Common Invoice Factoring (receivable factoring) Questions

Can the clients mail me the payment and we later send the money to factoring company?
No you can’t.  By doing so, it will delay our receipt of payment and further increase your fee.  In factoring, we are advancing the fund to you from your invoice; therefore, we are required to collect the payment from your client.

Do I have to sell my entire account receivable?
No, you don’t have to.  Some factoring companies allow you to pick and choose the invoices that you would like to factor.

I had previously file bankruptcy, will I be still qualified for invoice factoring?
Most factor can still assist you.

How will my customers think if they need to send the payment else where?
Simply let your clients know that you are outsourcing an receivables management company to manage your A/R to accommodate the growth of your business.  They probably will be impressed that your company is expanding.

What if my customer accidentally submit the payment to our company and not to the factoring company?
You need to notify your factoring company right away, and do not deposit the check.  For those check are already purchased by your factor company.  The factoring company will contact your customer and have them resubmit the payment to them.

Wow, I can’t simply afford the “high” discount fee of 3% for 30 days.  I’ll be loosing money.
Most of you probably accept credit card as a form of payment such as master card, visa, or even american express and discover card.  So, please take a close look at your current monthly statement and find out how much you were charged in interest from your merchant account company.  Most likely you’ll see it around 2 or 3% or even 4 or 5%.  So factoring is basically the same, but with added benefits such as underwriting services to reduce bad debt, reporting, taking over your in-house a/r collecting service for we will help you to make routine calls to your customers with no additional charges.  What so great about factoring is that, you can now offer your credit card only customers terms and that will also help to generate more business and also you could eliminate the cost of your merchant processor entirely, giving you additional saving.

What if my customer pay in 60 days or beyond 60 days.  This is going to hurt more than benefit my cash flow.  
The key to avoid fee is to factor only the best customers.  Customers that always pay on time.   The other trick is to delay factoring your invoices for up to 4 or 5 days or 1 weeks in some cases.  Day 1 starts when you submit the copy of your invoices to the factor company, not when you invoice your customers.  Do keep in mind that most company won’t buy back old invoice, so make sure you do not delay it more than a week.  Also, the main purpose of factoring is to get immediate cash flow, so there’s no point to really delay on submitting invoice copies to your factoring just to avoid high fee.  Your goal is have cash flow to grow your business.  You need to spend money in order to grow.

Why factoring company have to verify invoices with my customers and what will my customer think about my business?
Invoice verification is a necessary steps in all factoring deal.  This process is to validate the invoices.  Factoring is very common for business as a tool to grow their business and your customers will most likely be more than happy that they are dealing with a growing and established business.

 

Factoring/ Invoice Factoring Terminology – www.businessandfunding.com

Factoring / Invoice Factoring / Account Receivable Factoring Terminology

Account Receivable – It is a commercial debt that needs to be paid

Invoice – A legal document that shows the amount a customer owes

Broker - The person that comes between the client and the factor

Factor – The company that is offering working capital to the business via purchasing the client’s receivable

Factoring – the act of purchasing account receivable 

Client – The company that is providing service or products to a customer

Customer – one that purchase the service or products from the client, customer is responsible for the payment of the invoice.

Discount Fee – This fee varies and it’s determined by the amount on the invoice, the credit of the customers

Reserve – The money that will not be paid back immediately to the client.  This money is expressed in % of the total invoice

Advance Rate - Money that is given to the company that is factoring its account receivable 

100% of total invoice – advance rate plus reserve

Due Diligence - The verification any information that is provided by the company factoring its account receivable. This process is to help the factor to decide whether to purchase the receivable or not

Initial Fee Period – initial fee will be charged during this period

Late Fee – this fee is charged by the factor whenever the a/r is surpass the initial fee period

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Equipment Leasing / truck financing, Section 179, tax relief act – www.businessandfunding.com

section 179 and its benefit to small business owners

What is the benefit of Leasing equipment for you all business owners?
The number one advantage is of course tax advantages.  Not to mention you might be qualified for section 179 Deduction (which I will discuss briefly below).  Second, most of the time financials are not required and the application form will be much shorter compare with purchasing.  Fourth, It is consider as an expense, not a debt.  As a expense, it will actually improve your net worth and your financial.  Finally, at the end of the lease, you can always return it (or buy out) and upgrade to a new model of the equipment and you won’t feel trap and be stuck with the older model of equipment.  You are able to stay on top of the trend.

