slow periods in busienss

Slow Periods in Business Create Cash Flow Challenges

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slow periods in busienss

Cash flow management during slow periods can be challenging for a business owner. However, understanding how to manage your cash flow during these times is critical to long-term success. In this post, let’s explore some strategies for managing cash flow during slow periods.

  1. Create a cash flow forecast. The first step in managing cash flow during slow periods in business is to create a cash flow forecast. This forecast should include your projected cash inflows and outflows for the upcoming period. It should also include any expected changes in revenue or expenses. A cash flow forecast will help you identify potential shortfalls so that you can take action to address them before they become a problem. If you project running short of cash during the slow period, consider looking into invoice factoring. Turn the invoices into cash now to cover shortfalls during the slow period.
  2. Minimize expenses. It’s important to minimize expenses as much as possible during slow periods. This may mean cutting back on non-essential expenses, renegotiating contracts with suppliers, and reducing employee hours. Consider outsourcing select business operations. One of the benefits of invoice factoring is that you can turn your accounts receivables function over to your factoring company. Reducing the labor needed to manage and collect outstanding invoices can help offset the factoring costs.
  3. Offer incentives for customers. Do you have creative ways to incentivize customers to shop with your business now? Offering discounts is one method; however, rather than cutting your costs, consider adding value to your product or service. For example, if your company offers commercial cleaning services, add an upgrade service such as window washing now or during a future visit if the client books during your slow period. The value of adding cash flow today could offset the marginal labor expense to provide the incentive service.
  4. Increase marketing efforts. One of the first expenses many business owners cut is marketing. But that’s comparable to turning off the water faucet when you’re thirsty. It can be critical to increase or laser-focus your marketing efforts for slow periods to reach new customers and encourage existing customers to continue shopping with your business. This may mean using social media and email marketing, hosting events to attract new customers, or partnering with other businesses to host sales or promotions.
  5. Review payment and credit terms. During slow periods, reviewing payment and credit terms with your suppliers and customers can improve your cash position. This may mean negotiating more favorable terms with your suppliers or offering incentives to customers who pay early or in full. Work with a factoring company that doesn’t require you to sell all invoices. You can offer customers who pay within ten business days a lower rate and then factor the invoices for the slower-paying customers with the increased rate offsetting the factoring fee while you net the same amount regardless of payment timing.

In summary, managing cash flow during slow periods requires thoughtful planning and management. But you have tools available, and depending on your circumstances, you can weather the downturn and be prepared for future growth.

 

How to Solve the High Sales - Low Cash Flow Dilemma

Solving the High Sales – Low Cash Flow Dilemma

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For entrepreneurs, startups and small business, simply generating more sales might not be the answer. Successful businesses can still fail! Find out how to improve low cash flow to make your organization more sustainable.

Why low cash flow – not low sales – is the common lament of entrepreneurs

An article titled The Irony of Successful Sales Growth describes one of the challenges faced most often by small business owners and entrepreneurs as low cash flow. When an organization experiences low cash flow along with limited reserves and lack of resources (such as lack of investors or inability to obtain a bank loan), the seriousness of the situation can quickly become acute.

Many businesses that are successful – in that they are growing and increasing sales – can even create their own unique recipe for low cash flow when the need to purchase additional inventory, hire staff, or increasing operating expenses outpace incoming cash flow. This can be especially difficult for B2B sellers who often extend especially favorable terms to customers as a competitive advantage.

“The entrepreneur’s lament is one of the great ironies of the marketplace;

a small business in danger of failure as a result of extreme success.”

(Jim Blasingame, The Irony of Successful Sales Growth)

But the challenges presented by low cash flow are not only limited to organizations like (B2B) business-to-business companies that sell to customers on terms. Retailers and service organizations also face the challenge of making hefty investments in inventories before offsetting sales occur. If a retail organization’s projections about consumer demand do not match up with actual sales, they too may find themselves in a cash crunch.

Perhaps the best news for business owners trying to solve the challenge of low cash flow is that it is a common challenge, and there are many ways for a business to improve its cash flow. We previously shared an article with ten ways to maximize business cash flow that might also interest you further.

Here are some of the solutions for managing the challenge of low cash (or slow cash flow):

1. Plan for growth so that you know where the money and resources needed for fast reinvestment will come from.

2. Avoid use of operating cash for non-operating expenses (such as purchasing capital equipment).

3. Closely monitor accounts payable and accounts receivable

4. Understand the relationship between Accounts Receivable Days (how many days it takes customers to pay) and Accounts Payable Days (how long you have to pay vendors).

Ideally, you will have the option to work with vendors who will extend terms that make it possible for customer payments to come in before supplier invoices become due; however, that is not always going to be the case.

You may be able to speed up customer payments by offering discounts to customers who pay on delivery or who pay very quickly, require customers to make partial payments or deposits up front and conduct more thorough due diligence checks before extending customer credit. Plus, you can spend more time and money on collections efforts rather than taking a more passive approach to unpaid invoices.

You might also like: Top 10 Reasons B2B Startups Might Fail

Stop chasing customer payments – factor receivables for fast access to working capital

B2B organizations that invoice customers upon delivery of goods or completion of services may be able to immediately improve cash flow and better manage receivables by factoring – or selling – customer invoices to a factoring company.

When a client factors (or sells) an accounts receivable invoice to us, they receive funding for up to 95 percent of the face amount of the invoice for a small fee, called a factoring fee, within 1-2 business days. In this way they can get access to the working capital they need to run and grow their operations long before their customer is required to pay.

Since factoring clients do not have to wait for customers to pay, they can reinvest in growing their business more quickly. They can also extend generous payment terms to their customers, which could create a competitive advantage.

Get a free, no obligation quote for invoice factoring or request more information about the invoice factoring process.

  • Average monthly sales or amount of invoice to factor
16 Ways to Run a Lean Trucking Business + Infographic

16 Ways to Run a Lean Trucking Business + Infographic

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Running a lean trucking business could put more money back in your bank account and allow you to grow more quickly. Here are sixteen strategies that can help you get a better return on the money you spend. 

Maximize Working Capital By Running a Lean Trucking Business

Business owners that adopt a lean business strategy set out to spend less overall by ensuring that they are getting measurable value – and the most value possible – out of each dollar they spend on business operations.

The bottom line? Adopting a leaner business model could mean faster growth for less money. Below you will find sixteen ways to run lean trucking business operations in order to get more from each dollar you invest in growing your business.

Before you do, it is important to point out that lean businesses are not just organizations that try to cut costs.

Cutting costs outside of a business growth strategy could easily result in lost business when items that enhance the customer’s experience – and perception of the value of the goods or services of the business – are slashed.

A lean business model is an operating strategy that both:

  • strives to eliminate waste in product and processes, while also simultaneously
  • strives to satisfy customer wants and needs

A better understanding of the idea of a lean trucking business model might be the idea of creating more value for customers using fewer resources. It is about maximizing the value of each and every dollar spent in running and growing a business. The Lean Enterprise Institute shares a multi-step process for creating lean business operating tactics that boils down to this:

  1. Identify specific value prized by your customer
  2. Identify all the steps or inputs it takes to create that value, and eliminate any unneeded components
  3. Make the stream tighter; make the value-creating inputs occur in as tight a sequence as possible to get it to the customer as quickly as possible

While it might sound simplistic, tracing back all of your business processes to their elemental components might be difficult. Luckily, we found an Entrepreneur Magazine infographic (scroll down) which identifies sixteen ways to run a lean trucking business and make your company more efficient and profitable.

