Maximize Business Cash Flow with these 10 Tips

Maximize Business Cash Flow with these 10 Tips

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.

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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.

12 Ways to Protect Yourself and Your Business from Internet Scams

12 Ways to Protect Yourself and Your Business from Internet Scams

Even before personal tech devices – and internet scams – became commonplace, scammers existed. They used the postal service and wall-mounted telephones to scam people out of money and identities. Sometimes they succeeded.

Internet Scams, Spam and Phishing – Oh My!

As technology advanced, along came the internet scams. Now they use email, SMS (text) messaging and mobile phones to try to get access to identities, bank accounts or to persuade their victims to send money.

If you have a mobile device, if you get email, if you purchase things online, or even if you just do business with companies that store information in the cloud, you are unfortunately at risk in some way.

Think about all of the stories you have seen recently about a large retailer or financial institution whose customer data was breached. Even social media use can put you at risk, as scammers often impersonate accounts by creating a “mirror” account using the images and text of another or posing as someone in order to interact with potential targets.

12 Ways to Protect Yourself and Your Business from Internet Scams

There are some basic ways you can protect yourself and your organization from internet fraud, and you can also learn to spot red flags that may indicate someone is trying to scam you. The FBI’s website has many great resources for this, including a list of recent email scams and warnings. They estimate email scams alone cost over $26 Billion in 2019!

  1. Refrain from giving personal or financial information out to incoming sources. Your bank is never going to email you and ask you to verify your account information – they already have it!
  2. Check the sender information. Email scams often come to you as though they are being sent by a friend, retailer, bank, or some other entity you do business with. However, when you look closely at the actual return email address, the address isn’t a match to the organization. The URL/domain names are different.
  3. Verify, verify, verify! One common email and telephone scam is to contact someone pretending to be a colleague or loved one who has an emergent financial need. Before sending money or giving out account information, get in touch with the actual person (colleague or loved one) or someone who knows them well and can verify the need is legitimate.
  4. Ask for a call back number and see if it matches publicly available information for the organization.
  5. Google some of the terminology, sender information, subject line, company name, etc., from the email to see if it matches up to known scams.
  6. If the communication contains some kind of threat, such as a threat to shut down your network, request for ransom for your domain name or if your website gets hacked, or a personal threat, contact local or federal law enforcement, your web hosting provider, your lawyer, etc., to see how to proceed.
  7. Protect your website with a firewall, antivirus, anti-spyware/malware and anti-spam software, and an SSL certificate that encrypts the data submitted to you via the forms on your website. With all of this security comes updates, so be sure to update your software on a regular basis.
  8. Shut it down! Shut down your computer when it’s not in use to prevent attacks from happening and/or stop any attack in process.
  9. Download with care. Many forms of malware are sent via email and if you click on a link or download a file from the internet, you may be unwittingly installing malware or spyware that can make your business vulnerable to attacks, ransomware or a data breach.
  10. Don’t click. You might think you’re closing a malicious popup only to find that the “X” you clicked on to close the box started an action instead. Instead of clicking to close a pop-up window or ad, close the browser window instead.
  11. Clear your devices’ cache, cookies and history. Clear out any unwanted internet activity by clearing your devices cache, which are temporary files stored on a device to make loading re-visited websites more efficient. You can also clear your devices internet browsing history and delete cookies to free up space on your device. This type of device “housekeeping” can make your devices run faster, frees up memory, and helps keep your device safer in the process. If you’re unsure about how to do this, contact your IT department, a local IT (information technology) or computer repair/maintenance specialist, or google information about how to do these types of tasks on device’s operating system.
  1. Institute protocols. Make training about internet fraud part of your employee orientation and on-going training. Institute protocols and rules for use of company devices on the internet (including for email).

What – Exactly – Are Scams, Spam and Phishing?

Here are some of the common terms it’s important to understand, in order to protect yourself and your organization.

