NeeBo Capital Blogs – Page 26 – The Best Info For Factoring…

Non-Recourse Factoring for Food and Beverage Companies

Food & Beverage working capital lines ($50,000- $10,000,000)

There are many types of factoring for food and beverage companies, and sometimes it can get confusing. That’s because not every factoring company offers the same types of services, and sometimes they don’t differentiate between invoice factoring and invoice discounting.

The best way to go about procuring factoring services is to make sure that you and the factor have a very clear agreement. Now if you want to be protected from the risk of not being paid by a grocery store for your food and beverage products, you may want to search for non-recourse factoring. In this version of factoring, the factoring company assumes most of the risk.

When a Grocery Store Goes Bankrupt

To illustrate, let’s take a typical example. You have an invoice that’s worth $100,000, which the grocery store is required to pay in full in 90 days. With the factoring agreement, the factor gives you 70% (this may vary depending on the factor) right away. So that means you have $70K as working capital, which you can use to pay your employees’ salaries and overhead. When the grocery store pays the full amount, you then get the rest of the money, minus a standard fee and a percentage for the factor.

But with non-recourse factoring, if the grocery store declares bankruptcy before the due date of the invoice, you get to keep the $70K. You may not get the rest of the money owed you, but basic math tells you that it’s better to lose $30,000 than lose $100,000.

Points to Consider

Usually, non-recourse factoring costs a lot more than recourse factoring. You may receive a smaller advance, and the fees and percentage for the factor may be higher. This is understandable because the factor will want to be compensated for the added risk. In addition, the background checking for that particular grocery store may be more extensive, which means there’s more work that must be paid for.

You may also want to remember that you will only be protected if the grocery store goes bankrupt. If the grocery store refuses to pay because of a dispute with you, then that remains your problem.

Conclusion

So is non-recourse factoring for food and beverage companies worth the additional expense? It’s hard to say, but that can apply to anything in business. Everything in business, when you think about it, is a gamble. You’re simply paying more so that you minimize your risk when it comes to a particular invoice. Moreover, you can’t really know for sure that a grocery store is unlikely to go bankrupt just because it is already well-established. According to some statistics, grocery stores rank as the third type of business that’s most likely to fail after the fifth year, with eating places (which may also be your clients) trailing at number 4. By passing on the risk to the factoring company, you can still get the majority of money owed to you even if your clients go bankrupt.

How Essential is Factoring for Apparel Companies?

Factoring for apparel companies has always been popular. The textile and apparel company is the first industry in which the factoring method of obtaining fast cash through the sale of accounts receivables became virtually a standard practice. That’s primarily because of how clothes manufacturers and retailers do business. A clothing line offers a set of clothes to a retail store, but the retail store will pay for the clothes anywhere from 30 to 90 days. But with factoring, the clothes manufacturer gets most of the money right away (anywhere from 70% to 80%).

Today, factoring services are expanding in the business sector as many companies across a wide range of industries have come to appreciate the convenience and other advantages of factoring. Yet the textile and apparel industry is still the major player in factoring. According to one study, the majority (54%) of the factoring volume in the US is still with the textile and apparel industry.

While factoring advantages for apparel companies have always been recognized (such as greater cash flow and convenience), many apparel companies are also using due diligence as a way to help predict the future.

Assessing your Future

If you are a designer who sells clothes to retailers, one of the things you may have tried in order to get the capital you need is going to the bank to borrow money. Banks have always been the go-to lenders for working capital. What they will do is investigate your financial health (such as your credit rating) in order to assess the likelihood that you’ll pay back the loan plus the interest.

But because of the current economic climate, banks nowadays are not really in a lending mood even if your credit history is satisfactory. You probably need to put up sizable collateral in order to secure the loan you need. But chances are your loan application may be denied. That’s not really saying that your company has very little chance of succeeding. It only means that banks are quite wary about lending these days.

On the other hand, with factoring services, you may get a more accurate assessment of how your company will perform in the future. The factors will also investigate your company and if they think it is a viable partner, then they will be willing to purchase your invoices. It’s only when factoring companies reject your application that you should really be concerned about your future.

Customer Creditworthiness

Factors also check out the creditworthiness of the retail stores that owe you money. You have to do your own due diligence, of course, but here, the factors perform the same task as well. And if the factor refuses to purchase an invoice involving a smaller retail store, that may be a red flag concerning your future relationship with that particular retail store.

There are many advantages to factoring for apparel companies. If you want your business to operate smoothly and steadily in spite of some challenges, then factoring is certainly something you should consider.

