Category: Factoring Invoices

Benefits of Factoring as Revealed in International Debt Factoring Case Studies

There are numerous debt factoring case studies which you can find online, and if you take the time to study them at length, you will find that debt factoring can even be more advantages than you previously thought. Debt factoring is an industry which involves many different arrangements, but with the right factoring partner you may be able to get the financing you need.

View our recent case studies here: neebocapital.com/case-studies

In addition, you can get additional benefits which can foster greater growth for your company.

  1. You can get credit protection against customer insolvency default. The problem with many industries today is that if you wish to grow you may have to extend your operations overseas, and that can be very problematic. For one, if an overseas customer defaults on an invoice then you may have a very difficult time in getting the money owed to you for the goods you’ve delivered.

This is why some factoring companies offer total credit protection against such a contingency. You can then expand your business and get new customers abroad without having to insist on cash on delivery or a letter of credit.

  1. You can outsource receivables ledger bookkeeping. When you have numerous customers abroad, keeping track of all those receivables can be a huge task. You’ll probably need to setup a department to do this. Yet by outsourcing this task to an international factoring company (which is already set up to do this for you), you can then keep your overhead costs down. This may enable you to keep your pricing competitive to attract more customers.
  2. You can let the factoring company take over the collection process. If you think that keeping track of all these invoices is complicated, then you’ll despair at how convoluted and arduous the process will be when you need to collect your money. It’s one thing to have overseas customers, but it’s a more expensive proposition to have to set up local offices just to do your collecting.

But factoring companies have standing relationships with local collection services, which can then handle this job for you. Some companies don’t like using factoring services to handle collections because they’re not sure about how professional they’ll be, but that’s not a problem here. Since these are overseas customers, the local collection agencies used by the factoring companies would be better suited for task of collecting than anyone in your company. These people know the culture as they’re part of it after all.

  1. You can be protected from currency fluctuations. Another risk in international deals is that you there’s a possibility that the exchange rate can go against you. You’re essentially dabbling in Forex trading. But many debt factoring case studiesclearly show that you can also be protected from this type of risk. If you’re based in the US, everything in the contract with your factoring service will be in fixed US dollars regardless of the changes in the exchange rate.

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Factoring Business Studies: What Do They Reveal?

Nowadays, quite a few mainstream finance publications and websites have finally accepted the fact that invoice factoring can be hugely beneficial for small businesses. For example, the Fox Business website has published an article that discusses the loan programs available through the Small Business Administration, and it suggests that invoice factoring may be your better alternative if you need the cash quickly.

Click here for our factoring case study.
Click here for our factoring case study.

But how do you know if a particular factoring company can be the best fit for your company? One way of doing this is to ask for references so you can use the experience of their former clients as your factoring business studies.

  • Choose references that are involved in your own industry. Different industries have different needs and business processes, so it doesn’t really make sense to study a factoring service for a janitorial company when you’re a distributor in the apparel industry. Those are two wildly different industries.

Instead, make sure that the references you get are in your own industry. If you can’t get these references, then at least you know that the factor you’ve approached to help you has no or very little experience in your industry.

By getting these references, you can then gauge the level of experience the factoring company has, and you’ll have a better sense of how they can set up an efficient arrangement for you.

  • Analyze the entire process. Since you’re using these references for your very own factoring business studies, take note of the particulars of each case. How much advance payment did the other companies get, and how quickly did they get it? Were the clients forced to assign factoring for certain invoices, or could you pick and choose what you can put up for factoring? Were there any lock down contracts in place, which required you to use factoring for a certain amount of time? Get the answers for all these questions, because they could apply to you too.
  • How much will the arrangement cost you? Everyone says that invoice factoring can cost you a whole lot more than a traditional loan from a bank. But the question you need to ask is precisely how much more? The references you get can give you a clearer idea of what you’ll be paying for the opportunity to get the funding you need much more quickly.
  • Are there any extra services available for your company? Some factoring services offer additional benefits than just simple funding. For example, they can handle the job of collecting payments for you, which then saves you the burden of having to set up a department dedicated to collecting payments from your customers. Others may give you detailed reports on the reputation of potential customers, so you’ll know which ones you can offer credit to. Some factoring companies even offer to shoulder the risk if your customer doesn’t pay the invoice.