Scams – Internet Fraud

The FBI defines internet fraud as “the use of Internet services or software with Internet access to defraud victims or to otherwise take advantage of them. Internet crime schemes steal millions of dollars each year from victims and continue to plague the Internet through various methods.” It describes several types of internet scams including:

  • Business Email Compromise (BEC) wherein legitimate business email accounts are compromised “through social engineering or computer intrusion techniques” in order to conduct an unauthorized transaction of funds
  • Data Breach – Unauthorized access (copying, transmitting, viewing) to business data which might include customer accounts, employee information, bank or financial information, etc.
  • Denial of Service – When a hacker is able to interrupt access to any system or network, such as when a website gets “hi-jacked” or rerouted to another URL, users are unable to login to systems, network access is cut off, etc.
  • Email Account Compromise (EAC) which is similar to BEC but may also extend to the general public, and in which compromised or impersonated email accounts are used to solicit funds from victims
  • Malware – Malicious software, codes, scripts, etc., used to disable or damage computers, networks or other devices
  • Scareware – Similar to malware but includes the use of scare tactics to get victims to click on something, send funds or take some other action
  • Phishing, a.k.a. “Spoofing” refers to use of forged or faked electronic documents. Spoofing is when an email is disguised to appear as though it’s coming from a legitimate source (such as a financial institution or brand) rather than its actual source (also referred to as vishing, smishing or pharming). In both cases, the intent is usually to get the victim to provide personal or sensitive information like passwords, credit card information, bank account numbers or to redirect the victim to a malicious website.

And finally

  • Ransomware – A form of malware and/or phishing or email compromise in which money is demanded in order to restore access to data, a network, or even suggesting the recipient has committed crimes or done something else (e.g., “we caught you doing ___________ and we’re going to release this information if you don’t pay!”)

Internet fraud schemes frequently occur as investment schemes, the infamous Nigerian prince letter fraud, non-delivery of merchandise, internet auctions, business or credit card fraud.

If you believe you or your business has been the victim of one of these schemes, you should report it to your financial institution, any organization that the scammer was posing as (such as when they pose as your bank, a retail store, a charity, or some other organization), and you can also report internet fraud directly to the FBI to assist in their efforts to discover and prevent these types of costly and malicious crimes. If you haven’t been victimized per se but want to report a tip about internet fraud to the FBI, you can do that as well.

You might also like: Understanding Common Business Financial Statements

Overview of Common Business Financial Statements

Understanding Common Business Financial Statements

Improve your ability to understand and interpret the most common business financial statements needed to run your organization.

Financial Literacy is Essential for Running a Thriving Business

PreferredCFO.com cites several business finance challenges being at the heart of why young businesses failed, with financial literacy coming in on the top of the list:

  • 82% – Didn’t understand cash flow or had poor cash flow management skills
  • 79% – Didn’t have adequate working capital at the outset
  • 78% – Didn’t have an effective or well-developed business plan
  • 77% – Didn’t price products or services properly
  • 73% – Didn’t predict sales or costs accurately
  • 70% – Didn’t know what to do to succeed and failed to seek help from those who did

It’s nearly impossible to overstate the importance of financial literacy. While a business owner can learn along the way, having a strong understanding of the financial needs and performance of their company can help them avoid making some of the costly mistakes that can hurt an organization.

This need only grows over time, from knowing how much money you need to start up, to understanding when it’s time to make changes in your business. Paying close attention to the common business financial statements produced each month, quarter or year can give you invaluable insights into sales trends, vendor costs, payroll and other business expenses so that you can take action before a small problem escalates.

Overview of Common Business Financial Statements

What is a Balance Sheet?

The balance sheet shows an organization’s assets, liabilities and net worth. The organization’s assets must be equal to the sum of its liabilities (debts) plus equity in order to balance.

Assets are items an organization owns that have value; meaning, they can be sold or leveraged to make services or products which can be sold.

Liabilities are debts owed by the business to another organization or individual.

Net worth, or equity, is what an organization would have if all assets were sold and all liabilities satisfied. An organization’s net worth belongs to its owner and/or any and all shareholders.

What is an Income Statement?

The income statement shows how much revenue, or income, an organization earned over a specific time period (often over a quarter or year). And it also shows the costs and expenses attributed to earning that revenue.

The commonly used phrase, “the bottom line…” is derived from the actual bottom line of the income statement because it shows an organization’s net income or net loss after costs and expenses are deducted.

What is a Cash Flow Statement?

While income statements have a bottom line of net earnings or loss for a given period, cash flow statements show the movement of cash in and out of an organization.

Understanding the flow of cash going in and out of your business is important because you need to know whether you have enough money coming in to cover operating and capital expenses. It can also help show you where your cash is coming from (or whether activities, such as operating activities) are not generating enough cash to cover operating expenses.