2014 Medical Business Loan Guide and Tips

Click the image for our medical factoring program. Clients that exceed $500,000 in accounts receivable may qualify for our asset based receivable financing program — Click the image for our medical factoring program.
Clients that exceed $500,000 in accounts receivable may qualify for our asset based receivable financing program

Like any other business, starting a medical clinic of your own will require startup capital. This may seem problematic at first, since you need to file a lot of paperwork beforehand. It may also seem like applying for a 2014 medical business loan can be very tedious too. However, applying for loan to start your own clinic can actually be easier than for other types of businesses, since offices and clinics of medical doctors are among the types of businesses which enjoy a very high success rate after 5 years.

Here are some tips to keep in mind:

Make sure you have a stellar credit history. That means you should make sure that you always pay your credit card bills and car loans promptly. It’s also nice if you don’t have any other significant debts, such as student loan debts. A bad credit history may indicate to banks that you are a poor choice on which to invest their money.
Go to different banks at the same time. You should file a loan application to at least 3 banks. You are essentially shopping for a high-cost product (capital) and so you want to do your due diligence and see which lender offers the best terms. Applying for a bank loan also takes weeks and even months, so you should do it simultaneously instead of applying to banks one at a time.
Make sure that you follow the application procedures properly. Keep track of deadlines for form submissions, and stick to the truth when putting down your financial details. Basically, you want to demonstrate more assets than your liabilities, such as student loans and a mortgage.
You’ll want to see which ones offer the best rates. The usual rates are at about 2 to 3 points above the prime rate. You’ll also want to know which banks can get you the full amount of money you need. Another aspect you need to check out is the term of the loan, which usually goes from 5 to ten years. Five years may be too short a term, because the loan payments per month will be higher. But ten years may also not be ideal because they tend to carry higher interest rates. That means that you will pay more money in total for the loan. In general the best term is about 7 years. The interest rate will be tolerable yet the payment scheme won’t be too high.
In general, loan payments consist of interest payments and payments toward the principal. See if you can get a reasonable period when you pay only the interest initially. That’s because you are still building up your patient list, and there’s a delay on when you’ll get your payments from the insurance companies. By paying for the interest only at first, you should have enough working capital to cover your operational expenses.

Starting your own clinic is a great, perhaps even sacred, profession. But it is still a business. Make sure that you spend your 2014 medical business loan wisely!

California Apparel Company Working Capital

If you are an apparel company operating in the state of California, then you have special challenges that non-Californians may not experience. Your main problem is carving out a niche for yourself, because the state is teeming with competitors in the apparel industry. Perhaps a large part of your California apparel company working capital will be spent on marketing and advertising, simply to make sure that your brand is known among shoppers and that you have the brand image you want to have.

Everything seems more expensive in the state. Rent for California commercial spaces can be exorbitant, despite the supposed problems in real estate. Even paying workers is more expensive, with their hourly wages almost 10% higher than the rest of the nation.

But there are software tools you may want to use which can truly help you in your day to day operations. These tools don’t really care all that much if you are in California. You can take advantage of the benefits they bring just as much as the rest of the nation. Take a look at some software tools which can really make business much easier for you:

WordPress. More than 60 million people use WordPress, and that just shows how easy it is to use, and how beneficial it is as well. You need an online presence for your apparel business, but sometimes it can feel as if you’re managing an entirely different business when you run a website. Hiring people to run it for you and to add content can really siphon off your money, and the regular maintenance costs will take their toll as well. But with WordPress, it’s so much easier, and it’s even free.
Bill.com. Doing your accounting books is part of running a business, but Bill.com makes it all so easy. It helps you track all your accounts payable and accounts receivable, and helps you manage your cash flow. It works with your accounting software, and it even eliminates the paperwork by storing everything in the cloud. It helps you make more accurate projections, reveal potential problems down the road, and enable you to come up with solutions much more quickly.
Evernote. Running a business means keeping track of everything, and that can be difficult when you have to come up with new ideas while also taking note of tasks you need to do. But Evernote helps you keep tabs on everything, and you can use any mobile device to access your notes. So any time you get a fresh idea, Evernote can help make sure you don’t forget. This is especially useful when you like to take photos to illustrate your ideas—these photos can’t help when you just use a notebook and pen.

As an entrepreneur, you really need to use your California apparel company working capital wisely. It has to last for a long time, because it will take some time for you to achieve the success you want. By investing in the right software tools, you can use your resources correctly and you’re much more likely to see a return on your investment.