Like any other business studies, factoring business studies can clearly illustrate the details you can expect, as well as the potential benefits and liabilities. Study them well, and you can get the right arrangement with the right factoring company that can fit your needs to a T.

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Factoring That Advertising Company Owners Need

If you’re in the advertising business, you really have to teach yourself how to adapt to the sometimes glacial pace of the industry. Things can be really slow.

How Slow Can It Get?

Nowadays, most advertising clients can take up to 90 days to pay for services, which is in stark contrast to the time when it just took them 30 days. This, of course, can really stretch your available cash flow, to the point that you may even think about cutting costs and salaries if you manage your own advertising company.

Then you factor in the time you need to obtain a contract and to finally succeed in providing your services. All in all, it can take months from the time you start a project before you get your money which you need to cover operational expenses and salary.

You may want to get a loan from the bank, but that’s another institution which doesn’t really believe in speedy procedures when it comes to providing loans to businesses. The loan application process is notoriously interminable, and what’s worse is that it’s very likely you may not even get your loan application approved.

Factoring for Advertising Companies

There’s a difference between providing generic factoring services and factoring advertising company accounts receivable. Generic factoring companies offer the same basic services of providing quick cash for invoices, but often they require that your advertising clients should be able to pay quickly. Companies factoring advertising company invoices, on the other hand, are quite aware of the trend in the advertising industry that involves very late payments.

In other words, a standard factoring company will be dismayed at a customer’s tardiness at paying their bills. A factoring company with experience in the advertising industry will regard such late payments as “business as usual.”

The Speed of Factoring

Companies that specialize in factoring advertising company accounts receivable may be used to how slow the payments can be from your clients, but these factors can act very quickly. That’s the advantage of working with factors. They really don’t dawdle all that much.

For example:

  • You can call them up and you can immediate talk to a specialist who can answer all your questions. There’s no delay about finding the answers for you, because you’re already talking to an expert.
  • You can then fill out the information required for online applications. This can be done very easily, because usually it’s only a single page you have to fill in. You can then send it back along with a sample invoice and an A/R aging report.
  • That same day you can get an email from them with their proposal. The email will mention how much you can get on your invoices and the fees involved.
  • You then send over your first set of invoices, and in a few days (or even in 24 hours) your money will be deposited to your bank account.

That’s the factoring process, in its simplest sense.

 

Choosing a Factoring Company for Vehicle Repair

Quite a few small businesses that offer vehicle repair started out with regular car owners as customers. These people tend to pay cash or with a credit card immediately after the service has been rendered. Since you are able to get your money fairly quickly, you have enough cash for all your operational expenses.

But the problem starts when you start catering to large companies. Sure, it’s a good deal. You have a greater volume of business in your hands, and that means greater profits, right? Then you realize that these companies don’t pay immediately. Either they will expect you to wait for a month (or even 3 months for some companies), or they have their insurance companies pay you. And one thing you can expect from insurance companies is that while they’re very eager to accept premiums, paying out is a different matter altogether.

If you just started out as a vehicle repair company, then you must anticipate these things. However, it doesn’t mean you should just pass up the opportunity or get a loan for your cash flow needs. Your third option is to make use of the services of a factoring company that deals specifically with companies offering vehicle repair. By doing so you may actually improve your cash flow situation.

How Factoring Works for You

Let’s say you have a large invoice worth $50,000 due to you in 60 days. You then just submit the invoice to the factoring company. They then investigate the company who owes you the money and evaluate the likelihood that they will pay up. If they think that you have a solid company for a client, then the factor advances you a large chunk of the money owed to you. For example, they may give you $40,000 in a couple of days. Then the factoring company for vehicle repair deals with the company or the insurance company for the payments.

When the company or the insurance company finally coughs up the payment, you then get the remaining amount, although the factoring company will take a small cut to cover fees and charges.

What Can You Do with the Cash Advance You Received?

Of course, you should prioritize paying your workers and utilities, but with this kind of an advance you have a lot more possibilities. You can add to your inventory or provide new types of services for your customers. You can engage in more effective forms of marketing so that you can gain new customers. When another large order comes in, you can then be able to fulfill the requirements without having to take out a loan.

