Invoice Factoring Blog

Link: http://www.ifgnetwork.com

IFG gets asked this question all the time.  What IS the difference between factoring and invoice discounting  -- which is also known as debtor financing? The truth is they are basically almost the same.  Both are designed to improve your cash flow. Factoring is a sale of your receivables to the factoring company, so you receive the cash (from the factor) and the factoring company collects the debt from your client. They typically keep the interest and gets a discount fee. On the other hand, invoice discounting can also be termed a sale of receivables, but the difference is that the receivables and their collection doesn't ever change hands. The business that earned the income still holds the responsibility.

It does not matter if you are a small business or a large company, rather than having to wait for your customers to pay after you have invoiced them, accounts receivable factoring simply releases the money as soon as you have completed an order and sent your client the invoice. That's why factoring is ideal for funding growth.  Because it's linked to sales, factoring  is a great tool -- especially if your firm has not yet built the financial track record for negotiating sufficient overdraft facilities.

Once a factoring company like IFG approves your client's invoices and puts your accounts receivable factoring in place, there is no limit to the amount you can borrow.  Why?  because these funds will always be linked directly to your sales.  Plus it is an extremely fast way to turn your receivables into cash. In an ordinary scenario you might have to wait 30, 60, or sometimes even 90 days for invoices to be paid.   IFG can pay you the majority of what's owed to you within as little as 24 hours.

Link: http://ifgnetwork.com/construction_factoring.php

Yesterday, The National Association of Realtors said sales of previously occupied homes dipped in May by 2.2  percent from the previous month.  Now, the seasonally adjusted annual rate is at 5.66 million, and almost one third of the sales in May were distressed properties or foreclosures.   What this all means is that after stabilizing over the past year, home prices could be heading down.

Analysts are saying that solid operating margins should help homebuilder Lennar Corp. turn a slight profit during the March-May quarter, while high costs will keep rival KB Home in the red.  Many believe that KB is poised to grab significant market share in its core California and Southwest markets as home prices continue to stabilize. While others are saying that the builder's high selling, general and administrative expenses will prevent KB  from turning a profit for the quarter.

No matter what analysist are saying, the truth is for many contractors, things are tough.  This is a time when they are seriously looking at deploying construction factoring to tied them over, and stay in business. As one of several sectors that can benefit tremendously from invoice factoring,  sub-contractors, or construction companies don't have to wait  for payment before starting on the next phase of a project, or begin construction on a new project.  Construction factoring allows the  sub-contractor or construction firm to turn around accounts receivable due for completed stages of a construction project in as little as 24 hours.  The construction company, or sub-contractor, can be paid virtually overnight for outstanding invoices which speeds up cash flow and improves the company's ability to start immediately on the next phase of construction.

IFG Network is one of the few factoring companies that is willing to provide construction factoring.

Link: http://www.ifgnetwork.com

Many people who have left the corporate world after losing their jobs are thinking about taking their retirement savings, or 401ks and either starting or purchasing a business. Interestingly, financing the purchase of a business is pretty easy if you are prepared, and it is much easier than trying to get the money you would need for a start up business. Most people just need help on how to acquire a business. Oh and by the way, unless you’re prepared to collateralize the loan to start a business at 100 percent with your own personal liquid assets, a bank will not loan you the funds.  So there  are benefits to buying a business versus starting a new business. And there are plenty of tools that can help get you through the tough spots - like a bad economy - such as factoring.  

Starting a business of your own can pay off  but it's important to understand the risks. Most start-up businesses eventually die, and according to Author Michael Gerber who wrote E-Myth Revisited, 40 percent of new businesses fail within the first year.  What's worse is that 80 percent fail within five years.

However, purchasing an existing business reduces an entrepreneur's risk while creating a number of profitable opportunities. There are a many reasons to consider the purchase of an existing business rather than starting one including. 1) The buyer already knows the concept works. 2) A business is already branded. 3) Financing a purchase is often easier than securing funding for a start-up business. 4) You're buying an existing customer/vendor base. 5) The seller has already laid the foundation and taken care of the time-consuming, tedious start up work. 6) Perhaps the most important reason is cash flow.  Most businesses are structured so you can cover the debt service, take a salary, and have some left over to invest back into the business for growth, whereas start ups aren't expected to make money for the first three years.