What is Section 179
This IRS tax code let business owner to deduct the full purchase price of the “QUALIFYING EQUIPMENT or SOFTWARE”.  Is that enough to get your full attention?  So what that means is that our U.S. Government is really trying to help you business owners, especially small business owners, and helping you to be successful via this tax relief. There is; however, a dollar value limitation.   It was $500,000.00 back in 2011 and it is $2,000,000.00 this year.

Who can be qualified for Section 179?
Generally all businesses that finance, lease, or purchase any new or used equipment less than $2 million this year should be qualified.  Equipment that is qualified are equipment/ machine for business use, business vehicle, furniture, computers, etc…. My suggestion is check with your CPA to determine if the equipment that you want will be qualified.  And also take advantage if the equipment that you want are qualified.  You’ll never know when this write-off will not be available. Section 179 is geared to help small businesses to grow and expand their businesses.

For further information you can check out http://www.section179.org  and equipment leasing, lease equipment, leasing equipment, truck financing, commercial truck loan

 

All about Invoice Factoring Business line of Credit – www.businessandfunding.com

Invoice Factoring, Receivable Factoring, Account Receivable Factoring

How much is advanced?
The advance amount is typically 80% of the invoice. For instance, if your invoice is $100.00, $80.00 will be advanced to you.

What is Reserve?
The reserve is the amount that the factoring company waiting to be paid.

What is Discount Amount?
The amount that is taken from the reserve when after the invoice has been paid. The factoring company will keep that discount amount and the remaining amount will be given to the client.

How are the invoice factoring fee determined?
Every industry is different, and every company and your customers’ strength is different.

Do I have to factor all my client?
You don’t have to factor all your clients, you can pick and choose.

Do I have to notify all my clients?
Those that you are factoring yes.  It is because the factoring company will not be handling those invoices; therefore, their Account Department will need to send their payment to the factoring company instead of you.

Is invoice factoring a type of Loan?
Is is not a loan and therefore it will not appear as a debt on your financial balance sheet.  And it will not interfere with you getting a loan in the future.

Do you need to check my credit?
We won’t check your credit, but your customers do need to have good credits.

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QR Code and how it benefits business owner – www.businessandfunding.com

What is QR Code?  You might not know what it is called, but I’m sure you have seen it in prints such as magazines, newspapers, or even on television.  According to Wikipedia, QR Code short for quick response code is a type of two-dimensional code designed to be read by the popular startphone (such as iphone, android, and window). The code consists of black modules arranged in a square pattern on a white background. The information encoded may be text, an URL, or other data.  So who created this code?  It was originally created by TOYOTA subsidiary of Denso Wave back in 1997.  This special code was designed to allow the contents embedded in the code to be decoded at very high speed.

I myself love QR Codes, I have my own QR Code for many things and I use this great website to create my very own QR Code - http://www.qrstuff.com .  And the best part is, it’s ALL FREE!  Yes, they are all free, though some companies do offer to help you with customizing your QR code such as putting words inside the code or images.  It can be very fancy indeed, but for the sake of free marketing.  A free version is good for most businesses.  Afterall, we all love to lower the cost of just about anything in this economy.

So this special code can indeed be imprinted on paper, stickers, clothes, caps, mouse pads, keychains, etc etc.. This small little square can hold so much information in it such as your business website, telephone number, sms message, an email message, facebook like, twitter follow, event information, or linkein profile. This QR Code is sure a fun way to promote for those that want branch out to people they normally won’t reach.