How to Properly Spend Your Apparel Business Working Capital

For some, entering the apparel business may seem like a glamorous endeavor, but it is still a business. A lot of people try to use their interest in fashion to start a clothing retail store, but in reality it’s not as easy as it seems. In fact, most people who have experience in this industry caution prospective entrepreneurs to make sure that they have enough apparel business working capital to operate for years because it takes a long time before they can actually begin to see some profits.

Here are some aspects of the business into which you may have to spend a large chunk of your working capital:

Location. In many businesses, location is the key to success. Finding the right location may mean having to engage the services of a realtor. Often, a good location will already be rented even before an advertisement appears online and even if you do find a great location, you may also find that the rent is overpriced. The ideal location for a clothing retail store isn’t just a place where lots of potential shoppers pass by. It’s also a place that’s defined to be cool and fashionable.
Ambience. The fashion industry is all about image, and your clothing retail store has to operate within the same rules. This means you have to make sure that the atmosphere of your shop reflects the kind of character you want for your brand. A clothing retail store isn’t the same as a hardware store; a clothing retail store is more like a fashion label or a club. You’ll need to invest some money in making sure that your store exudes that feeling you want so that you can emotionally connect with your prospective customers. And like fashion labels and clubs you have to change and update the look regularly in order to match current trends in fashion.
Marketing. It’s not just the ambience of your shop which defines your brand’s image. You need to have a coherent marketing and advertising strategy so that you can foster an emotional connection with your target customers. Your advertising will be different depending on the specialty of your shop. Marketing towards teenage girls is different from how a wedding dress boutique or a store for bikers markets itself. Sometimes image can spell the difference between success and failure, and if you want to be cool you’ll need lots of capital on a regular basis.

The lack of apparel business working capital is just one of the potential problems you have to overcome if you are thinking about setting up a clothing retail store. There are legal ramifications involved, and you actually need to have the skill to manage a business efficiently. Not all clothing retail stores succeed, but having enough money can help.

It may be sufficient to give you enough time to get a firm foothold industry, so that eventually you do make profits from your investment. Knowing where to get your working capital even when business is slow is also important. Non-conventional lenders like invoice factoring companies will be able to provide you with the capital you need.

The Importance of Business Working Capital for Sub-Contractors

Sub-contractors are different from general contractors. General contractors are the ones who are in charge of a project, and they’re the ones who get to pick the sub-contractors to do the job for them. But sub-contractors aren’t employees either. The agreement between the general contractor and the sub-contractor is not between employer and employee, but a business-to-business contract. And because it is a business, there is a need for business working capital for sub-contractors as well.

Technically speaking, sub-contractors exist in every industry. A wedding planner may be tasked to create the perfect wedding ceremony, but to do that they have to hire musicians and caterers. Those musicians are therefore technically sub-contractors who are tasked to do a certain job as part of a bigger project. But in popular usage, a sub-contractor is usually part of the construction business. Your job as a sub-contractor may be to deal with the plumbing or with the electrical wiring. You don’t deal with the homeowner directly, and instead the general contractor contacts you with the details and schedule of the job.

If you are a subcontractor, you need working capital for a lot of expenses, such as:

Liability insurance. This is often a requirement, and since you’re not an employee the general contractor won’t provide for insurance. You have to pay for your own liability insurance yourself. Sometimes that’s not the only thing you need; you may also need to get workman’s compensation insurance or risk indemnification.
Travel expenses. As a sub-contractor you need to travel to different places. You have to go where the job is. That’s the nature of your work. And if the work is far enough from your home, you’ll also need to pay for your lodgings and your meals. Unless it is specified in the contract between you and the general contractor, all these expenses are your responsibility.
Equipment. Since you’re not an employee, it is your responsibility to obtain all the tools you need in order to do the job that you are contractually obliged to perform. There’s no other company that will get you the tools you need.
Training. You are also responsible for your own training and there is a real need to upgrade your skills. One reason is that there may be new tools available which you need to familiarize yourself, or they may be new procedures you need to master. And you should also always try to improve or expand your knowledge because that makes you more likely to get the attention of a general contractor.

While you may think of yourself as a freelancer, as a sub-contractor you’re actually a business entity. As a business, you need to make sure that you can perform your day-today tasks, and that means you need to make sure that you have the cash available. Business working capital for sub-contractors is crucial, especially if you want to make sure that you are rehired by the same general contractor who chooses you in the first place.