It’s so simple a process that many people in the business are using factoring companies extensively. If you can limit their services to just the bigger invoices, then you can limit your fees and maximize your profits handsomely.

 

Let Factoring Help with Additional Funding Needs for Your Manufacturing Business

The conversion of raw materials to a finished product is done through the process we know as manufacturing. To be in this kind of business, the entrepreneur must have the acumen to predict market demands, have access to a regular supply of raw materials, conduct quality control procedures, and ensure the quality of the resulting product.

 

These requirements would need sufficient funds all the time to stay in business. That’s why a business such as this cannot afford to have cash flow problems. Ironically, this business is one of those who do run into fund shortage and end up in bankruptcy. If you’re into the manufacture of products, it’s time you think about engaging the services of a factoring company.

 

Your Best Financial Management Solution

 

Maybe you tried alternatives to fund your company in the past in the forms of investors, credit cards, friends, other lenders or bank loans to no avail. This is understandable because while your business has growth potential, there are other circumstances which prevent these alternatives from sustaining your business consistently. Investors may grow impatience over the return on their investment, friends might need the money more than you do, and credit cards, other lenders, and bank loans will charge you interest rates that may well be more than what your revenue can pay up.

 

Factoring will not put you through embarrassing or desperate financial situations. In fact, factoring is perhaps the best financial management solution that you can turn to when your manufacturing business faces a cash flow crisis. Your invoices are your collateral to get the funding you badly need. The factoring company buys these invoices and collects the payments from your customers. Compare that arrangement with a bank, for instance, and you know at once that the convenience of being approved immediately or even obtaining the loan within a week is not going to happen.

 

Why Factoring Cannot Be Topped By Other Lending Institutions

 

Here are the benefits of factoring which no other lending institution can top:

 

  • Fast, quick, and easy access to cash: no credit history or background investigation as a requirement for approval.

 

  • No addition to the business balance sheet as a liability because the funds are not considered loans. That said, there also no loan payments or loan interests to pay.
  • There are maximum or minimum requirements regarding the amount of funds that the company receives since the business owner selects what invoices to factor and the how often factoring is done.

 

  • An improvement in the company’s credit line means there is an increase in the business revenue and therefore an increase in the company’s access to more funds.

 

  • There is no demand on the part of the factoring company on how the cash advance should be spent and the business is not required by the factoring company to buy assets or equipment.

 

  • Increase profits and fund the growth of the company.

 

  • The creditworthiness of a company’s customers and not the company’s financial condition is the determining factor in approval by a factoring company.

 

  • Collection of payments to the company is done by the factoring company.

 

How Your Business Can Avail Of Cash Flow Funding

 

Given all these benefits, consider the services of a factoring company like NeeBo Capital. From financing production, supply chain, purchase order, commodities, and contracts, to asset-based lending such as financing real estate, A/R, inventory, and equipment, to other lending options such as merchant card services, credit insurance, equipment leasing, merchant cash advance, franchise financing, and restructuring of payables, NeeBo Capital can provide all these with professionalism, reliability, and quality service.

 

Numerous service industries – gas and oil, aviation brokerage, food service, cable ads and marketing, financial recruiting, freight and trucking, fitness equipment development, contractors and installers, and agriculture and dairy, among others – have benefited and continue to benefit from the services provided by NeeBo Capital to them. Visit www.neebocapital.com and out how your manufacturing business can avail of a first-rate cash flow funding service.

Best Sources of Working Capital for Medical Providers

Medical providers, from small clinics to major hospitals, offer one of the most important services in society. Yet they are still essentially a business, and as such they need working capital to ensure the smooth flow of daily operations. They need to pay for a workforce possessing specialized skills and knowledge; they need to purchase advanced equipment that grows more expensive each year; and they also need to spend for legal defense against claims of medical malpractice. But working capital may not always be available right away, because often they’re paid by insurance companies which have always been traditionally slow in paying.

