• Dec 5

    4bd4b9b2-a157-474d-84da-24b875b047f1Raising capital is hard in itself as money is always a difficult resource to come by. This is likewise the reason why entrepreneurs are getting more cautious and keen in their search of the right methods to tap. So in order to help in this situation, we decided to shed more light on one of the more prominent options in the market today: invoice factoring.

    The name itself gives us some hints. This method makes use of an invoice or receivable, one born out of a credit sales transaction, to raise the needed capital. This is done by way of selling the rights to their collection in exchange for an advance of their value. What does this mean? The company gets to receive cash immediately instead of having to wait until maturity while the provider gets a minimal fixed fee in exchange and gets to collect from the said invoice/s once they mature.

    There are many benefits to using invoice factoring and today we are listing down five of its most beloved perks, as follows:

    1. It’s fast. The only one of its kind, invoice factoring can be processed with cash released in as fast as a day’s time. Yes, twenty-four hours! It’s a more hassle-free and not to mention quick approach making it perfect even for emergency expenses and pressing situations.

    2. It hastens collection. Companies no longer have to wait until maturity for them to be able to collect from the invoice/s. The advance hastens the process an eliminates the necessary waiting period allowing for the entity to be more liquid in terms of its assets.

    3. It’s not a debt. The beauty to factoring is that despite being a means of finance, it is not a loan therefore it creates zero liability in the balance sheet. Additionally, it comes without a need for collateral and zero interests but rather a fixed fee agreed on by the parties at the beginning of the transaction.

    4. It improves cash flows. The ability to tie up actual cash collections to sales is one of invoice factoring’s most celebrated characteristics. Not only does it improve cash flows, it also betters liquidity, and strengthens working capital.

    5. It’s non-restrictive. The cash or resources received from an invoice factoring arrangement can be used in whichever way the business deems fit as there is non-restriction when it comes to how they are to be spent as with other methods in finance.

  • Aug 29

    spot-factoringProduct quality is one but service is another thing. Still, both must come hand in hand to achieve an entirely worthwhile experience for customers and that’s exactly what great spot factoring companies do. But how do we even identify the good from the mediocre? Check out the following characteristics and see to it that you tick each one off before you employ a certain provider.

    • TIMELINESS – Spot factoring has become a favorite because it allows businesses to choose a specific invoice and sell the rights to its collection in exchange for an advance of its value. Unlike other financing options, it is relatively fast with majority of providers able to release cash in just a day’s time. That’s the standard and anywhere beyond it is mediocre and below par.
    • FLEXIBILITY – It is also important that they be able to handle a diverse set of clients. Even if let’s say their expertise lie in a particular client industry, they should have no trouble serving companies of different financial backgrounds, sizes and kinds.
    • SYSTEMATIC – Check and inquire about their standards and procedures. Does their process seem streamlined? It should be otherwise we’re getting ourselves in a tangled mess. That kind of situation would be a headache. Besides, we want spot factoring companies that’ll make everything run in as smooth as possible.
    • CUSTOMIZED – Standards must be there but when it comes to serving clients with various needs, they need to be able to fine tune and tailor fit their services to those. Each business entity is unique in their own ways so it is necessary to work alongside a company that has no trouble shifting their gears to meet your necessities.
    • RELIABILE – Always choose providers that are reliable and trustworthy. Their professionalism and ethics need to be far and above otherwise it’ll be hard to work with them. Plus considering that they will handle the collection for the invoice factored, you’ll want someone who will likewise treat your customers right if not better.
    • REASONABILITY – Last but not the least, great spot factoring companies come with reasonable and sound fees. Keep in mind that since the financing method is a onetime transaction, the fee should be a onetime thing as well. Regardless, the amount should be at a sweet spot, neither expensive nor cheap. The former is never a guarantee of quality while the latter is always a case for red flags.


    Check out http://workingcapitalpartners.com

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  • Jul 18

    Business is a risk and success comes with a lot of hard work and not to mention resources. This is why companies take it very seriously when we talk about financing. It’s a sensitive and crucial aspect because no entity will function without money. This is also the reason why entrepreneurs have come to identify single invoice discounting as one of their biggest and most effective tools. But what is it and what does it do?

    Selective, spot or single invoice discounting is a type of receivables finance. Because sales occur either on cash or on credit, there lies a discrepancy between sales level and actual cash received. Credit sales are not bad at all but because they translate to receivables, they can mean illiquid funds. Cash won’t be available for use until the invoice matures and the customer pays up.