Take Advantage of a Beverage Company Factoring Line

If you run your own beverage company, try to go with a factoring company that has experience dealing with beverage companies.

For a regular importer or beverage company, having some ready working capital is always a problem. That’s the nature of the business, because most of their assets are often tied up in their inventory or in their account receivables. If you own a beverage company, you may always find yourself running low on funds to run your monthly operations (for overhead, utilities, and salaries) because the payment schedules of your distributors are generally slower than the pace of your expenditures. That’s why a lot of lenders and other financial assistance providers offer more alternative ways of supplying working capital. You can even take advantage of a beverage company factoring line.

Different Types of Factoring Services

If you take the time to research about factoring, you may find yourself becoming confused. That’s because there are many different types of factoring. Factoring companies also offer different advance rates and varying fee structures. Part of the confusion is that terms such as factoring and invoice discounting may be defined differently, depending on the organization you deal with.

But the advantage here, once you actually discover the details of a particular factoring service, is that often the factoring can be customized to fit your particular needs. You may be able to make use of additional services such as investigating the credit-worthiness of new clients, processing the invoices, and even collecting the payments from clients.

A Line of Credit

A regular line of credit is one of the more traditional ways of obtaining working capital from lenders. If you own and use a credit card, the process is similar. You can borrow money up to a certain amount, so for example if you have a $100K line of credit then you can borrow only up to $100K before you need to pay it back with interest.

The advantages here are that you can borrow the money when you need it, and you also only borrow the amount you need. With traditional loans, if you borrow $100K, you have to pay interest on the full amount, even though you only spent $60K. With a line of credit, you can then be approved for a $100K line of credit but only pay for the $60K which you need, plus interest. So you still have $40K available, which you can use anytime you need it.

The Factoring Line

The factoring line usually works the same way, although of course this again depends on the particular factor you work with. Essentially, the total of your invoices can determine the limit of the factoring line. The factor may buy only a certain number of them, or you can be the one to choose as to which invoice you will sell to the factoring company. Like a line of credit, you have a limit as to the total amount of the invoices you can sell.

If you run your own beverage company, try to go with a factoring company that has experience dealing with beverage companies. They may be your best way to determine if a beverage company factoring line is appropriate for your situation.
http://www.neebocapital.com/Markets-we-factor/food-and-beverage.html

Why the Utility Industry Needs Factoring

A business in the utility industry faces lots of challenges. First of all, acquiring the equipment, machines, and infrastructure for utilities is a very expensive endeavor. You could easily spend hundreds of thousands of dollars on one equipment alone. And when you consider the fact that often times your clients have payment terms, cash flow can be a problem. Fortunately, factoring can handle this situation easily.

Why Factoring is Important

The reason why factoring is so important is that it gives you the money necessary to operate and expand your business. The same money can also be used to pay for bills. By signing up with a reputable factoring company you will have an easier time signing in other carriers. The reason of course, is they know the factor’s reputation. This also means you can use the opportunity to strike a negotiation for discounts.

Aside from this, a factoring company can provide more incentives that can help your company prosper. Because the utility industry is very competitive, hiring the right factor is essential. If you’re going to hire a factoring company, they need to have the rates and programs your business specifically needs.

Other Benefits of Factoring

Anyone who has worked in the industry can tell you that some clients just take too long to pay up, and carriers even more so. When this happens your credit rating goes down and the revenues along with it. With a factor this won’t be an issue and a utility business can be assured of bills paid on time. In addition a factoring company will help in carrier payments and make sure that nothing is left unpaid.

Second, these factoring companies offer several programs with different payment options. Regardless of your budget, a factoring company will be able to provide an option to help you out. If you have never used factoring before, what all this translates to is immediate funds for invoices and no more headaches.

Factoring companies can offer much more than these, as they can provide different kinds of factoring services including recourse, medical, spot and traditional factoring. In addition these companies may also provide related services such as asset based lending and more.

Today it isn’t difficult finding a factoring company, but you need to make sure that the invoices you provide are for completed tasks. By making sure the invoices are free of legal issues or other problems, transactions will proceed smoothly. If you have never availed of their service before, rest assured that factoring is legitimate and acceptable.

A highly reputable factoring company also provides customizable payment payment schemes and online accounting. There are of course several factoring companies so you need to make sure that you hire professionals and those with experience.

If you’re looking for a factoring company that caters to the utility industry, there’s NeeBo Capital. Located in Boca Raton, Florida, NeeBo offers rates as low as 0.59% – 1.5% for 30 days. In addition there is no financial or monthly minimum needed, and the terms are very flexible.