Fortunately, when it comes to obtaining the working capital they need, medical providers have a number of options:

  1. Loans. There are many types of loans for medical providers. Some are based on real estate and work like a mortgage, while others are based on equipment. If you are a medical provider, the lender evaluates your credit history and the viability of your healthcare facilities, and then loans you the money you need when you can offer something substantial as collateral.
  2. Factoring. This is another way of using your assets (your accounts receivable) as way of obtaining the money you need more quickly. Essentially, instead of waiting for the insurance company to cough up the money, you get about 75% of it right away from the factor, with the rest to come when the insurance company finally pays you. This can also be an effective cost cutting measure for you, as your clinic doesn’t have to establish a collections department in order to get the payment. The factor does that for you.
  3. Grants and donations. The government and private organizations may provide you a grant or donation. A San Francisco hospital can even receive as much as $100 million as a gift from wealthy donors, and so can a hospital in New York. Normally though, donations are not really sizeable and hospitals often provide direction on how even regular folks can make donations.
  4. Selling Assets. Sometimes a hospital may sell a building or some land in order to obtain working capital. Even medical equipment may be sold as well.
  5. Venture capitalism. This is a very common practice in the hi-tech industry in which a start-up sells a percentage of its shares for some quick money. Now venture capitalism has entered the healthcare industry as well, and some hospitals are selling shares to investors. Even some non-profit hospitals are generating interest from investors.
  6. Joint ventures. This is when two different companies share risk and offer access to working capital, while reducing costs. The joint venture, however, has to comply with rather stringent antitrust government regulations.

Many medical providers seem to rely only on loans and grants in order to obtain the money they need. With some of the alternative methods of obtaining working capital for medical providers listed here, hopefully you can achieve greater success in getting the funding that your clinic or hospital badly needs.

 

 

How to Find the 2014 Best Local Factoring Company for Your Needs

Neebo Capital provides cash flow in all 50 States and to over 140 different industries including Canada

As the year steadily marches on, many small businesses are beginning to realize that factoring may be a much better source of financing than bank loans. This development has been going on for years, and now a lot of factoring companies are eager to offer their services to small and medium sized businesses.   Determining the 2014 best local factoring company can take some time, but you can accelerate the process by looking for these features:

1.     A speedy application process with clear-cut instructions. A lot of companies use factoring companies because they can get the loan much more quickly than applying from a bank. Some factoring companies may be able to grant the financing in two weeks, but there are also others that will approve your request in a matter of days.

2.     The best rates. Factors offer financing by immediately giving a percentage of the value of the accounts receivables so that the business doesn’t have to wait 60 or 90 days for the payment to arrive. Some factoring companies may advance 75% of the value of the accounts receivable, but others may advance 90% or even more. The 2014 best local factoring company would not only be able to advance a larger percentage, but will also charge the lowest rate on the remaining value of the accounts receivables. In addition, all their fees should be spelled out clearly in the factoring agreement, so that the client won’t be surprised with additional fees.

3.     The best collection handlers. Some companies use factoring companies not as a way to increase cash flow, but simply because of the convenience afforded by the factor since they are the ones who will collect on your client. So in effect, you save money because you no longer have to hire people to collect the money from your client. But this can backfire if the factoring company’s collection methods run counter to the style of your business. For example, rude ways of collecting payments may only serve to worsen the relationship between the business and the customers. The best factoring companies, on the other hand, have perfected the ways of efficiently collecting from customers. The best examples of these are the experienced factoring companies who specialize in medical factoring. These factors know how to deal with Medicaid and private insurance carriers, and they know precisely what types of documents are needed to collect the payment.

4.     Accurate risk assessment. Reputable factoring companies also excel in in assessing the credit risk of your company’s clients. They may also offer to do a credit rating review on your new customers. The best factors may even offer this service at no additional charge. By getting this information, you may be able to identify which customers deserve credit, and which ones are to be avoided.

Factoring can be a great asset to your business in many ways. But in the end, the right factoring company must first be chosen.

 

The Advantages of Getting Commercial Capital Through Freight Factoring

2014 Freight Factoring
freight factoring. In essence, the trucking company sells the invoice to a factoring company at a slight discount, and then gets a large percentage of the money immediately.