16 Ways to Grow Faster By Running a Lean Trucking Business – Infographic

1. Go Without

When it comes time to make a purchase or a hire, take time to be sure that it is necessary and eliminate the possibility that there are less expensive ways to fulfill the need.

2. Lead by Example

It can be difficult to get employee buy-in for a work environment that is too cold in the winter and too hot in the summer (for the sake of saving money) if you aren’t working in the same conditions. If you want others to remember to turn off lights and equipment when not in use, be sure they see that you are doing it too.

3. Source Creatively

You might be able to trade for goods or services with other companies at a lower cost than buying comparative goods or services outright. Network with other local business owner and Chamber of Commerce groups so that you can source more creatively. As a bonus, you will also be earning local goodwill as you create mutually beneficial networking relationships with other organizations.

4. Get Things in Writing

Eliminate unpleasant surprises by asking to have the details of your agreements with vendors, suppliers and clients spelled out in writing.

5. Recycle and Resell

Rather than throwing out old equipment or furnishings, see if there is someone willing to buy them from you, or whether some of the materials (such as metal) could be redeemed at a recycling center for money. Every penny recouped by recycling or reselling counts!

6. Max Out Available Discounts

Save money by taking advantage of discounts available to your company in business networking groups, industry purchasing groups or memberships in business office supply stores or big box retail centers.

7. Take the ‘Petty’ Out of Petty Cash

Petty cash funds are often made available to make it easier for staff to make change or to go out and buy miscellaneous supplies. In a lean business, there is no such thing as a “petty” – or unimportant – line item. Keep track of petty cash and any other slush funds and establish accountability.

8. DIY as Much as Possible

If you can save money by creating your own forms, printing and cutting your own business cards, picking up local supplies rather than paying for delivery and making repairs and renovations yourself, you may be able to shave lots of dollars off the operating budget. And do not forget to tap your staff, because they may have skills or connections that can be leveraged to help you grow that you aren’t yet aware of.

9. Ask Why

Take nothing for granted! Before re-upping or when auto-renewal windows arrive, make sure you are asking whether it is still essential to your business and taking the time to explore competitive quotes.

10. Hire for Core, Outsource or Train for Extras

Before hiring or refilling a position, consider whether you are hiring to a core business need or might be able to reduce costs by outsourcing or spreading tasks out among existing staff.

11. Waste Not

Save by buying in bulk when you can, printing on both sides of your paper, using waste paper as scrap for taking notes or phone messages, refilling print cartridges and other penny-saving practices. Pennies can add up fairly quickly when everyone is getting the most out of supplies and equipment on hand.

Going paperless and storing backup documents remotely can also help you cut office supply costs immensely over time, since you will not need to purchase as much paper or ink or storage units.

12. Get Professional Help Where It Matters Most

The cost of legal, marketing, accounting and other expertise might seem expensive, but it might be a drop in the bucket compared to the pitfalls you might encounter if you don’t pay for experts when it comes to doing your taxes, reviewing contracts, submitting trademarks and copyrights, writing business plans and completing other business activities.

13. Keep All Your Receipts

You may be unaware of all of the different business expenses that qualify, so to make sure you can take advantage of all deductions available to you, keep all your receipts, at least until tax time! You can save money and time by investing in a system for digitally scanning and storing all your receipts, eliminating the need to print and store vast amounts of single records of transactions and saving time by filing them digitally for easy retrieval when needed.

14. Use Plastic Money Strategically

Some credit and debit cards or banking activity can help you earn rewards, miles, and other perks. Look around for those that offer the type of rewards that would benefit your organization most and use your cards strategically.

15. Negotiate Everything

Ask vendors and suppliers for discounts on cash or early payments or negotiate for longer payment terms that will let you keep working capital on hand longer, whichever is more financially beneficial to your organization. Also, find out how factoring invoices with a top freight factoring company can put you in the driver’s seat when it comes to negotiating with vendors or extending better terms to your own customers.

We offer great freight factoring rates even to single truck and small fleet trucking companies, including small invoice, spot factoring and micro factoring programs that let you maximize the benefits of factoring only when it is best for your trucking company.

16. Buy Used Instead of New

Craigslist, newspaper classifieds, eBay and second-hand stores all make it possible for you to buy office furnishings, supplies and other items at a lower cost than new items usually require. Likewise, watch for local going out of business sales, surplus auctions, and other events where you may be able to save exponentially on the equipment, supplies and furnishings your business needs.

Featured image,  @5m3photos via Twenty20

infographic lean business

what is invoice factoring

What is Invoice Factoring?

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Invoice factoring is a business finance tool that gives an organization nearly immediate access to money their customers owe them without waiting 30, 60, 90 days – or even longer – for the invoices to be paid.

Instead of waiting for customers to pay, the business can factor an invoice with a factoring company for a small fee (called a factoring fee) and receive an immediate advance, which could be up to 95 percent (or even more) of the invoice amount.

Why do companies factor invoices?

Though the need for expedited or more consistent cash flow is the reason most companies factor invoices, some of the other common reasons factoring clients cite include:

  • Need to unlock working capital to fuel business growth
  • Working capital can be leveraged for better terms with suppliers
  • Customer accounts with generous terms, often 30-90 days
  • Need working capital to take on larger accounts or big orders
  • Slow-paying customers
  • More consistent cash flow
  • Better ability to meet operating expenses and payroll
  • Capital expenditures like equipment purchases, repairs, renovation or expansion

The practice of invoice factoring is centuries old and has played an important role as a means of business finance. Any organization, of any size, that provides goods or services to other businesses, government agencies, e-commerce selling platforms or other commercial organizations on payment terms may be able to factor receivables in order to improve cash flow and unlock working capital.

What type of businesses factor invoices?

Factoring clients come from many different industries where invoice factoring is commonly used to expedite cash flow, including:

  • Staffing and temporary employment agencies (security services, nursing, etc.)
  • Business consulting and B2B business services
  • Trucking, transportation, logistics
  • Supply chain distributors and manufacturers
  • 3rd party sellers like Zulily vendors and Amazon merchants
  • Vendors selling through Costco, Walmart and other mass retailers
  • Textile, clothing, accessories, and other wholesalers
  • Oil and gas (and all gas and oil field contractors)
  • Energy and utilities companies and contractors – and others

Nearly any type of company that invoices customers for payment or waits more than 15 days or more to get paid after completing delivery of goods or fulfillment of services might be able to improve cash flow immediately by factoring invoices.

How does the invoice factoring process work?

Invoices factored are typically funded within 1-2 business days – up to 95 percent (or even more) of the face value of the invoice, with the remainder placed in reserve as a holdback, pending customer payment of the invoice.

As an example, if a businesses completed delivery of goods or services to a customer and generated an $18,000 invoice, with net 30 (or even longer) terms, they could unlock most of that working capital within hours instead of waiting weeks or even months on payment.