So how can this QR code can be related to business and how you can utilize this QR code for marketing? You can create a special QR code just for coupons, free tickets, special promotion events, giveaway, just about anything and later email this code for all your customers.

Other creative way to use this QR Code:  Have the URL embedded in the QR Code printed on a postcard along with an image of something that you are selling.  If you have a storefront, you can put a QR Code in window and have someone scan it to receive special discount, just for trying their service.  For restaurant owners, you can have your potential customers to scan the QR code outside your restaurant window and attract more customers (such as get 10% off if you dine in today).

Or you can also do what I did, which is to have a facebook like and a twitter follow QR Code and put it on just about anything.  I use my special website URL QR Code, for my twitter logo, facebook logo, wordpress logo, youtube logo.  A great way to draw more traffic to my website.  More importantly, this is definitely an easy way for anyone to “stuff” in more information that you want others to read.

Currently, I also have this special code especially for my contact information.  Therefore if I meet someone that would like to obtain my business contact information, they can simply scan my code that I already have on my android.  How fun is that?  Another great way that I would love to use this little qr code in the future, is to have it imprinted on back of my business card.

According to Mobio, recent study (http://www.lightninglabels.com/news/qr-code-popularity-increases-by-1200-percent) QR scanning increased by 1,200 percent, a figure attributed mainly to high profile marketing campaigns that integrated the codes.  The primary demographic that scans this QR Code is between the age of 35 to 44-years-old.  64% of QR codes are scanned by women and the majority of scans made are information requests.  Only a small percentage of those scans are for payment.  Mobio also saw a higher growth rate around the holidays.

In Conclusion, sure there are virtually no limitation as to how you can use this QR Code but there is one downside.  Remember, not everybody is using smartphone, and only a handful of people that use smartphone knows what is a QR Code.  And out of those people only a fraction have QR Code scanners downloaded on their phones.  More importantly, not everybody is knowledgeable enough to know what to do with that QR scanner apps on their phones.  Thus QR code is merely just another fancy way to market your brand or your products.  For now, it can not take over your traditional marketing strategy.  But for those that is in love with QR Code, it is a perfect way for them to attract customers that just love to scan, scan, and scan.  And find it intriguing to discover new deals, recipe, or a website just by a scanning the code on their using the camera on their smartphones.  So are you ready to jump in and create your very own QR Code?

Note:  To view all my “beautiful” QR Codes that were created by qrstuff.com, please visit http://www.flickr.com/photos/66845949@N03/ .  Go ahead, scan me, I mean my codes and go find out the hidden message in each of the code.  For those that don’t have QR Code reading on their smartphones, you can also go download it for free (not necessary to buy the paid version, the free one are just as good and simple to use).  The one that I’m using on my white sony experia is called QR droid and it is truly one of the best one I can find from the android marketplace.  For you apple iphone lovers, you can also download similar qr code scanner app from the apple store app.   Such as shopsavvy (also available on my android).

Happy Scanning Everyone!

 

Disadvantages of Angel Investor for Small Business – www.businessandfunding.com

Angel Investors usually are some wealthy former entrepreneurs or executives that has business experience. These special type of individuals investors are refer as angel investor mainly because these are investors that invest their personal funds in struggling company when no one want to come to the rescue.  Angels generally only invest in companies that they believe has an earning potential, hoping to eventually make profit when the companies they invested go public or sold.

With this in mind, Angel usually won’t take interest in small mom and pop shop such as local restaurants or a small family own liquor store.  Why?  For those are the type of stores that don’t have the expanding business mind set.  Angels are in for the money only and nothing else.  Though most people probably agree that the advantages will outweigh disadvantages, but it’s important for us to take closer look at its disadvantages before looking your Angels.