If you own a trucking company, it’s highly possible that you experience some challenges with your cash flow. That’s because you have to deal with a whole lot of day-to-day issues. These include salaries for your employees, the cost of fuel and repairs, and other expenses. Nearly every trucking company offers a credit period for their clients, which is why commercial capital problems are inevitable. When your clients only pay after 30 to 60 days (and sometimes even 90 days), it’s no wonder you have trouble with expenses that need to be paid now.

Fortunately, there’s a solution that’s specifically designed for this situation, and it’s called freight factoring. In essence, the trucking company sells the invoice to a factoring company at a slight discount, and then gets a large percentage of the money immediately.

Freight factoring offers several advantages:

  1. It boosts your commercial capital. Your cash flow problems are gone because you’ve essentially taken out the waiting period. You now have money for whatever you need. You can pay your bills on time, and you can also use the money for growth and expansion.
  2. It’s faster than getting a loan from the bank. Banks are notoriously slow in granting loans, and it may take you weeks, sometimes even months for a loan to be granted. Your bills are due now, so obviously you need the money now—a fact that banks don’t seem to realize. But factoring companies understand such needs perfectly, which is why the money is transferred to you almost immediately.
  3. You can control your debt to equity ratio. This ratio rises when you take out a loan to solve your cash flow difficulties, and it is also monitored by investors and creditors.
  4. You can avoid payment collection troubles. Having to chase after clients for your own money can be tedious and annoying—and sometimes it can be terribly frustrating. The factoring company may take it upon themselves to do the collecting for you.
  5. You can cut down on extraneous staff. You no longer need to hire people to check that your clients have good credit ratings, and of course you also don’t need your people to make follow-ups or collect your payment.
  6. You lessen the risk you take with your client’s credit. Factoring companies may share information about the credit ratings of your customers, so you can assess which ones are good and bad credit risks.

In one survey, 935 trucking companies filed for bankruptcy in just the first quarter of 2008, and that only included the companies with at least five trucks in their fleet. If you don’t want your trucking company to join their ranks, you may want to consider a quick and reliable infusion of commercial capital, and you can get that with freight factoring.

For more information about our freight factoring services, please check out www.neebocapital.com.

 

The Pros and Cons of Factoring Invoices 2013

By: Chris Lanchech

If your company is in dire need of ready cash for your working capital, one way of securing that money is by factoring invoices that your business has accumulated and has not yet collected on. This is just one way of securing quick cash for the company (other typical ways include securing a business loan or establishing a line of credit), and although it is not as common as other options, many companies have found it compatible with their particular needs and circumstances.

What is Factoring?

If your company offers credit to customers, then the accounts receivable (which in the accounting books of customers are labeled as “accounts payable”) constitute part of the company’s assets. It has not been turned into cash just yet—and this is what a factoring company does in a very short amount of time. Instead of waiting for the customers to pay the balance of their accounts, your company can sell those invoices at a discount. For example, your company can receive $900 right away for an invoice that calls for a $1000 payment. When the customers pay their invoices in full, that payment goes to the factoring company.

Advantages of Factoring

Quick ways of securing cash for companies have their own sets of pros and cons, and factoring invoices is no exception. These are the advantages that your company receives should it decide to factor its invoices to a factoring company:

  • Some businesses may find it difficult to get a small business loan or establish a line of credit. Invoice factoring is much more possible to secure.
  • This practice allows the company to receive the money it needs much more quickly than waiting for the customers to pay the balance of their accounts. Typically, your company should receive the money about two to five business days after your agreement with the factoring company has been finalized. Some companies even receive their money in as fast as 24 hours.
  • The money your company will receive is generally larger than the amount you can get from a business loan.
  • Invoice factoring also saves your company the effort of collecting the accounts receivables, as the work is done by the factoring company.

Disadvantages of Factoring

There’s no such thing as a perfect solution for getting large amounts of cash for a company, and factoring has its downsides as well. This is especially true if you have less than ideal customers. If they are slow to pay or if they have a dubious credit history, this can affect the fee that the factoring company will require.

Your customers must also pass the standards set by the factoring company; if they do not or if the factoring company thinks your customers are unreliable then you may receive a lower percentage of the accounts receivable up front.

But in spite of the drawbacks, factoring your invoices via a factoring company will be beneficial for your business. It will provide you a steady flow of cash that your business needs to operate and grow.