NeeBo Capital Blogs – Page 37 – The Best Info For Factoring…

Should You Avail of Oil & Gas Providers Factoring?

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

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

Consider this:

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

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

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

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

Accounts Receivables Loans or Invoice Factoring

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

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

Is It Risky?

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

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

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

Purchase Order Financing as a Solution to Cash-Strapped Businesses

A lot of people are getting confused with the difference between purchase order financing and accounts receivable financing. Both can be quick sources of funds to keep your business going but of course, both are running on different terms.

fast Purchase order financing — Purchase order financing is also sometimes referred to as pre-delivery financing. It is meant to be a short term way of allotting funds to your inventory that are required to complete an entire sales transaction.

Take this as an example; if you’re a business owner and you just have landed a deal with a huge corporation or a government agency, but you don’t have enough funds to cover the manufacturing and delivery. What will you do? The recourse is to find a quick source of cash; otherwise, you stand losing the order and possibly create a dent on customer relationship, too.

In situations like this, business owners are looking into alternative lending solutions that have the capacity to provide them a loan in such a quick turnaround; and that’s where purchase order financing comes into play.

What is Purchase Order Financing?

Purchase order financing is also sometimes referred to as pre-delivery financing. It is meant to be a short term way of allotting funds to your inventory that are required to complete an entire sales transaction. PO financing is designed for growing businesses that have very little access to working capital or those that are suffering from cash flow issues. Mostly, the types of businesses that are qualified to take out a purchase order financing are producers, wholesalers, distributors, or resellers of manufacturing products.

Purchase Order Financing for Businesses with No Credit History

In a purchase order financing deal, the lenders will evaluate the credit history and ratings of your clients, not your company. So even if your business does not have a credit history to boast of, many lenders are still going to work with you on the deal. If your client has a solid track record in terms of payments, credits and such, then there’s a good chance that a lending company may be willing to finance your sales transaction.

PO Financing: How Does It Work?

A typical purchase order finance deal looks like this:

You scored a large business deal with a reputable client, but you don’t have enough funds to cover all the costs necessary to complete the entire sales transaction.
You go to a lender and apply for a PO loan. Lender checks your customer credit rating and if it passes, they’ll agree to finance your transaction.
PO lender issues the funds, you complete the transaction and deliver the goods to your client.
Once the client pays up, the PO lender collects the money, gets its share of the pie and gives back to you the remaining proceeds of the sale.

Yes, a chunk of the profit will have to be sacrificed, but if you really want your business to survive and honor your commitments with your clients, then opting for a purchase order financing is worth a shot.

Interested in Purchase Order Financing as a Solution for your Businesses? Click Here

What’s Up, Doc? – Medical Services Factoring

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

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

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

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

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

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

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

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

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

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

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

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

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

Accounts Receivable Loans: Should You Rely On Them?

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

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

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

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

Weighing Benefits Against the Risks

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

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

– Finances are secured early

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

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

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

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

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

Temporary Employment Agencies Factoring: Financing Solution That Can Help Grow the Business

Cash flow problems can be one of the most familiar problems for a lot of temporary employment agencies. And a solution that businesses often resort to is the use of temporary employment agencies factoring. Sure you have lots of clients whose companies are financially capable and are good with credit. But the thing is, these companies are slow on payments due to maybe a longer billing cycle or probably because of some sort of corporate red tape; but that of course is outside your concern.

On the other hand, while you are waiting for your receivables to fully liquidate, you have to make your own payments to your staff and suppliers. This is where the equation gets all muddled up. You have money that you have yet to collect, but you have dues now that you have to settle. So where do you get your money to cover your current dues?

Temporary Employment Agencies Factoring: Quick Cash for Dire Needs

Generating cash for your business is not easy. Sure, there are lots of ways to do so, but not all of those ways are applicable to your business. An option to get some funding is to take out a traditional loan; however, if you are a newbie in the business, you may not yet qualify for this kind of loans. But the good news is, it doesn’t end with traditional financing. Instead you may opt to go to a lender or a factor.