Assuming a factoring fee of 3%, and an advance rate of 95%, here’s how it would work:

Invoice Factoring Process Overview
Day 1 – Generate a $18,000 client invoice and factor it
 – 24-48 hours Receive an advance of $17,100 (95%)
Factoring company earns $540 (3% factoring fee)
Day 30+ Receives the $360 holdback (2% of the invoice amount) after the invoice is paid

What are the benefits of invoice factoring?

Faster cash flow!

Businesses that want to expedite payment of accounts receivable invoices can turn to a receivables factoring company. Instead of waiting on customer payments, they can factor a customer invoice on the same day it is generated and receive and advance of up to 95 percent of the face amount of the invoice right away.

Advance rates may be even higher, and factoring fees even lower for larger invoices or for companies who factor on a regular basis and receive a volume discount.

Factoring receivables enables you a business owner to focus on growing their business rather than chasing invoices or performing collections. They gain almost immediate access to working capital by speeding up cash flow, so they can reinvest in their company much more quickly.

Factoring receivables could also be the key to positioning your business to be able to take advantage of emerging opportunities.

Organizations that factor invoices expedite cash flow, which means they have more flexibility to meet operational expenses. They have the flexibility to extend more generous payment terms to their customers as a competitive advantage, and can reinvest working capital in their business more quickly in order to expand, service larger accounts or take on new customers.

There are also additional benefits for businesses that choose non-recourse invoice factoring over factoring with full recourse.

Non-recourse factoring is less common in today’s economy because non-recourse factors assume the credit risk for the invoices they purchase. When you factor invoices with a non-recourse factoring company, you may be able to completely eliminate financial risk from bad debt. Find out more about factoring invoices with recourse vs. non-recourse factoring companies.

Speed up cash flow and grow your business faster by factoring invoices instead of waiting 30, 60, 90 days or longer for customers to pay.

Since we have competitive rates and fees, working with us will not cost your business more, but it could help you get a better factoring agreement. You want to work with an invoice factoring company that goes from approval to funding quickly and looks for reasons to say “Yes!” when you submit invoices for factoring. Our factoring services offer low fees, high advances, and flexible terms, such as:

  • No long term contracts
  • No monthly minimums (you choose when and how much to factor)
  • Retain control of billing your customers or let the factoring company do the work
  • Non-recourse factoring (the factoring company assume the credit risk)
  • Spot factoring
  • Micro-factoring
  • Small invoices welcome!
  • Credit checks to help you vet new customers
  • No application or due diligence fees
  • No hidden fees
  • Fast approvals and funding

Most importantly, we promise a high level of customer service to our factoring clients. We want you to work with a financing partner who understands your preferences and unique business needs, saving time and reducing the stress of managing receivables. Take the next step and request a free, no-obligation factoring quote to find out if this business finance tool could help your company grow faster.

  • Average monthly sales or amount of invoice to factor
10 Musts for Small Business Restart Programs

10 Musts for Small Business Restart Programs

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These key components should fuel small business restart programs across the United States as the economy tries to rebound from COVID-19 related closures and slowdowns.

  1. Lean ops
  2. Cleaning
  3. Financing
  4. Cash flow
  5. Workstations
  6. Common spaces
  7. Communications
  8. Customer contact
  9. Marketing evolution
  10. Well-being and peace of mind

Small business restart programs must address COVID-19

It’s not just the elephant in the room, it’s the iceberg that sank the economy. In early 2020, COVID-19 disrupted what was inarguably one of the fastest growing economies in nearly all sectors, and for nearly all segments. The U.S. went from all time low unemployment overall and for women and minorities to record high unemployment when many states imposed COVID-19 lockdown and business shut down emergency orders.

Are you ready to restart a small business in the wake of COVID-19?

As elected officials and business owners seek ways to reopen and reignite the economy so that the temporary economic stall doesn’t become lead to long-term negative economic effects, small business restart programs are popping up across the country. If you are a small business owner who is ready to restart or expand operations, here are ten things to consider.

10 Musts for Small Business Restart Programs

1. Lean operations

The pre-pandemic economy was robust and many businesses enjoyed being able to spend more on discretionary items, hire more employees, pursue growth opportunities and expand employee perks, benefits and “extras.” The post-pandemic reality is that many small businesses shut down completely or experienced a significant slowdown. As you restart your small business it would be beneficial to “think lean” when it comes to operations.

Planview.com lists seven principles of lean operations:

  • Eliminate waste
  • Build quality in
  • Create knowledge
  • Defer commitment
  • Deliver fast
  • Respect people
  • Optimize the whole

It is worth noting that lean operations is not just about cutting costs or eliminating waste, but it is also about adding value for customers, employees and other stakeholders. Small business restart programs must focus on efficiency throughout operations.

2. Cleaning and disinfecting the workplace

One of the more challenging aspects of restarting a business after COVID-19 is that the dangers of the virus are often invisible. You cannot spot virus particles on a surface and many people who have the virus are 100 percent asymptomatic or experience only light symptoms, which might mimic allergies or the common cold.

Americans do not want to infect one another or unintentionally bring potentially dangerous germs home to their loved ones or friends. Small business restart programs must address cleaning and disinfecting of the entire workplace, for both customers and internal stakeholders like employees and vendors.

It be advisable to do a thorough cleaning of your business before restarting and to develop a plan for how you will continually re-clean and sanitize commonly touched items (such as door handles, restrooms, break rooms, keypads, etc.) as well as a thoughtful plan for cleaning and disinfecting every area of your business on a regular, and probably more frequent, basis than before.

3. Small business financing

You may be wondering whether to use small business financing tools in general or specific to COVID-19 to restart or resume full operations. The U.S. Small Business Administration lists both regular SBA financing programs and guidelines for Coronavirus funding options including:

  • PPP loans – loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program
  • EIDL loans – economic relief to small businesses and non-profit organizations that are currently experiencing a temporary loss of revenue
  • SBA express loans – small businesses who currently have a business relationship with an SBA Express Lender may be able to access up to $25,000 quickly
  • SBA debt relief – financial reprieve to small businesses during the COVID-19 pandemic

Government programs are only one type of small business financing that might support your efforts to restart your business or return back to more normal revenues. Your bank may also be offering small business financing programs and your business banker could be a good resource for financial advice at this time.

Non-traditional small business invoice factoring could also help you speed up receivables collections, especially if some of your customers are paying more slowly due to current economic conditions. If you are a B2B (business to business) company or you sell goods and services via third party platforms (such as software developers, Amazon merchants, Zulily vendors, etc.), you may be able to get paid in 1-2 business days instead of waiting weeks or months on payments by factoring invoices.

4. Speed up cash flow

Cash flow has always been a key concern for most small businesses; speeding up organizational cash flow might be crucial to restarting and resuming normal operations. Inadequate cash flow can make your company vulnerable to several potential problems, such as:

  • Inability to fund payroll
  • Higher costs (inability to take advantage of early or quick-pay vendor discounts or incurring service and interest charges for late payments)
  • Creating concerns among investors and creditors
  • Failing to reduce long-term debt or increase equity
  • No reserves for short or long-term emergencies
  • No cash to fund repairs, maintenance or growth

Cash flow is our business! We help clients leverage invoice factoring as a financial tool to speed up cash flow. If your company invoices clients on terms or you sell through third party stores or platforms, you probably wait weeks or months to get paid. By factoring invoices, you can eliminate the wait and get paid within days (or hours) of when an invoice is generated or from the time you receiving an earnings statement.