    This can be a problem because what if the business needs immediate financing or if it requires a certain level of resources for its operations or an expansion venture. Moreover, liquidity is something that investors look at and too many receivables isn’t that much attractive.

    invoicediscountSingle invoice discounting helps solve those dilemmas and more. In this arrangement, the company chooses a specific invoice to discount. In exchange of an advance of its value, it shall use the said invoice as a form of security or guarantee to the provider. Once it matures and becomes collectible, the company receives payment from the owing customer. After which, it then goes off to pay the provider the amount received plus fees.

    The very reason as to why single invoice discounting works is because it is very fast. Unlike most financing options available in the market today, it only takes at least as fast as twenty four hours to process it and cash can be released afterwards. This is a stark contrast to other options which can take weeks or even months.

    Moreover, it is not a loan so it does not reflect as a liability in the accounting books. Single invoice discounting is an asset transaction so it also comes free of interests and property collaterals. Because it is a onetime transaction, the fee is also a onetime deal. There are no lengthy contracts too. Plus, it helps hasten collection, improves liquidity and cash flows as well as strengthens working capital. It’s even perfect for immediate and emergency needs which is why companies love it a lot.

  • Jun 8

    export-finance2Global expansion has been the great entrepreneurial dream on top of profitability. Success in both domestic and international markets spell sweet victory and everybody wants it. But the lure of exportation is a long, winding and bumpy road. It comes with risks and not to mention added financial resources. This is where export finance comes in.

    Export finance allows businesses to advance the value of foreign sales on credit thereby enabling them to realize cash prior to the invoice’s maturity. By hastening collection it minimizes credit, interest rate and foreign currency risks. It likewise improves cash flow, strengthens working capital and improves liquidity all while incurring no debt, interest and collateral as it isn’t a loan but an asset transaction. Moreover, several administrative tasks especially those as pertaining to collections shall be shouldered by the provider.

    The great thing about export finance is that unlike most types of financing available on the market, it remains non-discriminatory in the sense that it’s not exclusive to established entities alone. It may likewise be used by small to medium scale enterprises, startup businesses and recovering entities. The application process is faster with lesser documentary requirements to prepare and submit and as mentioned earlier, it’s not a loan to begin with.

    But why should entrepreneurs consider exporting in the first place? The benefits of expanding globally are aplenty and here are only some of them.

    1. It opens up and widens one’s market or client base. Although a company may already succeed domestically, its operations and profitability is limited because there can only be so much customers in a specific location.

    2. Unit costs are lowered and assets are maximized. In cost accounting, the higher the output of production the lower per unit costs are. Moreover, higher production maximizes the capacity of one’s assets and equipment thereby making more value our of them.

    3. There is risk diversification. Remember the eggs in a basket principle? If you put them all in one basket then chances are you’ll lose everything if the container breaks. The same applies in business. As domestic and international sales are not directly proportional and risks vary from country to country, poor sales domestically may be compensated for a strong international demand and vice versa

    4. Enjoy less seasonal losses. When it comes to products and services, businesses experience slopes and plateaus. Seasons are a factor here. For instance, iced drinks may not be highly sold during the winter months in South Korea but may be profitable all year round in the Philippines. Because countries vary in time zones, climates and seasons, businesses can avoid suffering from certain losses due o seasonal demand fluctuations.

    And when you’re ready to dive into the foreign market, remember that export finance has your back.
    http://workingcapitalpartners.com/

  • May 15

    export-overdraftIf there’s one thing that all entrepreneurs have in common, it’s the pursuit of global expansion and success. It is likewise for this reason that the industry of export overdraft financing has experienced a massive boom over the past decades. As one of the most effective, efficient and affordable methods of raising capital and avoiding risks altogether, business entities have sought it without avail.

    But what exactly comes with global trade that makes it a risk worth taking? We all know that exportation takes not only time and effort but a lot of money too. There has to be a valid reason as to why companies always pursue it as a long term goal. Today, we’ll discuss such reasons with the following list.

    1.    Market – Perhaps the most obvious of them all, the expansion of one’s audience is what businesses want. There’s nothing wrong with local or domestic operations, none at all, but it can become claustrophobic in a sense that success is boxed and dependent on one market alone. With exporting, the customer base can be expanded to cover not only similar demographics. It can allow the entity to tap on new markets thus allowing for more sales and profits.
    2.    Sales – A bigger audience calls for more sales which is the primary goal of global expansion. With the right factors in play, this will eventually constitute to profits in the long run. We all want that, don’t we?
    3.    Risks – Having more than just one audience base helps better diversify risks. Because not all markets and economies will function and move the same, this allows businesses to suffer lesser risks and losses should one market slow down or fall flat. In other words, they get the convenience of fall backs.
    4.    Costs – In terms of cost accounting, the higher production output is, the lower the per unit cost becomes. This helps not only save resources but it likewise maximizes the use of machineries, equipment and other assets. It’s no secret that these depreciate overtime regardless of how much output they churn out.
    5.    Losses – Exportation also helps minimize if not eliminate what we call seasonal losses. Many companies can suffer slow months due to a change in season or the weather as trends and needs will shift. For instance, a Canadian based swimwear company may not be able to enjoy promising sales locally during winter but if it is able to tap other markets say in the tropics or anywhere where it’s summer, it is able to lessen the losses it would have suffered.