So what if you do have slow cash flow? Apart from growing your business or increasing sales, another way to speed up cash flow is to factor customer invoices instead of chasing down payments. Some companies do this on an on-going basis until they have grown to the point that incoming revenue from sales more than cover business expenses. Other companies choose to factor invoices only occasionally or to spot-factor invoices in order to free up working capital to meet payroll, invest in emerging growth opportunities, pay vendors more quickly for fast-pay discounts, and so on.

The more you understand your organization’s cash flow, the better you can leverage financial tools that expedite working capital. This can help you run your business more effectively and efficiently, or put you in a position to grow your company faster.

Why Understanding Common Business Financial Statements is Important

In business, chances are that sooner or later you will need to be able to read and interpret common financial statements in order to make good business decisions for your organization and avoid costly mistakes.

A better understanding of the financial position of your business can help you determine whether, and how, business financing options like invoice factoring could provide you with expedited working capital or a more consistent flow of cash so that you can focus on growing your business to the next level.

7 Things to Do Before Launching a New Product or Service

Launching a New Product or Service? Do These 7 Things First

When you’re launching a new product or service, answer these seven questions to ensure it gets the customer attention it deserves and produces the new sales you desire.

Don’t Fly by the Seat of Your Pants! – 7 Point Checklist for Launching a New Product or Service

All too often a stellar product or service launch falls flat simply because the groundwork for product launch success was not done. In fact, data suggests that 64% of small businesses (or even more) don’t even have a documented marketing plan.

What you do before launching a new product or service option could be just as important as the product or service itself. Position your new product or service for faster client adoption using this seven-point new product launch checklist.

7 Things to Do Before Launching a New Product or Service

1. Identify “who” will want it.

If you’re launching a new product, chances are it fits one or more segments of your existing customer base (and target markets) better than others. Or you may be planning to add products or services that will attract new target markets, outside of those your business normally serves. In either case, successfully launching a new product or service requires that you identify “who” will want it.

Based on purchasing history, identify pioneers and early adopters among your customer base, or use your marketing to target pioneers and early adopters among members of your target audiences.

2. Specify “why” members of your target audience should want it.

Value propositions and competitive differentiators aren’t just for brands. You should be able to accurately describe – in detail – why members of your target markets would want any new product or service you plan to launch.

3. Court influencers and put them to work when launching a new product.

Based on purchasing history, identify pioneers and early adopters among your customer base, or use your marketing to target pioneers and early adopters among members of your target audiences.

  • Invite them to pre-launch events
  • Employ their feedback for product or service refinement before the launch
  • Use their comments as testimonials and social proof
  • Invite influencers to sample new products or services and share their experiences on social networks
  • Share recommendations from celebrities and experts on your social networks and marketing communications

4. Create anticipation and demand before launching a new product.

Initiating communications about a new product or service beginning weeks – or even months – prior to its launch gives you the ability to create anticipation among your customers and prospects. Additionally, by creating demand prior to a product or service launch you will have a better idea of the level of product inventory (or service supplies) you will want to have on hand for the launch period.

5. Extend a no-risk trial proposition.

Money-back guarantees, free add-ons and other incentives can help to allay any concerns that your customers or prospects may have about trying a new product or service.

6. Make it an offer too good to refuse.

Reward those who are willing to pioneer adoption of your new product or service by extending a special trial period offer, free gift with purchase, financing options (for big-ticket items), or another inducement that makes it easier for customers and prospects to say “yes” than it is to say “no thanks” when it comes to trying your new product or service.

7. Create urgency.

Special offers and incentives should be time-limited, so that your customers are encouraged to try new products or services before they disappear. Likewise, if sales are less than anticipated or less than needed to keep a newly-launched product or service in your line up, encourage customers to purchase and to recommend it to their friends, co-workers or loved ones in order to step up demand.

You might also like: How-To and Marketing Tips for Vendors Selling on Zulily

6 Invoice Factoring Benefits Can Turn a Small Business into a Big Player

6 Invoice Factoring Benefits Can Turn a Small Business into a Big Player

If your small business invoices its customers using accounts receivable invoices, invoice factoring benefits could help you turn your small business into a big player – in nearly any B2B industry in the US.