You might also like: 10 Ways to Maximize Business Cash Flow

5. Safe workstations

We all watched as grocery stores and big box retailers updated cashier stations with plexiglass, added plastic, easily-cleanable coverings to keypads and instituted other protections for workers and customers. Whether your business serves customers on-site or not, your employees still expect that their workstations will be conducive to social distancing and contactless interactions. You may also want to provide employees with cleaning and disinfecting products like wipes, hand sanitizer and with masks and other essential PPE (personal protective equipment).

6. Common spaces in the workplace

Employee workstations are not the only spaces that employers must address as part of small business restart programs. Before COVID-19, many small business teams worked in open environments, took meal and rest breaks together in common kitchens and cafeterias, regularly crossed paths in hallways and corridors, met together in conference rooms and utilized communal restrooms.

Employers must take all common spaces into account when restarting as part of their efforts to keep employees safe and healthy. Some ways to mitigate risk in common spaces in the workplace might be to:

  • Temporarily suspend use of common spaces for breaks or meals
  • Redesign common spaces for social distancing
  • Require employees to wear masks, gloves or other PPE in common spaces
  • Designate traffic flows in hallways or corridors
  • Contactless cafeterias and food lockers
  • Provision of food options on-site (so employees do not have to leave work for meals and/or where there are only limited food service options available due to closures)
  • Ensure regular and frequent disinfecting of common spaces and frequently touched areas (appliances, appliance handles, faucets, door handles, chairs and tables, restrooms, etc.)

7. Communications

Customer and employee communications have changed due to COVID-19 and those changes will probably linger far after viral infections subside or disappear altogether. Many employers have decided to extend work-from-home opportunities indefinitely to those workers who can effectively perform remotely. Likewise, businesses are evaluating whether customer and client communications that were previously done in person or at events can be moved online.

Virtual meeting tools like Skype, Facetime, Zoom, StartMeeting and similar platforms have all enjoyed exponential growth as a result of the change in communications. Your business may also want to consider whether now is a good time to expand or revitalize communications programs for social media, email and other online tools that can help you connect with customers and employees in the ways needed to grow your business.

8. Customer contact

For many small businesses, face-to-face customer contact is the most personal and sometimes the most effective option for helping prospects move through the buying journey, supporting new customers, generating referrals and creating an overall positive customer experience. In the current environment, however, it is not the safest form of customer contact and may not even be an option anymore. Laws in your area may even preclude customer contact, at least temporarily.

In other small businesses, such as retail and restaurant businesses, it is an absolutely necessary factor for restarting and resuming business operations. Just as with on-site employees, small business restart programs must address safety conditions for serving customers at your place of business. Modifying the shopping and payment stations, cleaning and disinfecting, and PPE for both employees and customers will all be considerations for restarting.

9. The evolution of marketing

As with other aspects of customer contact, marketing has changed dramatically, and those changes will probably continue indefinitely for the foreseeable future. Businesses plan to decrease investing in in-person marketing tactics, as well as advertising and paid marketing in favor of online events and organic search.

How COVID-19 has impacted marketing for small business restart programs

According to MarketingCharts.com, the percent of businesses that plan to decrease these marketing investments:

  • 80% – events / experiential marketing
  • 39% – out of home marketing
  • 33% – TV (advertising)
  • 25% – paid social advertising and marketing
  • 23% – online display advertising

Conversely, the percent of businesses who say they plan to increase marketing investments are choosing:

  • 67% – webinars
  • 56% – organic social media
  • 44% – online video
  • 39% – paid social media
  • 34% – SEO / search
  • 34% – online display advertising

10. Well-being and peace of mind

Before COVID-19 stalled and disrupted the economy, American workers and customers largely went to work, shopped and did businesses free from fear of health concerns. With COVID-19 still dramatically affecting the business environment across the nation, and even as it subsides, the “new normal” will not be like it was before.

Small business restart programs must account not only for addressing the physical safety of employees and customers, but also the perceived well-being and peace of mind promoted by the “new normal” of how they plan to do business going forward.

Perceived well-being and peace of mind is a real concern for business owners. Many people have experienced extreme fear and anxiety as a result of the pandemic. You may want to consider whether to offer counseling services to employees as a part of their return to work program.

Employees and customers do not just want to be safe, they want to feel safe at work or while doing business with you. It will be vital for you to effectively communicate what steps you are taking to promote health and safety at your place of business to all of your internal and external stakeholders.

The bottom line for restarting a small business after COVID-19

We all want to get back to the business of doing business! From making changes to physical aspects of the customer and employee experience with your business, you can foster a safer workplace that contributes to the health and well-being of your business, as well as all of its stakeholders.

Don't let late payments hurt your business

Don’t Let Late Payments Hurt Your Business

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Take control of your cash flow so that customers’ late payments don’t have the ability to slow or stall your business.

Is money stuck in your accounts receivable due to late payments slowing down your business?

Finance news site PYMNTS.com reports that on any given day in the US, B2B companies are sitting on as much as $3.1T (yes, TRILLION!) in accounts receivables. Larger companies have two advantages when it comes to slow-paying customers than their SMB (small and mid-size business) competitors do.

Amount tied up in unpaid customer invoices every day

  1. Relationship Power

Big companies are often the “power” player in the relationship, in the position of dictating payment terms to their customers. Conversely, SMB’s may have to play by the rules of their customers and may not feel as though they want to risk damaging a relationship by hounding a customer for payment.

  1. Financial Power

Large companies generally have deeper financial reserves than their smaller counterparts. Late payments from customers can make it difficult for small and mid-sized businesses to make payroll or meet other financial obligations, such as taxes, lease and mortgage payments, operating expenses, marketing and advertising, taking on new customers or bigger accounts, and so on.

SMBs with late payments also pay their own suppliers late

In fact, a PYMNTS study found that 28 percent of businesses impacted by late payments from their customers also then end up paying their own suppliers late.

Are you running your business or is slow cash flow calling the shots?

An Inc.com article lists signs that indicate slow cash flow is stalling or stopping business growth and operations, ultimately resulting in a lack of liquidity – insufficient on-hand working capital needed to meet payroll, expenses and other operational costs. Two of these symptoms go directly to the heart of outstanding customer invoices:

  • Late payments – overdue invoices
  • Slow collections

When money isn’t coming in as scheduled because of late payments from customers, your ability to meet payroll and cover your own business expenses is hampered. Even if you are scraping by on expenses, you may be unable to take actions to grow your business, such as taking on bigger accounts or new customers while you are waiting for customers to submit payments on jobs you have already completed.

If your business struggles – occasionally or frequently – to meet expenses or lacks working capital needed to grow, slow cash flow is negatively impacting your operations and limiting your control. You can take control of your cash flow by expediting cash flow, whether or not you eliminate the challenge of slow-paying customers.