    With these reasons, more companies have tapped the export overdraft financing to enjoy the above benefits of global trade and success.

    http://workingcapitalpartners.com/

  • Oct 13

    Invoice financing has become a massively used method for entities that are in need of cash and would not want the hassle and interests of regular loans and the lengthy application to approval time that comes with it.

    By definition, invoice financing is a method by which companies derive funds from their unpaid customer invoices or in other terms its receivables. We all know that sales can happen on cash or on credit. With the latter, businesses will have to wait for a certain period of time before collections are made and the actual realization of cash is apparent. This can be bad in a way because even with a rising amount of sales, the amount of cash that the company has at hand and can use is not available. Cash is locked up as receivables. Invoice financing frees them up.

    single-invoice-financeBut what about factoring? Where does it come to play? It is in fact a method of invoice finance apart from the other one called discounting. Today, we’ll focus on the former.

    Basically, factoring is the sale of the corporate assets which in this case are the receivables. The company, in order to free up the cash, sells off the right o collect against the customer invoices to a financial firm or a factor as what they are mostly referred as.  The factor in turn provides for the cash which is correspondent to the value of the receivables subjected. This is oftentimes equivalent to around eighty up to a ninety five percent of their value. The remaining balance, which is less any agreed upon fees, is only released once the full amount has been paid by the owing customers.

    The reason why factoring has become widely used is due to its numerous benefits to wit:

    For one, it is a very quick method to acquire funds. In fact, it can take only around 24 hours at the least for the cash to be made available. This makes them very useful for emergency situations.

    Second, it banks on the credit rating of the owing customers and not on the business itself. Therefore, no financial statements will be necessary nor are credit rate and history an issue.

    Third, it does not appear as a debt in the financial statements but rather an increase in cash and a decrease in the trade receivables making. This is in fact a very good effect brought about by invoice financing and factoring part from the absence of any rising interest expenses.

  • May 20

    invoice finance for businessInvoice finance is a method used by businesses in which they draw out funds or cash from their customer invoices and receivables even before they are actually paid for. This has been a common tool used by any companies and has also been proven to be advantageous in numerous circumstances.

    There are two types of invoice finance. The first is called factoring while the second is referred to as discounting. The two bring about similar benefits but are treated differently as the first is considered a sale while the latter a loan.

    Factoring is where the business sells its invoices to a third party. Such party provides an advance which is typically 80% to 95% of the value of the receivables. It then proceeds to collect from the owing customers. Once full collection is attained it then forwards the remaining balance to the business seller less any fees.

    Discounting is where the business gets a percentage of the receivables’ value from a third party with the receivables used as collateral. The business proceeds to collect from its owing customers and once payment has been completed they will then repay the financing party for the advance they have provided plus any fees agreed upon.

    Invoice finance is used for many purposes and reasons which includes but are not limited to the following:

    • A NEED TO INJECT CASH INTO THE SYSTEM – When companies need to improve their cash flow, this is one of the best solutions there are. It significantly improves the inflows versus the outflows of the entity.
    • ABSENCE OF A LOAN – It is not a secret that loans are not easy to acquire. Invoice financing on the contrary is rather easy as it does not require a lot and would not even require you to submit your financial statements. The reason is because the provider of such service does not lobby on the capability of the selling company to pay but rather on its owing customers.
    • LESSENING OF BAD DEBTS – They also help lessen the amount of bad debts and the expenses or losses that go along with them. The risks will be borne by the financing party but one should remember that this is not applicable to every invoice finance transaction. It has to be stipulated and contained in agreement.
    • EMERGENCY EXPENDITURES – Because invoice finance can be acquired and received in twenty four hours or less they are useful for emergency expenditures of the company and there is no available cash at the ready or fi there are they have been limited for use in other corporate endeavors.

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  • Apr 15

    Single invoice discounting facilities are financial institutions that provide funds to businesses who are considering other means of funding projects and raising capital other than loans. It is a type of receivables financing that draws up funds by freeing up locked resources in unpaid customer invoices.