They offer short term solutions to companies suffering from financial constraints by buying accounts receivables. However, they’ll buy it at a rate that’s lower than the actual amount of the invoices. On the upside, it will give you some instant funding that can help make you pay your current dues as a temporary employment agency.

Is Factoring the Right Financing Option for Temporary Employment Agencies?

Temp agencies have lots of expenses that cannot be put off; so it is of utmost importance that they have a steady influx of funds. For a temp agency to run, it needs to pay for advertising, utilities and more so, it needs to make prompt payments to their employees. So for immediate funding needs, taking out a business loan the traditional way is not going to be a practical option, since approval for this kind of loan takes too long. That is why factoring is the ideal choice for businesses such as temporary employment agencies.

Lenders or factors also do not require a company to put up a whole array of hard assets to be used as collateral. Oftentimes, they only require the invoices that borrowers want to sell plus probably the employees’ corresponding timesheets. If they get approved for invoice factoring, the lender will deposit the funds into the company’s bank account and will soon be made available to fund the company’s monthly obligations. Temporary employment agencies factoring allows the company to pay their dues to its billers and employees without having to take out a new loan.

Interested in Factoring: Click here

Purchase Order Financing | How it works

Purchase order financing puts a different spin on raising capital to fund your business. Instead of borrowing against assets you hold, or selling invoices that you issue, you instead acquire that money on the basis of an order that a customer places with you.

Let me explain what I mean.

By definition, a purchase order is a request for a product to be delivered on one day, but paid for on another. If you have a credit card, then you do exactly the same thing every time you use it.

The financial institution that issues the card, in effect, gives you a loan to buy whatever items you obtain with it. Most people don’t see credit cards in that light, which is perhaps one reason why they get into debt so easily.

But the principle behind purchase order financing is exactly the same. You don’t have to part with cash at the time that you buy. In fact, you don’t actually pay the supplier. Instead you repay the bank for the loan.

Here’s how it works:

The company such as Neebo Capital takes your purchase order as collateral for a loan. The finance company gives you the money in exchange for that order. They issue a Letter of Credit, which amounts to the loan documents, and then give it to your supplier. The supplier is now the borrower.

When the supplier fulfills the order, you can then resell it as part of your normal business. Then you can use some of your profit to pay the supplier, who in turn redeems the Letter of Credit they received from the bank. In other words, it’s a means for you to pay your supplier on time without draining your company of the money it needs to continue to trade.

Companies of all sizes can benefit from this form of financing, but it works especially well for wholesalers.

Let’s say that you receive an unusually large order. You don’t want to increase your credit risk with the bank any further by obtaining an ordinary loan and, in any case, the length of time under normal circumstances to get one could cause you to lose the order altogether.

You know that you’ll make the money needed to cover the loan after you fill the order, but you need the additional money now so that you can.

Or, let’s say that you receive an order from a foreign country. That can add a level of complication the companies that only trade in the US can’t even imagine. Not only are delivery times longer, but payment has to pass through the arduous, and sometimes costly, process of exchanging one currency for another.

There is one proviso, however, and that is that your supplier must be a reliable, creditworthy firm. That’s because he bank wants to be sure that you will be able to repay the money that it loans you.

Your ability to do that is based on the assumption that the supplier will give you what you need to fill the order. Then, when you’ve paid the supplier, they can then repay the bank.

Interested in Purchase Order Financing? Click Here

Understanding the Basics of Medical Services Factoring

In the health care industry, there are often two different departments that require the aid of medical services factoring. First there are the medical providers like clinics, hospitals, and private medical offices. Second are the vendors that provide services and supplies to the medical providers such as medical staffing agencies and those that provide medical transcription services. Each affect the other but when cash flow is slow they both suddenly come to a halt. So what is the solution?

Medical Services Factoring Creates Steady Cash Flow

The never ending complication is that medical providers like hospitals often have to wait for months before getting paid. This is because the transaction can go through several billing departments especially now since most patients pay using their personal medical insurances. Securing the payment from the medical insurance will take weeks due to verification and legal procedures. This is then going to go all through the hospital’s billing department a second time before it gets distributed to the proper departments that were intended to get paid in the first place. This last part also includes the vendors.