4 Ways to Speed Up Slow B2B Cash Flow Caused by Late Payments

1. Factor invoices

You can completely eliminate the challenge of late payments by customers by factoring invoices as soon as the first day they are created by factoring them with Corsa Finance. Factoring also benefits your customers in that they can still enjoy generous payment terms and can further protect your company from risk of bad debt if you choose non-recourse factoring.

2. Offer fast-pay discounts

You probably have vendors that offer quick-pay or cash discounts, giving you a price break or account credit if you pay immediately instead of on terms. One thing to consider before offering a quick-pay discount like this to your customers is whether the discount you’re offering would be more than the cost to factor the invoice. If your factoring fee would be lower than the amount you give back in a discount, then factoring could be the smarter financial choice. Your business still gets paid right away and you aren’t leaving as much money on the table.

3. Require large deposits

One of the consequences of invoicing customers on terms after a job has been completed is that your business is often required to pay for supplies, equipment, employees and other expenses long before the revenue attached to that job has been received. If customers are required to put down a deposit, some of that revenue can be matched up to corresponding expenses. However, this doesn’t completely eliminate the issue of the balance of the invoice coming in slowly or late.

4. Invoice in real time

Use technology to generate invoices in real time as soon as a customer has signed off on a job or one of your employees has indicated its completion. Waiting a day or even a few days to invoice customers means days in addition to the length of their payment terms before revenue will come in.

What would you be able to pay for today if you weren’t waiting on customer payments or commissions owed to you?

  • Federal or state taxes
  • Taking on new clients or bigger accounts
  • Business credit card or loan payments
  • Marketing, advertising and other promotions
  • Automobile repairs, gas or maintenance
  • Lease, rent or desk fees
  • Employee or contractor wages
  • Supplies and expenses

Call 866-855-6772 or by email using the form below to find out how we can help you take control of your cash flow to keep your business on a better financial footing.

  • Average monthly sales or amount of invoice to factor
Maximize Business Cash Flow with these 10 Tips

Maximize Business Cash Flow with these 10 Tips

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No matter the type or size of an organization, effectively managing business cash flow is always important, and is often a top concern.  Here are ten tips that can help you run a leaner business and maximize business cash flow, so you can grow your organization.

6 Signs You Need to Expedite Business Cash Flow

Cash flow is important to every business – so much so that one of the most commonly used financial statements for any business is called a cash flow statement. Understanding the flow of money coming into, and going out of your business can bring eye-opening revelations, especially if you are experiencing symptoms that point to inadequate cash flow; such as:

  • Scrambling to fund payroll
  • Inability to take advantage of vendor’s early-pay discounts
  • Failing to meet investor’s expectations or repayment schedules
  • Not reducing long term debt or increasing equity
  • No reserves for emergencies
  • No money to buy new equipment or fund expansion

Earlier we published an article titled Which Came First, the Chicken or the Cash Flow Problem where we talked about the ten most commonly cited reasons new businesses fail, noting both their relationship to cash flow and the warning signs that might point to problems on the horizon. With that in mind, here are ten tips that can help you maximize business cash flow so you can stretch every dollar and put it to work to help you grow your organization.

10 Tips to Help You Maximize Business Cash Flow

1. Raise prices.

If it’s been a while since you set or raised pricing, you may be surprised to find that some of your profit margins have been diminished or disappeared altogether.  Schedule a time each quarter to review pricing and profit margins in relationship to not only current expenses, but long-range plans and the competitive marketplace.

2. Improve upgrade and add-on sales.

You’ve landed a new customer – now what? Before you finalize a contract or sale to a new customer, make sure you aren’t leaving money on the table in the form of upgrades, additional services, expediting or add-on sales that could give you a bigger return on the cost of customer acquisition.

3. Cut costs.

No matter how lean your business operations are, over time there will always be new ways to cut costs and eliminate waste. Along with scheduling a regular review of pricing or profit margins, set aside time on a regular basis to review line item expenses and look for those which are no longer needed.

4. Incentivize innovation.

This is a perfect example of a time when you should spend money to make money. Enlisting staff in coming up with ways to improve your business, cut costs, become more efficient and eliminate waste is a great investment for the long term.

5. Speed up collections.

Yes, you can speed up collections (and expedite cash flow) by putting the pressure on your customers or setting up quick-pay discounts; but you can also get immediate access to unpaid customer invoices by factoring them with a factoring company like Corsa Finance.

The minimal cost of invoice factoring (as low as 5% of an invoice amount for small invoices and less for larger balances) can often be more than offset by the competitive advantage you gain when you can extend longer payment terms to your own customers.  Factoring fees can also be more than offset when expedited cash flow means that you can take advantage of vendor and supplier’s early pay discounts yourself.

We would be happy to help you discover whether factoring would represent an overall cash flow gain for your business – at no cost to you. Use the form below to request a free, no-obligation factoring quote; you could go from approval to your first funding in hours, instantly expediting business cash flow.

Request a no-cost, no-obligation quote:

  • Average monthly sales or amount of invoice to factor

6. Take advantage of industry discounts and offers.

From group buying discounts to industry or networking group offers, there could be many opportunities for you to get more from every dollar you spend.  Sometimes the only investment that you will need to make to take advantage of these offers and discounts is time!

7. Eliminate petty cash.

Once upon a time it was smart for business owners to keep a little – or even a lot – of cash on-site for emergency use or to fund incidentals.  The problem with petty cash is that keeping track of what the money was used for or removing the temptation to dip into it unnecessarily can be difficult.  If maximizing cash flow is your goal, make sure that you can account for every dollar that is leaving your business.

8. Negotiate.

Some people have a natural talent for negotiating. For the rest of us, it must become a learned skill. Failing to negotiate (or at least find out whether there is room to negotiate) with vendors, investors, customers, lenders, landlords and other entities that impact your business cash flow – in-coming or out-going – will nearly always mean that you spent money unnecessarily or did not receive as much money as you could have earned.

9. Audit.

It’s easy to set it and forget it when it comes to vendors and suppliers. Make sure you have a time established, especially before auto-renewals or in the case of perpetual agreements where you will review terms, renegotiate, and compare other options.

10. Flex your muscles!

Cash flow represents buying power and leverage.  Make sure you ask vendors and suppliers for early-pay discounts and take advantage of all that exist. Remember that factoring invoices can speed up cash flow, which could give you the ability to negotiate lower prices and reduce your expenses. These discounts may not show up on your cash flow statement or any other financial statements, but that doesn’t mean they won’t add up quickly.

8 Ways Invoice Factoring Can Help You Grow Your Business Faster

8 Ways Invoice Factoring Can Help You Grow Your Business Faster

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Is lack of working capital a problem? Grow your business faster with a financing tool that speeds up cash flow.

Business Cash Flow Financing – 8 Benefits of Invoice Factoring

Few things are more frustrating in business than watching opportunities pass you by because of a lack of working capital. In fact, lack of working capital is repeatedly cited as one of the main problems business owners face when trying to grow their business – or even just keep it afloat.

Having your organization’s growth constrained by a lack of working capital can be especially frustrating when you have assets you can’t access, such as outstanding receivables, and you find yourself waiting for customers to pay so you can take on new business. If a lack of working capital is keeping your business from growing or cash flow is a problem, invoice factoring could be an ideal cash flow financing tool for your organization.