Disadvantages of the Angels

• Angels often become controlling and will want to protect their investment in many ways.  They might ask the business to agree to not take certain business steps without their authorization.  In other words, they are not simply buying a share of the company, they are in fact buying their power to control and influence how the business will be ran.  It might make sense in the Angels’ point of view, since they are investing a large amount of money in risky and not well established companies that has potential to grow.  In most cases, if Angels own more share, the business owner will need to turn over the management of the company completely to the Angel.  The Angels might also hire someone to manage the company for them.  This power shift can be scary for the business owners, for that imply that the Angels can have the power to liquidate the business, sell the business, or even dissolving it.  Though you might able to come to some sort of agreement with the Angel; however, most Angels won’t invest in your company if they are not the one who is running the show.
• I’m sure most business owners will agree and would love to see their companies go public.  But it can also generate a new problem.  As I stated earlier, when Angels invest in a company they only have one thing in mind, which is to gain profit.  However, when the stock are not yielding a feasible amount, they sell the stock.
• Angels rarely reinvest on unsuccessful company for the risk of loosing more money will most likely to outweigh in such companies, unlike venture capitals.
• Just like any business partner, angel investors might disagree with each other.  And their disagreement can create a setback for the company that is caught in the middle of this drama and not allowing it to move forward.  Though this can be easily eliminate by drafting a investigators partnership agreement; however, many times there will be issue that are overlooked and not included in the agreement.  In some cases, if issue can not be ironed out, they might need to bring it to the court wasting both money and precious time.

I’m not stating that it’s not a wise move to locate your Angels, for in most case, the outcome will generally be greater than the disadvantages.  However, every business is unique and you just need to invest your time and outline all the pros and cons.  More importantly, it is important to communicate articulately with your Angels and discuss all the important issues and potential problems before proceeding into a business owner/ angel partnership.

 

The Problem Client for every business – www.businessandfunding.com

Congratulation business owner, so now you have your own business and you are grabbing every business opportunity, right? Wrong!  No doubt that it’s important to have sales and business.  After all, that’s the reason of you investing in your business and building an empire in the first place.  But there are some clients that actually cost more. Yes, you know those kind of clients.  I’m sure you have one of two of those types of difficult clients.  But the key point that I am trying to convey is that no matter how much you are struggling, how much money that client can bring you, no one should need to deal with such client.  So what you need to do?  Cut them loose.  Yes, that is the “only” answer.  The following are types of clients that you can definitively do without.  And yes, I’m telling you to trash those to the dumpster and put them in your past.  For those are the clients that irritate you down to the core and squeezing every energy out of you.

1. The slow turtle payer

I’m not talking about few days late, I’m referring to a week, few weeks, or even a month.  Claiming that they forgot to put the stamps on the envelops, never receive your invoice, the payment was lost through mails, or it might deliver to the wrong address. And the worst thing is when you try to call or email them,  they just won’t answer and return any of your message.  You can try threaten them with collection, but the bottom line is we don’t want this problem in the first place.  So if you have any clients that consistently is slow paying, cut them loose now, before they drive you insane.

2. The Psychotic Mental Hospital Client

Sure your job is to treat every client situation unique and special and try to give them the best customer service possible.  But do remember, if your client starts making ridiculous demand, are you going to continue assisting them or should you call it quit?  If you have a client that call you religiously asking and ordering you to do things, it’s time to divorce this client.

3. The Coupon Worshiper

Yes, I’m sure every business owner can relate to this one.  And yes, we all want to bargain, we clip coupons, buy things on sale, or just sit home and watch dvd instead of going out.  But when it comes to owning your business, your goal is to be profitable.  I’m not suggesting that you can’t lower your price, but there are those specific clients that repeatedly asking you to lower the price, threaten to go else where or cut you loose.  Well, dump them before they dump you.  Don’t waste time to go back and forth with the numbers.  Instead, invest your time in more profitable clients.