Competitive Advantages Among Invoice Factoring Benefits for Small Businesses

Often, a small business can provide a higher, more personalized level of service to its customers than its larger competitors; but this does not always translate into a true competitive advantage for one simple reason: bigger organizations have access to more working capital.

While a small business may be waiting for customers to pay or resources to be freed up, larger competitors already have the money needed to invest in the next project, shipment or production run as well as spare resources at the ready to carry them out.

When it comes to cash flow, why play the waiting game?

By factoring invoices instead of chasing customer payments, a small business can gain access to the working capital tied up in open receivables, without waiting for customers to pay. This could give your small business or startup the edge needed to compete with large rivals in order to take on new orders more quickly, fulfill larger orders or serve larger customer accounts.

6 Invoice Factoring Benefits for Small Business

1. Reducing Overhead and Expenses

Your invoice factoring company can handle your receivables from beginning to end if that’s what works best for you. Your organization reaps the savings in overhead for the time, money and personnel that would be needed to first generate invoices then the time and energy to track and receive payments.

2. Eliminating or Reducing Bad Debt Risk

Many factoring companies provide clients with access to commercial credit checks on both new and existing clients. This gives you, the business owner, added peace of mind in trusting that you will be paid for the goods and services delivered by your company. You can vet new customers for credit worthiness and periodically reassess customer limits.

Working with a non-recourse factoring company gives your small business additional financial protection. When you use non-recourse factoring, the factoring company assumes the credit risk for the invoices we factor. If one of your customers can’t pay their invoice for credit-related reasons, the factoring company absorbs the loss, not your business.

3. Giving You Leverage with Suppliers and Vendors

Having working capital in hand (instead of only on the books) provides you with leverage you can use to negotiate better terms, including cash discounts or volume discounts with your own suppliers and vendors.

4. Improving your Credit Rating

Since factoring invoices gives you more predictable, steady cash flow, you can pay your bills on time or pay down debt more quickly, which can help to improve your business credit score and may help you improve your personal credit score as well.

5. Reducing Unnecessary Expenses

If you are forced to wait for customers to pay invoices before you can pay your own bills or creditors, you may also incur late fees and additional interest charges. Factoring invoices so that you have the money needed to pay your bills, loan payments and other expenses on time means that you won’t incur unnecessary late fees and interest.

6. Giving You Access to More Business Growth Resources

Our goal is to help you grow your organization from where it is today to where you want it to be tomorrow. From your account manager to the business resources and articles you’ll find on our website and blog, we continually work to provide our clients with more resources they can use to grow.

Bring invoice factoring benefits to your small business.

Get a free, no-obligation quote – you could go from approval to your first funding in hours. 

5 Small Business Superpowers Big Rivals Can’t Touch

5 Small Business Superpowers Big Rivals Can’t Touch

It’s not always about growing to the next level. Some of the small business superpowers your not-so-big business has are things larger competitors lack, which might mean staying small is better for your organization.

Mergers, Acquisitions and Partnerships – Oh My! 5 Benefits of Keeping Your Small Business Small

If it seems like a lot of companies got bigger by joining forces in the past couple of years, it’s because they did. Deloitte’s Merger and Acquisitions Trends report for 2019 found that 79 percent of responders anticipated they would close more deals over the next 12 months, up from 70 percent in 2018. In addition, more than 80 percent planned to sell off assets in 2019, up from 70 percent the year before.

It can be difficult to watch social media feeds and newswires light up with stories of larger competitors making acquisitions, merging with other companies and forming partnerships for lead acquisition, especially when you know that there are things your small business does better.

Rather than worrying about competing on scale, it might be smarter to leverage those things a small business can do that larger rivals cannot, to make your business more profitable without actually getting bigger. Since you might not know how to leverage these small business superpowers to outpace bigger rivals, we also included a few tips to help you turn advantages like these into growth.

5 Small Business Superpowers Big Rivals Can’t Touch

1. Access

Unless they go on a reality show like Undercover Boss, most CEOs and executives in large organizations have little contact with real customers on a day in, day out basis. They don’t have a chance to engage in two-way dialogue, collect first-hand feedback about the customer experience or find out what customers wish the brand would do next.

Take every opportunity to listen when customers complain, ask questions, or make suggestions. The insights they provide can tell you exactly what you need to do to make your business better, more profitable and guide your choices when it comes to adding to new products and services.