Why You Need Janitorial Services Business Working Capital

. If you need more working capital, contact Neebo Capital

When you first start a janitorial service company, you have to make sure that you have enough startup capital to fund your necessary initial expenses. You’ll have to furnish your office, buy all kinds of cleaning equipment, buy some computers, and even purchase a delivery van. You’ll also need to make sure your personnel gets the training they need in order to do their job efficiently and properly. You also need to think about marketing, and in today’s world that means having a strong online presence. And finally, you should also make sure that you have enough janitorial services business working capital so you can continue working and providing services while you wait for the money to come in.

After your initial expenses, you have to take into account the many other expenses you need to take care of on a regular basis. These expenses include:

Payroll. Your janitorial services company will need workers, which means you need to make sure they get paid on time. If not, they’re not going to hesitate leaving your company.
Training. Cleaners come and go, and you may find yourself hiring new workers which have to be trained properly. You need to develop a program or a mentoring system to make sure all your new workers know their responsibilities and tasks.
Utilities and rent. You will also need to make sure that you have enough cash available so that you can take care of your water and electricity bills. If you have a website, you may have to pay for that on a regular basis as well. And unless you bought your own place, the rent for your office will also have to be part of your expenses.
Cleaning supplies. You’ll need a steady supply of cleaning agents, including soaps, wax, bleaches, and industrial cleaners. Rags, wipes, and paper cleaners will have to be replenished as well.
Equipment maintenance. Once you buy your cleaning equipment, you’ll also need to make sure that they are in good working condition. They have to be cleaned and maintained regularly, and their storage should be appropriate as well. You should also make sure that you don’t overlook your company vehicle too. Proper vehicle maintenance must be done, and the truck you use for your business will need regular tune-ups and fuel. If any of your equipment is damaged or begins to malfunction, you should have enough working capital to take care of repairs and replacements.

Most people who are just starting a business think of janitorial services business working capital simply in terms of cash. But that’s not always the case. If you need cash in order to fund the day to day operations of your company, you also have other assets to use which you can convert into cash. You can use your equipment or even your location (if you own it) as collateral when you try to get a loan. You can also use your accounts receivables to get a cash advance through factoring services. If you need more working capital, there are always other ways to get them.

The Importance of Having Sufficient Food and Beverage Business Working Capital

If you want to put up a grocery store to serve the needs of your neighborhood, one of the first things you need to secure is sufficient food and beverage business working capital. Your working capital will enable you to run your business smoothly even through the slow seasons. You need that money to pay for inventory, which is necessary for you to make a profit.

One of the more common problems for small business owners such as those in the food and beverage industry is that they tend to underestimate the amount of capital necessary to function properly. You’ll need to use capital for things that a grocery store needs, such as:

Location. You’ll need space to set up your store. You need space to display and stock your wares as well as for your office, and you’ll also need space outside for parking. You may even have to do some renovations, and that too will require money as well. The precise location will also have to be found, because you want a place that’s accessible to your potential customers. The best locations also tend to be more expensive to rent, lease, or own.
Inventory. You’ll have to use your capital to buy food and beverage items, so that you can sell them. You’ll have to try to make sure that you have enough of the more popular grocery items so that you don’t run out of them.
Special equipment. You need to make sure you have the shelves for your wares, cash registers, computers for your accounting and communication needs, adequate lighting, shopping carts, and special containers such as freezers, refrigerators, and refrigerated display cases. A sound system for special announcements and relaxing music may also be helpful.
Personnel. You need people trained to guide customers to the sections they are looking for, to stock the shelves, to keep the place clean, and to handle the food and beverages so that they are stored properly in sanitary conditions. That means you have to make sure you pay their salaries regularly and promptly, and you may also have to spend time and money on their training.
Regular expenses. You will need to pay your monthly water and electricity bills.

Starting your own grocery store without adequate food and beverage business working capital can be problematic, at the very least. And these days, getting financing can be very difficult, since bankers tend to be quite tight-fisted about lending. In some ways, it’s a Catch-22—you need lots of money to buy assets, but you need lots of assets to borrow money for capital. So it’s a good thing that there are other ways to secure your capital aside from just relying on banks. With invoice factoring and other kinds of services, you can continue your business without interruption, even if you don’t have enough money at hand to secure inventory and pay for your daily operational expenses.

Click here to see our food and beverage working capital options