Because the process takes so long, medical service providers and vendors often have to slow down work or cut down on their staff to compensate. The only other option is to get a loan from the bank yet this can take just as long as receiving their fulfilled invoice. So what option is left but invoice factoring from medical services factoring companies.

How It Works

This is a very simple process. The medical billing department will take their invoices from insurance companies, financial firms, and others that will pay them in the weeks to come and sell them to a medical services factoring firm.

The firm will then process these invoices so that the medical provider can get all their payment in just days (mostly 24-72hrs) instead of waiting weeks. They will only get around 85-95% of the full invoice however as the factoring firm will keep the remaining balance until they paid in full. As soon as your customer pays the total amount you are given the remaining 10% minus the factoring fees, typically 2-3% . Now it will be the factoring firm to process those invoices and get paid in the weeks to come, making it much faster for vendors and medical providers.

This type of instant cash is better than loans because they are processed much faster and they often do not require good credit standing. Some factoring companies will check how the credit standing is for a medical provider or for their clients but over all this will not affect the pay out in many ways.

Another benefit is that you can get invoice insurance. This is very important for medical service providers since they should not be chasing after clients who did not pay their balances.

Without insurance the medical provider will need to pay the money back to the medical services factoring firm as penalty and chase the client to get their money. With insurance, the risk now transferred to the factoring firm. With the risks now taken out of the hands of the medical service provider and with cash flow always constant instead of having to wait for it to return, medical services factoring is often viewed as their financial savior.

To explore our Medical factoring option visit our website.

Manufacturing Factoring –Is It Beneficial for Your Business?

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

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

What is Manufacturing Factoring?

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

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

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

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

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

Is This Beneficial to Your Business?

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

– steady cash flow in the business

– payroll is always met

– credit standing is not moved

– costs of production are met beforehand

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

Asset Based Lending In Canada

This article is mainly about Asset Based Lending, what it is, how it works, and how it can help your business.

Although the factoring of invoices can provide the immediate injection of cash that your company needs, there may be times when selling them at a discount is not cost effective.

For example, if you happen to be in a very competitive industry, then your profit margin may be too low to use this method. And so while the non-payment of your invoices would cause a hardship, so would settling for less than their full value.

In this situation, you may find that a loan is the best option for you.

Normally, when we think of loans, we do so with respect to purchasing something.

Let’s say that you need to replace some equipment. In that case, you might need to borrow enough money to buy it.

But let’s say that instead, you need some extra cash in order to meet a scheduled expense, such as the company’s payroll. In that instance, there would be no new asset to use as collateral.

In such circumstances, asset-based lending comes into its own because you can use some of the assets that you already have as security for that loan. It’s similar to borrowing against the equity in your home.

The repayment of that loan is made through your cash flow.

There are a couple of different types of assets that can be used for loans of this type.

One is your inventory. Now there’s nothing to say that all over your resources need to be used. You only need to enough to cover the size of the loan. And so you needn’t feel as though you’re losing control of your company.

Remember that this is a short-term fix.

Another asset that you could use is publicly-traded stock. Larger companies do this on a regular basis.

There are however, two situations that can have an impact on the ability of the company to use this option.

The first is the market price of the stock. When it’s high, more money can be borrowed than when it’s low.

The second is the interest rates, and sometimes the two are related. Higher rates mean that the loan costs more. But, the markets usually react when rate go up because it reduces the amount of money that’s available to buy stocks from all companies, not just yours.

And so, if you depend on the market price of your stock for your asset based loans, then you may not be able to borrow as much as you need.

There’s a second reason why you might want to obtain an asset based loan, and that is so that you can take advantage of an unusually large order. It could be that you simply lack the resources to obtain the materials that you would need to fill your customer’s request.

The last reason why an asset based loan might come in handy is if there is a delay in the payment of one or more of your larger invoices. Where margins are tight, you could find that a shortage of cash would impede the firm’s ability to trade at all.

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

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

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

A/R Financing Defined

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

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

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

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

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

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

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

A/R Financing Potential Drawbacks

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

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