4.  The Lying Professional

Us human are not saint, and yes we all lied to someone and I’m no different.  But when it comes to business and dealing with money, this is no tic tac toe.  I’m sure both you and I can agree that you don’t want a client to lie to you.  In business, it’s important to keep an honest relationship with them.  If you have good reason to believe your client is being dishonest, you need to either confront them and reevaluate your role in such business relationship or to cut them off for good.

In Conclusion:

Sure, most business owner hate to let go of any of their clients, as if they are burning money into ashes.  But as we all know, we should not tolerate any client that is robbing time or money from you.  Or worst, disrespecting you and challenge your personal values.  And let’s not forget those that threaten you.  Therefore, we all need to do the most unthinkable, which is to divorce such client and build relationship with better and more profitable clients.  Go ahead, kick those to the curb and don’t worry for there is a huge market out there, loosing few clients will not send your business to the grave.  Let taste the sweet success by being a bit picky when it comes to choosing your own clients.

 

 

Business Line of Credit – Benefit of Merchant Card – www.businessandfunding.com

It is an on going Access to Cash – a card that provides immediate working capital to business whenever he needs it.   Unlike a traditional bank  loan,  this business line of credit has no fixed payment schedule, nor does it required collateral.  Thus merchant card business line of credit is perfect for small to mid size company that normally will either not be qualified for traditional bank loan or can’t afford to have collateral.  

Merchant Card Business Line of Credit Overview:

• Almost 100% of business applicants will be approved.
• Approvals are based on sales volume, not your personal credit.
• Fast approval, usually within 10 days to 14 days.
• Account availability is between $1,000 to $250,000 per location.
• Most New businesses will qualified for instant $1,000 credit.
• Accessing to funds is as simple as going to any ATM.
• Funds can be transfer to any bank.
• The method of paying back is through future business sales.
• With each and every on time payments are made, your credit will be increased.
• Banks often sent derrogatories to the credit agencies; whereas, there is no fixed payment schedule with merchant card.
• MerchantCard is truly every business owner’s ongoing access to cash, for business owner can obtain more funds whenever they need it.
• No longer need to rely on business credit cards which has a fixed payment schedule and a high interest rate.
• Help boast  business’ credibility, and improve cash flow.
• Reporting transactions to the credit agencies, which will enhance the Commercial Credit of the company, helping build credit in the company’s name.

 

Credit Repair Program – Road to getting Business Line of Credit – www.businessandfunding.com

 

Benefit of unsecured Business Line of Credit – www.businessandfunding.com

Dear small business owner,

Can you afford to loose your collateral if you are unable to pay your traditional loan on time?  If this sound like you, you will definitely want to find out how unsecured small business line of credit can help you to get the working capital that you need, use it when you need it, and pay only the interest of the funds that you use.

So what is a traditional loan?  A traditional loan is a fixed amount of money that is paid out in one lump sum and its interest is calculated off that amount.  But as a small business owner, the last thing you want is to borrow money and then pay the interest even when you are not using the fund.   With Unsecured business line of credit, you now have the freedom to choose.  You now can have a large amount of business line of credit, but you are not paying for the interest based on that maximum amount of such credit line.  What you will only need to pay is the interest on the amount that you decided to use.   Thus, unsecured business line of credit is often a better choice for small business or new business.

The freedom to let the business line of credit there and use it only when you need it is make unsecured line of credit a sure winner.   Perhaps you will never use such line of credit, but it will give you a peace of mind knowing there is a line of credit when you need it. And when you use it, you are only responsible to pay the interest of the amount that you used.  The bottom line is that the line of credit for your small business answers all your worries about working capital and provide you with the benefit of a loan, but with more flexibility.

In this economy, many financial service companies now offer unsecured business line of credit in addition of the traditional loan.  Here at business and funding, we can also help you with your unsecured loans needs.  Contact us today and find out how we can take care of your working capital worries and allow you to focus on your business.

info@businessandfunding.com
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