Invoice Factoring Blog

Link: http://www.ifgnetwork.com/

The United States Senate is supposed to vote this week on a bill to funnel $30 billion of capital to community banks.  Typically these anks cater to customers with small firms.  Banks could leverage the sum to make $300 billion in loans that create jobs, according to a Senate summary. So if this goes through, it  could more than double the commercial and industrial loans at eligible banks as of the first quarter. (Source: KBW Inc. )

Most bankers say that it’s lack of demand from creditworthy firms in a weak economy, and that the problem isn’t really scarce credit.  The result may be more loans given to distressed firms and higher losses.

In reality, invoice factoring would allow a company to grow without having to borrow money, and this  "use it as you need it" approach would allow small businesses to get cash quickly and easily - in as little as 24 hours - once the company is setup with IFG's factoring services.  Requirements for factoring include a copy of the company's current financial statements as well as a  signed application.

Link: http://www.ifgnetwork.com

In a news article on Reuters, President Barack Obama urged the Senate today to complete work on a small-business jobs plan. Obama hopes  to approve the plan, which includes a $30 billion small-business lending fund. Small businesses account for a large portion of United States job creation.

The fund would provide $30 billion in capital that the government could invest in independent community banks with assets of less than $10 billion to increase lending to small business.  It would support as much as $300 billion in new loans to small businesses.

Accounts receivable factoring could work in conjunction with new lending funds, as it would protect small businesses from falling into debt. The idea is to use funds due to your business net 30/60 or 90 days.  Factoring companies like The Interface Financial group (IFG) can factor invoices in less than 48 hours. 

Link: http://www.ifgnetwork.com/invoicefactoring.php

Banks make money by issuing loans to small businesses, and even though they are seeking more,  but there aren't viable borrowers.  What's more, the banks are now being criticized by the federal government for not lending to enough small businesses. Small businesses employ about half of Americans,  accounting for 60 percent of new jobs.

Most banks have the cash  to make loans, however research says that most loan officers are saying most applications fail. Loan apps typically fall into two categories, 1) business expansion, and 2) helping a business stay afloat.  Employment growth has been negative for 10 of the 12 quarters since April of 2007. Source:  Study by the National Federation of Independent Business - NFIB. The Market continues to be elusive, and overall consumer confidence is at an 11-month low, according to the same study.

The majority of  businesses are  trying to reduce their debt levels, so why would the average small business owner want to borrow money at this time?   They don't because with so much uncertainty, many small businesses can't imagine going into debt via a loan.

As the administration keeps pushing for new lending, Washington is pushing large commercial banks to set up small-loan funds.   The president of the Small Business Legislative Council, Jack Satagaj recently said, " taking out a loan to invest in inventory in this climate requires a leap of faith."  

However, a business that has funds due to invoice factoring, and leveraging their accounts recevables, makes enough money in less than 48 hours to purchase more inventory.

Remarkably, factoring can provide both a short term and longer term solution to small businesses during economically challenging times like these. It's fast and efficient and unlike a loan, it does not appear on the balance sheet. Invoice factoring is simply a "use it as you need it" service today.

Invoice factoring is basically a “use it as you need it” funding option, therefore every invoice purchase is a separate transaction and does not form part of a portfolio lending approach. The transaction is modeled as a buy-sell transaction, and the process includes:

1. Due Diligence - Once approached by a prospective client, IFG undertakes a thorough due diligence program that typically takes about 24 to 48 hours.
2. Review Invoices - Once the due diligence is completed, the client is at liberty to offer invoices to IFG for purchase.
3. Credit Verification - Upon receipt of the invoices, IFG will check the credit of the debtor named on each invoice and make sure the sale represented by each invoice has been satisfactorily complete.
4. Debtors’ Notification - Once credit has been verified, each debtor is notified of the purchase by IFG and the client is paid for the invoices.
5. Debtor Payments - At the end of the credit period the debtor will make payment directly to IFG thus completing the transaction.

Link: http://www.ifgnetwork.com

 1.   Does your exit strategy for investments still make sense? What if the stock market or your own company's stock takes another dive? Do you have a plan to secure the assets that have grown over the past year? How far will your money go before you sell out of the stock market? 

2.    Do you maintain a budget? Once your income begins to go up again, carefully monitor your spending plan  and be certain to save a minimum of 10 percent of your total income, and if yiou can swing it, save twenty percent. If you review your budget you can easily determine your needs, and not make unnecessary purchases that are not in your budget. 

3.    Do you keep sufficient cash in reserve? Cash reserves need to be a minimum of three months more than you would normally have. If you already have three months in reserve, double the cash to six months of cash in reserve. The job market is tough, and  it takes more time to get a job today.

4.    Are you keeping up with your insurance? If you lose your job you may discover many coverages such as disability insurance when it is too late.  Review your beneficiary designations and keep them up to date. 

5.   Are you prepared  to use factoring in your business?  Rather than go into debt, are you prepared to use factoring to catch up on things like insurance when unexpected bills come up?  Most factoring companies pay in less than 48 hours, allowing youto catch up on debts. 

Does your exit strategy for investments still make sense? What if the stock market or your own company's stock takes another dive? Do you have a plan to secure the assets that have grown over the past year? How far will your money go before you sell out of the stock market?  Accounts receivable factoring can help.