is the lack of collateral requirements. Firms applying for factoring line won’t have to present real property or vehicle as collateral unlike in a traditional bank loan. Another advantage is the swift processing of the factoring application, which could take a few days or even a couple of hours.

 

Purchase Order Financing

 

Another route that distributors can go to is by applying for a purchase order (PO) financing. This facility is ideal for small businesses that have just landed a big contract but lack the money to complete the transaction. In PO financing, a distributor also presents the purchase order of its clients to a lender. In turn, the factoring company will advance the amount indicated in the invoice and remit the remaining amount once the client pays up.  In purchase order financing, the distributor relies on the creditworthiness of its client to be able to access to quick cash for its operational expenses.
Benefits

 

Both factoring and PO financing provide a lot of benefits to distribution entities especially those that are just starting to grow their businesses. The first and perhaps most obvious advantage of these financing facilities is the money that enterprises can quickly get. Access to fast cash is essential for any distributor who has numerous bills to pay.

 

The second advantage is the lack of collateral requirements. Businessmen who are in the distribution sector won’t have to put up their houses or vehicles as collateral when applying for both facilities. Instead, they are only required to show the invoice or purchase order from their clients.

 

Distributors that need immediate funding for their day-to-day operations can apply for a purchase order financing or invoice factoring. While there are numerous financial companies that offer this type of financing, a wise entrepreneur should approach credible entities like Neebo Capital. We can assure you that your application for a purchase order financing or invoice factoring can be processed in a day or two. We also offer the best rates and flexibility to increase your credit line as needed.

How to Expand Your Canada Working Capital

We Offer Working Capital Lines $25,000 – $500,000 Across U.S. & Canada!

Knowing the amount of working capital that you need to run a business is very important. At any given point in the life of a business, working capital is perhaps the most important aspect that you need to really pay attention to. This is because your working capital is the source of all your operating expenses, and if you don’t have enough revolving capital, your business won’t be able to function the way you need it to. Relying on future revenues wouldn’t cut it, and this is why it’s important to really have your working capital figured out.

The reality though is that there are times when having sufficient Canada working capital becomes a challenge. Expanding your working capital sometimes becomes a necessity, and you’ll need to be clear about the options that you have in case you really need additional cash flow.

Different Financing Options

The good news is that while the requirements of traditional financing methods have become more stringent, there are now other ways to apply for financing. You don’t have to be limited to the usual loans offered by traditional financial institutions like banks, and you don’t have to worry if the credit line given to you is not enough to cover what you need.

In today’s world, there are so many other options you can run to. You can even initially apply for working capital financing through an online platform, no matter what part of the world you’re located. Here are some of the Canada working capital financing options that you can look into:

  • Purchase Order (P.O.) Financing
  • Supply Chain Financing
  • Contract Financing
  • Export Factoring
  • Freight Bill Factoring
  • Inventory Financing
  • Accounts Receivable Financing
  • Equipment Financing

These are just some of the many options available for those who want to expand their working capital. There are other options that fall under Factoring, Asset-based loans, Trade Finance, and other lending methods.

The amount you can borrow will depend on the arrangement with the lender and what your asset portfolio currently looks like.

Having the Right Working Capital

When you need to expand your working capital and you eventually choose one of these financing methods above, you just have to make sure that you know the amount of capital you need. Depending on what type of company you have and what industry you operate in, working capital needs could differ.

Also, if you operate globally, there are additional international requirements you need to think about and consider. For instance, you may have a customer overseas that just made a bulk order. To deliver that order you would need additional working capital not only for the raw materials and manufacturing but also for shipping those goods and making sure they reach your customer across geographical borders.

To operate your business efficiently, you will then need to really assess how much Canada working capital you need at any given point. If your working capital is about to run out or if you foresee that a certain season will drain it, then you’ll need to make advanced arrangements or plans for working capital financing.