8 Ways Invoice Factoring Can Help You Grow Your Business Faster

You can access the working capital locked up in outstanding invoices by factoring invoices instead of chasing customer payments. Having this working capital in hand, instead of on the books, could be the ideal business financing tool to enable you to:

  • Take on new business more quickly
  • Service larger customers
  • Purchase additional equipment, facilities or real estate needed to grow, expand or hire additional employees
  • Repair or replace aging or deficient assets
  • Improve cash flow to maintain a more even, predictable flow of money to meet operational expenses and fund payroll
  • Engage in strategic marketing and business growth initiatives
  • Negotiate discounts from your own suppliers or vendors
  • Extend more favorable terms to your customers to gain an edge over the competition

Our financing tools are especially appropriate for organizations that want to grow but find that cash flow is not keeping pace with operational needs. Low cash flow often creates difficulty in taking on new projects, new customers or larger accounts not because they aren’t profitable – but simply due to lack of working capital. Factoring can be used as a financing tool to unlock working capital that would otherwise be tied up in customer invoices for weeks, or even months.

Use our invoice factoring calculator to estimate the amount of working capital you could unlock by factoring unpaid customer invoices:

Our team has years of experience in factoring for a variety of industries, and now we are putting that experience to work helping our clients get tailored invoice factoring agreements, so they can maximize the benefits of this business financing tool.

We invite you tap our expertise. We will work with you to come up with a flexible plan that is customized to the financial needs of your business and the way you do business. Here are some of the advantages of factoring with Corsa Finance:

  • No long-term contracts or factoring minimums – factor only when you want to, and only those invoices you choose
  • No application, due diligence or credit check fees
  • No notification, funding or reserve release fees
  • Free funding on advances as soon as the same or next business day
  • Competitive advance rates – as high as 90 percent
  • Competitive factoring fees – factoring fees as low as 5 percent for small invoices or lower for larger balances
  • Choose full recourse, white-labeled non-notification factoring, or non-recourse factoring with additional financial protections
  • Flexible options – retain control of your own accounts receivables billing or let us do the work
  • High level of customer service to you and your customers – we want to earn your business and referrals!

When you think about all of the ways you could be growing your business if only you had access to the money locked up in customer invoices, the idea of using a financing tool that can expedite cash flow becomes even more compelling. We invite you to apply for a free, no-obligation invoice factoring proposal (even if you’re already working with another factoring company and just want to compare).

 

  • Average monthly sales or amount of invoice to factor
7 Ways to Speed Up Business Cash Flow

7 Ways to Speed Up Business Cash Flow

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Waiting on customer payments? Leverage these ideas to speed up business cash flow so you can focus on growing your business, instead.

STUDY – 3 Out of 10 US Businesses Not Paid On Time

According to the 2018 Global Trade Credit Payments Study by Dun & Bradstreet, U.S. companies in many industries are not being paid on time. While nearly 7 in ten financial services invoices are paid by the due date, as few as 38 percent of manufacturing invoices are paid on time.

Average time businesses wait to get paid

The Financial Services industry wins again when it comes to the fewest number of invoices that go beyond 90 plus days late before getting paid. Retail Trade, Construction and Transportation and Distribution industries have the most invoices that remain unpaid three months past their due date.

Retail Trade, Construction and Transportation and Distribution industries have the most invoices that remain unpaid three months past their due date.

Whether your business falls into one of these categories or a different one, every business that invoices customers or waits on third party payments (like app developers and merchants selling on Amazon, Zulily, Poshmark and similar platforms) experiences some kind of opportunity cost while waiting to see these on-the-books receivables turn into working capital.

The Opportunity Cost of Slow Business Cash Flow

Yes, sitting around waiting on customers to pay accounts receivable invoices or for third parties to pay out your commissions and sales revenues does have a name: Opportunity cost. It’s the sum total of anything you couldn’t do because you had working capital owing on the books instead of in hand; such as:

  • Waiting to replenish inventories or supplies
  • Limiting marketing and advertising funds
  • Stressing your ability to meet payroll or expenses
  • Precluding you from getting quick-pay discounts from your suppliers or vendors
  • Preventing you from expanding, taking on bigger customers or new orders
  • Watching competitors take advantage of emerging opportunities while you wait on the sidelines

Working capital is opportunity! Let’s talk about some of the ways you can speed up business cash flow so that opportunity cost doesn’t slow your organization down or keep it from growing as quickly as it might have otherwise.

Speed Up Business Cash Flow with 7 Proven Tactics

1. Restrict Customer Payment Terms

So this might seem a bit obvious, but one way to get customers to pay faster is to reduce the number of days customers have to pay. This won’t work in every case and of course doesn’t apply if you wait on payments from platforms like Amazon, Zulily, Poshmark, mobile apps, etc., because the platforms have non-negotiable terms. It could also be perceived negatively in terms of competitive advantage, causing customers to turn to businesses that extend more generous payment terms instead.

2. Factor Receivables

We help speed up business cash flow every day, every time we forward an advance on an invoice factored by one of our clients.  It works like this:

An organization or entrepreneur that sells products or services on terms to customers (or via third party retail or e-commerce platforms) factors – or sells – that invoice to us for a small fee (called a factoring fee). Within 1-2 business days, that organization receives an advance on the invoice (or promised payment) of up to 93 percent.

The invoice can be factored as early as the same day the customer invoice is generated (or the third party platform statement is received), so instead of waiting weeks or months on payment, the organization can completely eliminate opportunity cost and stay focused on growth. This enables organizations and entrepreneurs to:

  • Better align expenses with corresponding revenues
  • Meet payroll and operating expenses more readily
  • Access working capital needed to capitalize on fast-emerging opportunities
  • Increase inventories or supplies to take on more orders or serve larger customers
  • Negotiate fast-pay discounts with suppliers to save money on operating expenses
  • Reinvest in the organization more quickly (operations, staffing, marketing, advertising etc.)

3. Provide More Payment Channels

Waiting on customers to send payments via U.S. Mail can add days or even more than a week onto your wait. By adding more payment channels including online pay capabilities you make it possible for customers to choose the payment method that is most convenient for them. In addition, emailing invoices to customers instead of mailing them by postal service may cut additional days off your wait time.

4. Communicate Frequently

Staying in touch with your customers keeps your business top-of-mind and can passively remind them that they should send payment to you. Nor does communication need to be about the customer’s invoice, although this may be a necessity with slow-paying customers. You can stay top-of-mind with customers by sending occasional email newsletters, updates, special offers or expert advice, thereby adding value to the relationship as well.

5. Think Lean

If you overstock inventories or supplies, then your money could be sitting on the shelf instead of at your disposal. Pay close attention to customer preferences, buying cycles, patterns and seasonal trends to see where you may be tying up working capital on slow-moving products or services.

6. Create a Formal Process

What kind of plan do you have in place to communicate with slow-paying customers? Creating a formal process – almost like an email drip campaign – can remind and encourage customers whose payments are late to bring their account up to date.