    Like many financing methods it has its advantages and disadvantages all depending on factors such as corporate industry from among others. To help you determine and weigh the pros and cons here, below is a list to acquaint you.

    financingStarting off we have the advantages:

    1. It is a relatively fast method to obtain cash. Some facilities allow for twenty four hour fund availability if you could provide the documents needed.
    2. The necessary documents are not as burdensome as opposed to when applying for a loan in a bank.
    3. It does not levy on the company’s capacity to pay and thus will not necessarily require you to submit your financial statements.
    4. It levies instead on the owing customers’ capacity to pay what is due them should the time of payment comes.
    5. It hastens up the realization of cash by freeing up locked up ones in customer invoices.
    6. It helps improve your cash flows. When sales are good it does not necessarily mean that cash is going in. Remember sales can either be on cash or on credit. Those sales on credit can be hastened up and turned to cash quickly.
    7. It converts your accounts receivable into cash making your balance sheet more attractive to investors.
    8. It is not a loan although it has its benefits so you can breathe a sigh of relief as your debts will not rise up.
    9. It is a onetime transaction and so you will not be bound on monthly regular fees. You only pay as you use the service.

    Now on to the disadvantages:

    1. If you are not careful you might get the said service from the wrong facility with untrained staff that will irritate your customers by constant calls, emails and unruly messages asking and reminding them to pay their due.
    2. In a with recourse arrangement, you will be required to buy back any unpaid invoices from the single invoice discounting facility. Therefore the risks of bad debts are shouldered by you. Fortunately if you want to avoid this, you should consider a non-recourse arrangement.
  • Nov 15

    As a business owner, you have probably heard about different types of finance such as those based on equity, assets, receivables etcetera. Now, when you want to take things up a higher notch and on a global scale then you would have to consider export finance. What is it then?

    export financeExport finance enables companies to bring their products and services abroad and in all other parts of the globe. Being able to do so is considered a big step and a goal achievement for most if not all entrepreneurs. Besides, the ultimate goal of going into business is profits, growth and expansion and broadening your horizons on a global scale is definitely part of these goals. At the same time, putting your products and services on a bigger and global market comes not only with profits and opportunities. There too arise costs, expenditures and various other risks. In terms of risks, these need a lot of careful analysis, research and study to determine whether such venture is indeed promising and effective. When you talk about the costs, there are a lot to consider in this department. To name a few there are taxes, duties and the shipping of raw materials and finished goods. All these have to fit in your business plan and budget otherwise an export venture may be turned down by your board of directors.

    Now, for those companies who are willing to take the risks to earn their place at the global market, export financing can surely help especially regarding your need of financial resources.

    One option is those loans provided to companies for the purpose of transporting or bringing their products abroad. There are terms to it that both parties, especially the borrower, must uphold otherwise the lender will have the right to demand the full amount owed and ask for it to be payed at once. These are often secured with collateral the amount of which depends on the loan granted.

    Another option is by using an overseas factoring house. This firm or company will purchase the products at a discount that is below the invoice’s value. They will then sell these to prospective buyers who are either the ultimate consumer or a reseller at a mark up.

    Export finance is one good way for businesses to fund their global projects and ventures. After all, risks have to be taken to gain profits.

  • Oct 14

    single-invoice-discountingSingle invoice factoring is a popular option for businesses, small and established alike, which are seeking for a means to fund projects and increase working capital, to inject cash and improve cash flow or to lessen the risk of any bad debts to occur or add up. Although getting your invoice factored is around ninety five percent easier as compared to applying for a traditional loan, there are requirements needed for you to qualify. Read up and know if this option can work for you.

    1. Delivered goods and rendered services

    Factors will only agree to advance the value of your chosen receivable only after you have rendered the service or delivered the products to your customer. You must first be able to satisfy your obligation to your clients as the inability to do so will also cause the default or absence in payment from your clients.

    2. Organized financial documents

    Especially when it comes to invoices and receivables, you must keep everything in a systematic and organized manner.  No random and messy piles of papers should be scattered all over the place. It is also important that you have and are practicing strong and efficient controls when it comes to releasing invoices and managing your receivables.

    3. Client credit history not business credit score

    It is important that your client actually pays or has a good credit history. Do they take too long to pay or don’t they pay at all? Unlike traditional loans where the financial institution will look into your credit score, financial standing and require collateral, factoring will greatly require that your customers have a good credit history meaning that they pay within the given or agreed upon period.

    4. Ability of clients to pay

    Apart from checking how early or late they pay, your factor will also look into the financial capacity of your customer. Can they actually pay their dues or will they ultimately lead to bad debts? Do know that there is recourse and a non recourse in factoring. In the former you are required to buy back any unpaid invoice while with the latter, the financial institution will bear all the risk of non collection.

    5. A clean slate

    Lastly but also importantly, you have to have a clean slate. That is, you must be clear of any legal issues such as taxes. Single invoice factoring providers may not dwell much on whether you are a small company, an established business or one who is suffering losses. That is not their problem as they will not be affected by it as your client’s ability to pay are their key to collection not you. However, these firms will not transact with companies who are or may face serious legal issues due to noncompliance to rules and regulations.