2. Accountability

In a big organization responsibility for mistakes can be passed along until a furor dies down, and accolades for success don’t always trickle down to the employees who really made the difference. For better and for worse, a small business offers their customers accountability and gives every employee a chance to shine.

Leaders who aren’t afraid of taking responsibility for mistakes, missteps and misfires often earn the respect not only from customers, but employees as well. Take responsibility for the mistake and make the solution happen. Worry about tracking the details back later to ensure product or service performance in the future. Be generous with praise. Make sure that everyone on the team has a chance to shine and understands that the success of the one can only ever happen as a result of the effort of the whole.

3. Agility

Bureaucracy, processes, committees and getting the-powers-that-be to change direction or add new projects mean that big companies will almost always take longer to react to marketplace changes and emerging opportunities than a small business. A small business can react and make course corrections quickly. They can communicate almost immediately with all staff who need to make adjustments. They can move resources and redirect efforts in a short period of time when new opportunities emerge. These small business superpowers enable smaller companies to move faster than big ones.

Agility isn’t a verb; rather, it’s a passive state of energy. A small business that prides itself on agility but never takes action is wasting this small business superpower. Make sure that you have a process for discovering and evaluating suggestions, ideas and marketplace changes so that when opportunity strikes, you can strike right back.

4. Simplicity

As companies get bigger and bigger, it’s not just their offices that start to look like a maze. Trying to figure out who to contact with a question or when a new product or service will hit the floor can be a job in and of itself. A small business can keep things simple. From processes to communication channels and corporate announcements, customers and employees can feel confident that they are in the know about where to go and what’s coming next.

The routes might be clear, but they still need to be mapped. Make sure that you establish methodology for tracking and reporting stats and progress to the team on a regular basis — and then do it — so that everyone knows what they need to do next.

5. Consistency

Big companies are often stretched in many different directions, so much so that departments could even end up working to cross purposes or unknowingly undermine one another with prospects and customers. A small business has the luxury of finding and focusing on a few or even one common purpose. Employees not only understand the mission but can work together to achieve the goals with a minimum of disruption, since communication is practically instantaneous, everyone can be apprised of the status of all the projects underway at any given time.

The more consistent a brand experience is, the stronger the impression can be; but remember that a consistently boring experience might be just as bad as a negative one. Decide what type of customer experience your brand should deliver and what you will do to get it done. Ensure that all staff have a clear understanding of how what they do impacts and have the ability to improve the customer experience.

Regardless of size, your company has small business superpowers big competitors can’t replicate. The question is, have you discovered them, and how will you use them for good?

***

We offer small business invoice factoring, a financing tool you can use to expedite cash flow and even create competitive advantages.

Ask us for a free, no-risk, no-obligation small business financing proposal. Get immediate answers and get access to working capital within days of approval – or even faster.

Which Came First - The Chicken or the Cash Flow Problems

Which Came First – The Chicken or the Cash Flow Problems

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:

Top 10 Reasons B2B Startups Might Fail

Top 10 Reasons B2B Startups Might Fail

There is as much to be learned from failures as there is from success. Find out the most common reasons why B2B startups might fail during the first five years.

10 Areas Where Incompetence and Inexperience Can Cause B2B Startups to Fail

From cash flow to customer terms, unless you’ve run a business before, what you don’t know might hurt your new business. Find out how to protect and strengthen your startup or young business by shoring up knowledge and expertise in these ten areas that account for 75 percent of all young business startup failures.

Unless you have launched a startup or small business of your own, it is hard to describe the feeling of excitement and limitless opportunities that startup owners experience when they first open their doors (whether brick and mortar or virtual.) Equally difficult to describe is the vast disappointment that same small business owner will experience if they are forced to close those doors permanently within a few years (or even months) because their young business is no longer viable.