Cash flow is critical to any business.  Even if you purchase a successful business, as we all know, sometimes the economic circumstances create a glitche in the plans.  It is during these times that business owners can take advantage of factoring in order to survive.

Invoice factoring  today offers small business owners an opportunity to purchase a business, send out and collect the invoices.  But what many new business owners do not realize is that accounts receivables don't often come in on time.  And many are at 30/60 or even 90 days before you'll see the funds.  That is when factoring, or accounts receivables factoring, comes in handy.  A factoring company like IFG can  advance up to 90 percent against invoices. IFG looks at the creditworthiness of the client’s customers and can fund within as little as 24 hours, they do not expect 100 percent of your receivables, and there are no minimum or maximum sales volume requirements. IFG’s professional rates are competitive; each client's circumstances will vary and may have an impact on the fees.

Link: http://www.ifgetwork.com

It can be of tremendous benefit to your company if you follow best-of-practice accounts payables rules, because when managed well, you'll improve the working capital in your business. When you reduce the amount of working capital financing that you need. Here are some tips:  Try to obtain business credit from new and potential suppliers in advance of when you need it; never run out of essential supplies; get price and volume discounts and volume discounts when you can demonstrate a track record of a well managed account.

This will help you obtain an advantage over your competitors, to move  towards better returns on investment (ROI); document your procedures well documented so that no one is unclear about what needs to be done.  This reduces the time wasted by management and your business will be  more efficient; make sure you set clear expenditure mandates which will improve net profit by reducing unneccessary expenditures; when things get tight, consider accounts recievables financing. One of the oldest and most widely used forms of funding, standard invoice factoring has been used for thousands of years.   But there is a newer form of factoring called single invoice factoirng, or spot factoring, which allows the factoring of one invoice at a time.  IFG will advance 90 percent against invoices.

For more information about invoice factoring, go to ifgnetwork.com.

Link: http://www.ifgnetwork.com

There is a federal government organization that funds research into small business issues known as the “small business watchdog” and officially called The Office of Advocacy.  They examine the role and status of small business in the economy and then they also independently represent the views of small businesses to federal agencies, Congress, and the President of the United States.

According to this group, entrepreneurial activity in one of the United States often reflects similar activity in neighboring jurisdictions, according to a study entitled, New Business Clustering in U.S. Counties, 1990-2006, by Larry A. Plummer, in an analysis of geographic and other patterns in new business formation across the U.S.  This research sheds light on business activity related to levels of education, industry, economic growth patterns, and geography. (1990-2006 business startups were used and closure data from the Census Bureau’s Statistics of U.S. Businesses.)

The big question is always how and where new businesses are most likely to grow. This research provides some important clues to the relationships between business startups and various underlying factors in industries and across counties and states in the United States. What's more, the study might also offer insights for the number of companies. Interestingly, factoring companies often see similar patterns for contracts they get from from small businesses.

This study offers insights about various new business clusters, incuding the fact that Los Angeles, Cook (Chicago), and New York have the higher entrepreneurial activity levels; Colorado, Utah, and Washington have the highest firm birth rates and levels of entrepreneurial activity; High technology is the only industry sector specifically favored in counties with access to an educated workforce and a local research and development structure;  Higher unemployment is correlated with higher firm birth rates except in the business services industries—an indication that business service firms depend on the success of other firms; and the retail trade has the highest rate of new firm births, followed by industries in local markets.

With loans not as easy to come by, small businesses have turned to invoice factoring so they can meet obligations and continue to grow. Also known as accounts receivable factoring, a business owner often has a tough time when waiting for invoices to be paid, 30/60 or 90 days out, when employees must be paid and new materials and supplies need to be purchased for the next job.  By advancing up to 90 percent against the company's invoices, a factoring company like The Interface Financial Group (IFG) purchases selected invoices at a discount. IFG can fund within as little as 24 hours, and they do not expect to buy 100 percent of a company's receivables, so there are no minimum or maximum sales volume requirements. Spot factoring companies first typically look at the creditworthiness of the client's customers.

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