7. Extend Quick-Pay Incentives

Giving customers some type of incentive to pay you ahead of schedule may speed up your business cash flow. These incentives need not be quick-pay discounts, although that is a commonly used tactic. If you are going to extend discounts, be sure that to examine how they will affect your organization’s overall profitability. You may find that the fee for factoring invoices is far less than the amount of customer discount it would take to incentivize early payment.

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The Benefits of Non-Recourse Factoring

What is Non-Recourse Factoring?

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When an organization is considering expediting their cash flow through accounts receivable factoring it is important for that organization to understand the value that is provided by choosing to work with a non-recourse factoring company.

Comparing non-recourse factoring to factoring with full recourse shows some of the benefits of choosing a non-recourse factoring company.

Beyond Factoring Fees and Advances – The Benefits of Non-Recourse Factoring

When a business is comparing quotes for factoring services, they are often solely focused on the fee that will be charged or the advance rate they will receive on factored invoices. But fees and advances are just the tip of the iceberg. Astute business owners will also look at the additional benefits provided to them by choosing to work with a non-recourse factoring company in order to reduce – or even eliminate – their financial risk from bad debt.

First, an invoice factoring (a.k.a. receivables factoring) primer. Invoice factoring is a finance tool that can be used by organizations that invoice business customers upon delivery of goods or completion of services.

When an organization (called a “factoring client”) factors an invoice, they sell it to a factoring company, or “Factor”. The Factor that buys the invoice provides the factoring client with an advance on the invoice (we offer fast funding on advances as high as 90 percent of the face value of the invoice) for a small fee (our factoring fees start at 5 percent).

Using invoice factoring, your organization gains immediate access to cash flow that might otherwise be tied up in a customer invoice for weeks – or even months. With improved cash flow, you can take on new business more quickly and ensure that money will be on hand to meet operating expenses.

There are other benefits to factoring invoices as well. Organizations that choose to factor invoices might do so for a variety of reasons; such as:

  • speeding up cash flow in order to take on new business more quickly
  • maintaining more consistent cash flow in order to meet expenses more easily
  • reducing costs (payroll, supplies, mailing, etc.) attributable to receivables activities, including collections costs
  • eliminating cash flow challenges caused by slow-paying customers
  • extending longer payment terms to customers as a competitive advantage
  • or to resolve other common cash flow challenges

Comparing Non-Recourse Factoring to Recourse Factoring

As it pertains to a factoring company, the word “recourse” references the extent to which the factoring company is willing to assume risk of non-payment on factored invoices.

Recourse factoring companies fund advances on invoices with the understanding that the organization will be obligated to buy them back if they go uncollected (for any reason). If an invoice remains unpaid for a certain period of time, the factoring client may be required to buy it back and may also be obligated to compensate the factoring company for administrative and collections costs incurred while trying to collect payment from the organization’s customer. Reduced financial risk for the factoring company sometimes means factoring with recourse offers lower rates, but not always.

Non-recourse factoring companies assume more financial risk from bad debt than those that factor with recourse. When a non-recourse factoring company buys an invoice, the Factor assumes the credit risk. If the factoring client’s customer is unable to pay due to insolvency and other credit-related risks, the non-recourse factor assumes the financial loss.

Organizations that factor invoices with a non-recourse factoring company can reduce, or even eliminate, their financial risk from bad debt, since the non-recourse factor assumes the credit risk. Generally, the only time a factoring client would be required to buy back an invoice from a non-recourse factoring company would be in a case where the invoice itself is in dispute, such as when an order has been returned for some reason.

How the Factoring Process Works with Non-Recourse Factoring Companies

Working with a non-recourse factoring company is important to many of our clients. They use factoring services to free up working capital in order to operate more efficiently and grow more quickly. But they also enjoy the peace of mind of knowing that, once an invoice has been factored, they no longer need to worry about financial risk from bad debt, performing collections activities or even invoicing the customer, depending on their factoring agreement.

Get a Free Quote for Non-Recourse Factoring

We would be happy to answer any questions you might have about invoice factoring with a non-recourse factor or provide you with a no-risk, free, no-obligation quote for non-recourse factoring services so that you can determine whether this type of finance tool would benefit your organization.

Ready to apply? Complete a one-page application online or request more information about non-recourse factoring using the form using the form below.

  • Average monthly sales or amount of invoice to factor
The Hidden Costs of Invoice Factoring

The Hidden Costs of Invoice Factoring

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Six hidden costs of invoice factoring could make factoring invoices more expensive and less beneficial as a cash flow management tool.

6 Hidden Costs of Invoice Factoring Reduce Benefits and Drive Up Cost

When comparing the invoice factoring proposals of U.S. factoring companies, remember to look for additional costs and add-on fees in addition to the factoring fee that is being offered.

These fees and charges may seem small but when you do the math you can clearly see that they quickly eat into your business’ profits and jack up the real cost of invoice factoring.

1. Add-On or Administration Fees

Though it seems like administrative services should be part of the service provided, some invoice factoring companies tack on extra fees for the administrative tasks that are part of the invoice factoring process.

Any add-on cost drives up the real cost of invoice factoring. Some of the other hidden fees factoring companies might tack on include things like:

  • Application fees
  • Proposal fees
  • Due diligence fees
  • Credit check fees
  • Notification fees
  • Schedule processing fees
  • Invoice processing fees

We don’t charge any application, due diligence, credit check or account set up fees that drive up the cost of factoring. Nor do we assess extra fees to process paperwork, transfer funds or notify you of account actions. We view these types of tasks as intrinsic to the invoice factoring process, not as add-ons.

2. Long Term Contracts

Some factoring companies require clients to sign long-term contracts that might range from 6, 12, or even 24 months, and harbor strict renewal and notification clauses. If a client doesn’t adhere to the contract’s conditions or needs to be released from the contract before the terms are up, significant penalties are often assessed.

We don’t require clients to sign long-term factoring agreements, so they aren’t locked into an agreement that may no longer be right for their business. We believe the best factoring companies earn their clients’ continued patronage through professional customer service and outstanding performance, not long-term contracts with stiff penalty clauses for leaving.

3. Monthly Minimums or Other Minimum Factoring Requirements

Some factoring companies require clients to commit to factoring a minimum number or dollar amount of invoices every month or every quarter. If they fail to meet these minimums a penalty fee is assessed. Being locked in to factoring minimums may not be what is best for an organization. Factoring is a financing tool meant to help an organization grow more quickly, but mandated factoring isn’t always what’s best for a business. We don’t require clients to commit to factoring minimums. They have the freedom to factor only when it’s best for their business.

4. Introductory Rates, Fees or Other Conditions

Some factoring companies offer low introductory rates to new clients, then down the line they lower advance rates and raise factoring fees, quickly wiping out any savings enjoyed during the introductory period. In other cases, factoring companies offer what sounds like a low fee, but fine print reveals the fee is applied weekly or progressively, which then also costs the client more. We value transparency and simplicity. As our client, you will know what your advance rate and factoring fees will be from the outset, so you can make financial decisions in the best interests of your organization.

5. Lost Customers

When an organization factors invoices, the relationships they have with their customers may also be impacted by the factoring company they chose to do business with. A factoring company that engages in strong-arm collections tactics or pressures customers to pay more quickly could result in lost customers for a business. We view factoring as a tool our clients can use to grow their business and we want clients to use our services for as long as it benefits their bottom line. This view to the long term means we extend a high level of professional, courteous customer service to our clients’ customers as well.