As alarming as it sounds to say that half of all startups are no longer in business by the five-year mark, it’s not like the five-year mark is magic. In fact, more than seven out of every ten startups will fail within the first ten years. (statisticbrain.com)

The industries with the highest failure rates by year four (when 50 percent of all new young business startups are said to have failed) include:

  • Information – only 37% still in business after 4 years
  • Transportation / Communication / Utilities – only 45% are still in business after 4 years
  • Retail – only 47% are still in business after 4 years
  • Construction – only 47% are still in business after 4 years
  • Manufacturing – only 49% are still in business after 4 years

On the flip side, the industries which have the higher success rates by year four are listed as follows:

  • 58% of Finance / Insurance / Real Estate organizations are still operating after year 4
  • 56% of Education / Health organizations are still operating after year 4
  • 56% of Agriculture organizations are still operating after year 4
  • 55% of Services organizations are still operating after year 4
  • 54% of Wholesale organizations are still operating after year 4

From Startup to Young Business to Out of Business, Top 10 Reasons B2B Startups Might Fail

Statisticbrain.com listed the top ten reasons that a young business might fail under two main categories: incompetence and inexperience. One could make the argument that incompetence occurs largely due to inexperience or lack of knowledge needed to put the right policies into place; but for now let’s stick with their categories and talk a little bit about the most common reasons that startups tend to fail within the first five years.

Top 10 Reasons Startups Fail

Incompetence accounts for 46 percent of small business failures within the first ten years of operation. The specific areas of incompetence that derailed these startups included:

  • emotional pricing
  • living too large
  • not paying taxes
  • no understanding of pricing
  • lack of planning
  • no understanding of financing
  • no experience in record-keeping

As you read through the list, it’s easy to conclude that many of these small business failures could have been prevented if the entrepreneurs had educated themselves in the areas of finance, taxes, record keeping and pricing. What’s more, the problems that result in all seven of these areas directly affect cash flow, which is the lifeblood of any business, of any size.

Inexperience accounts for 30 percent of small business failures occurring within the first ten years of operation. The three specific areas where lack of knowledge and experience resulted in startup failure were:

  • poor credit granting practices (lack of experience in setting the right customer terms)
  • expanding too fast
  • inadequate borrowing

Even more than the previous reasons cited for startup failure within the first decade, these three reasons point back to an inadequate understanding of cash flow management, which, in turn, is just about certain to result in inadequate cash flow needed to sustain a small business.

Cash flow is simply the movement of money into and out of your business. Positive cash flow results when revenues exceed expenses; conversely, negative cash flow occurs when money is going out of a business more rapidly than revenue is coming in. Inc.com lists five ways to improve cash flow (collecting receivables, tightening credit requirements, increasing sales, discounting for early payment and obtaining financing).

However, it’s not always possible to implement some of these suggestions. For instance, if extended customer credit terms are being employed as a competitive advantage, it may not be possible – or even advisable – to demand that customers pay up more quickly.

How to Speed Up B2B Business Cash Flow

Any of the reasons cited for the demise of 76 percent of the small businesses that failed in their first ten years could have been experienced by any type of B2B (business to business) organization. Though some could have been prevented by entrepreneurs educating themselves or working with experts in the areas of planning, financing, record keeping, taxes, etc., some of the problems are more complex.

For instance, a small business might want to require customer payment up front or on delivery but may need to extend more favorable terms to their customers in order to compete with larger, well-funded competitors. Likewise, some small business owners may have a good handle on financing and record-keeping, but that does not ensure cash flow from customer sales will always match up in a timely manner with operating costs, expenses and payables.

That’s where invoice factoring can help. Invoice factoring is a financing tool most B2B organizations who invoice their customers for payment after delivery of goods or performing of services can use to better manage cash flow. Rather than waiting for their customers to pay, they can factor – or sell – a customer’s invoice to an invoice factoring company like Corsa Finance and get payment for the invoice within days – or even hours.

Factoring invoices allows an organization to gain immediate access to the working capital that might otherwise be locked down in their receivable invoices for weeks (or longer). With immediate payment on invoices, cash flow can be maintained at a more consistent level, and revenue can be matched up more closely with correlating operating expenses.

Speed Up Cash Flow by Factoring Invoices Instead of Chasing Customer Payments

Get a free, no-risk quote for invoice factoring:

8 Mission Critical Realtor Apps and Tools for a Thriving Brokerage

8 Mission Critical Realtor Apps and Tools for a Thriving Brokerage

If you want to grow your real estate business more quickly, these must-have realtor apps and tools are literally right at your fingertips.

Homes stay on the market an average of 65 days, but in hot housing markets that time might be just a few days – or even hours. Speed and efficiency are of the essence for realtors who work with sellers and buyers in fast-moving markets, but that doesn’t mean that quality doesn’t count. Real estate agents who successfully attract and engage more buyers stand a better chance of bringing in higher offers for their clients, which is a win both for the home sellers and the realtors.