Another way we help improve cash flow without jeopardizing customer relationships is through non-notification factoring. With non-notification factoring, the customer may never know an company is utilizing invoice factoring because the process is white-labeled to the organization almost completely, providing a seamless customer experience.

6. Recourse Factoring Buy-Back Stipulations

Most U.S. factoring companies factor invoices with recourse. Organizations that factor with full-recourse may be required to buy back an invoice at its full face value if a customer does not pay within a given period of time, if the customer cannot pay due to insolvency or for any other reason.

We do offer full-recourse factoring, but we also offer non-recourse factoring services that help minimize the organization’s risk from bad debt. With non-recourse factoring, we assume the credit risk for the invoices factored by an organization, and (in most cases) absorb the loss if a customer is unable to pay.

Eliminate the Hidden Costs of Invoice Factoring

Transparency with our customers is one of our guiding values. We are proud to offer receivables financing that is free of the hidden costs of invoice factoring, including the add-on costs some other factoring companies use to produce additional revenues. Ideally, your factoring fee will be your “all in” cost of financing.

Since it is likely your intention to utilize invoice factoring to speed up the incoming cash flow from invoices currently on your books (and thus get that working capital back into your business more quickly) it stands to reason you should compare the advance amounts and factoring fees offered by factoring companies (or Factors). As an educated, astute shopper of these services, you should never sign on the dotted line until you know exactly how the program works, all the fees that may apply, and how factoring your invoices could impact your profitability.

If you have questions about your factoring contract, want a quote for comparison or would like to find out more about our services, request a quote. We will be happy to provide you with a factoring proposal which you can compare against your current agreement.

  • Average monthly sales or amount of invoice to factor
Which Came First - The Chicken or the Cash Flow Problems

Which Came First – The Chicken or the Cash Flow Problems

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Whether or not you deploy invoice factoring or other financing tools to resolve cash flow problems, drill down to the root of the problem to prevent it from impacting your growth again in the future.

Cause or Effect? Exploring the Relationship of Common Business Challenges and Cash Flow Problems

“Access to capital” is commonly cited among the top cash flow problems for small business owners and startups, in particular. But often low cash flow is a symptom, not the cause.

We just published an article which listed the top ten reasons B2B startups fail – or fail to thrive – during their early years of existence. While “access to working capital” was not specifically listed among the reasons, many of the reasons that these small businesses failed tie back to cash flow problems in some way. So much so that someone on LinkedIn asked why “access to capital” was not on the list:

“Good info to share. I have read several articles that say the #2 reason for failure is the lack of revenue / cash flow / financing.”

Is inadequate cash flow the cause or just the symptom when things are going sideways in a B2B startup or young business? It’s sort of a “which came first, the chicken, or the egg?” type of question. It’s easy to point to lack of working capital or slow cash flow as the problem, when actually, cash flow problems are the result of another issue whose roots lie elsewhere.

Here’s another look at the list we shared, along with an analysis of what symptoms might be present within a business experiencing the same type of challenge, along with steps you can take to address the challenge if you discover it in your organization.

More than Cash Flow Problems: Warning Signs of the Top 10 Challenges that Derail Startups and Small Businesses

Emotional Pricing and No Understanding of Pricing (#1 and #4 on the list)

If goods or services aren’t priced high enough to produce the margins needed for a business to be profitable, it can quickly result in low cash flow. Conversely, if products are priced too high it can result in inadequate volume of sales needed to produce the revenues required to meet operational needs (and result in low cash flow).

You may be able to fix your pricing strategy by conducting some competitive research or establishing a value proposition that resonates with more buyers. You may also need to determine whether there is an adequate number of buyers in your target markets to support a particular product or service; if the market is inadequate, it might be necessary to scrap or table the item for the time being.

Living Too Large (#2 on the list)

Many entrepreneurs become small business owners out of a desire to build a better life for themselves, and it’s understandable that they (or their investors) would want to enjoy the fruit of their labor. Low cash flow can be symptomatic of the removal of too much operating revenue by an owner or investors. This challenge can be addressed through proper financial planning and having controls in place (or the self-discipline required) to ensure that the business retains the revenues it needs for day to day operations and growth initiatives.

Not Paying Taxes and No Experience in Record-Keeping (#3 and #7 on the list)

Many tax preparation professionals have a number of clients who are also sole proprietors and small business owners, and nearly all could probably tell you a story about doing taxes for a small business owner who had failed to set aside money for state or federal taxes. Not paying taxes at all, or not paying enough in taxes is a sure-fire way to hurt a small business.

We have included lack of experience in record-keeping here as well because both non-payment of taxes and poor record keeping are related; and both can find fixes in working with a professional accountant or bookkeeper in order to ensure that the paperwork is done right and taxes are filed and paid on time.

Both can also result in low cash flow; and in particular, as you work through your pricing strategy, it’s important to include projected tax expenses as you calculate margins and set prices for your goods or services.

Lack of Planning (#5 on the list)

Lack of planning can negatively impact any number of areas within a small business. Lack of planning could result in stocking too much or too little inventory. Lack of planning could result in having too many staff on board or not enough personnel. Some small business owners are inherent planners, others are more inclined to be visionaries. Some see the big picture, others the details.

One important thing for any business leader to remember is that it’s rare for any one person to have all the skills, abilities and inclinations needed to do everything that needs to get done in the business – and do it all well. This challenge can be addressed by hiring to your inadequacies, finding good mentors and recognizing where you need help (instead of trying to do everything yourself).

The bottom line: If planning in many or even just one vital area of your business is not your strong suit, don’t be afraid to ask for help.

No Understanding of Financing and Inadequate Borrowing (#6 and #10 on the list)

Meeting with a business finance expert as you launch your organization and as you grow can help to ensure that your finances will be correctly set up and understandable. Clarity in this area can help you identify problems as they emerge, before they hurt your business, and while there is still time to act to resolve them.

Additionally, it’s important for small business owners and entrepreneurs to understand that there are financing alternatives available that can help resolve common cash flow challenges. For instance, we offer business financing programs that can help small businesses with low or slow cash flow, including receivables invoice factoring that allows an organization to “speed up” collection of customer invoices in order to create more consistent cash flow and take on new business more quickly.

Poor Credit Granting Practices (#8 on the list)

As with setting prices, organizations can make the mistake of extending terms that are too generous, thus affecting cash flow because customers take a long time to pay or they can make the mistake of setting customer terms that are not generous enough, so that competitors look more attractive to their customers.

The good news for companies that invoice their customers after delivering goods or performing services is that invoice factoring can alleviate this challenge altogether. When companies factor invoices, they can receive payment on a customer’s invoice the same day the invoice is generated, without waiting for customers to pay.

Expanding Too Fast (#9 on the list)

When organizations try to expand too quickly, they often deplete resources (including working capital) to the point that the business may have trouble meeting operating expenses. This is another instance where simply working with a financial planning expert and creating a manageable, controlled plan for growth can prevent the problem from occurring.

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Get more information about how invoice factoring can speed up B2B organizational cash flow:

  • Average monthly sales or amount of invoice to factor