Many of the realtor apps and tools you need to compete at a high level as a realtor are right at your fingertips – in your smartphone, tablet and laptop. There’s more computing power in mobile devices than ever before, and their usefulness extends far beyond the basics. The realtor apps and digital resources listed below can help you run your real estate business more effectively and efficiently.

8 Realtor Apps to Use to Grow a Real Estate Business

1. Mortgage Calculator App

There’s no getting around the fact that homes are a big-ticket purchase for most home buyers. Having a mortgage calculator among the realtor apps on your smartphone, tablet and laptop puts the numbers buyers need right at your fingertips.

Not only is it useful in helping home buyers determine if they can afford the home of their dreams, it can also be helpful in working with buyers who have not locked down financing and mortgage pre-approval yet. You can also use this to help buyers decide what amount of down payment they need to put down for various types of loans or to avoid PMI (mortgage insurance) which can significantly increase the amount of their monthly mortgage payment.

Financept’s Mortgage Calculator (available in the Google Play store, compatible with all devices) has a 4.6 overall rating from over 1800 users, and its features include:

  • Calculate mortgage and loan payments based on principle, interest and term (length of loan)
  • Yearly and monthly breakdowns
  • Ability to save and print results
  • Mortgage amortization schedule (shows totals paid toward principal and interest over the length of the loan)
  • Mortgage amount with / without PMI (mortgage insurance)
  • Mortgage amount with taxes
  • Impact on the mortgage amortization schedule of making extra payments

2. Virtual Conferencing – Video and Screenshare

Eliminate email and phone tag by setting meetings with multiple participants using StartMeeting.com’s low-priced platform. At a monthly cost equivalent to the price of one lunch, you’ll have a virtual business meeting conference room that enables participants to call in or view from a smartphone or computer. This versatile tool provides you the ability to:

  • Share your screen to give a presentation, review documents or use your camera for a virtual “face to face” with prospects, buyers and sellers
  • Show property photos and videos, explain documents, put offers together, review counter-offers – great tool especially when working with remote buyers such as military home buyers
  • Review offers with sellers, review inspection reports, craft responses, etc.
  • Invite multiple parties to eliminate conflict schedules, the need to meet at a brick-and-mortar location and increase communication efficiency
  • Hold educational webinars for home buyers or home sellers (up to 1,000) in lieu of (or in addition to) local workshops for client attraction
  • Capture all meetings via recording for later playback, reference or documentation

3. Expense Tracking

Sure you can simply take a photo of receipts with your smartphone, but ReceiptBank goes a step further in automating scanning of receipts, bills and invoices on the go, storing them on the cloud so you can access them when you’re doing your office accounting or to send to your bookkeeper. It’s AI (artificial intelligence) reads your receipts, eliminating the need for data entry.

You can track profit and expenses and find tax deductions you might otherwise have missed starting for free using hurdlr. The free level includes:

  • unlimited mileage tracking
  • add income and expenses
  • tax calculations summary
  • ability to export / email reports

From there, for less than $10 a month (currently $7.99 month to month or $60 billed annually) you can expand hurdlr’s abilities with automated expense and income tracking, speed tagging, get real time calculations for state and federal self-employment taxes, and organize your office by setting work ours and creating rules. And don’t forget – the cost of apps and programs like these may all be tax deductible as well.

4. Scanners

JotNot Pro turns any iOS or android smartphone or tablet into a scanner, and features additional applications including Fax (send any Word or PDF document by fax), Invoice and Signature. Each of the apps currently cost $4.99 US.

Easy Inc.’s Simple Scan is a free app that turns your mobile phone into a scanner. It’s got a user rating of nearly 5 stars and has been reviewed by more than 73,000 users.

5. Selfie and Property Videos

Video. It’s everywhere! From selfie videos that let you introduce yourself to prospects on social media, your website and in email marketing, to videos you shoot at a home or property, video can take your real estate marketing to a higher level. However, a lot of self-produced video ends up looking very amateur and the still-shots aren’t always flattering.

Problem solved! Load Adobe Premiere Clip onto your phone, tablet and/or laptop along with your other realtor apps and get the extra editing tools you need to improve your videos, add effects, music, transitions, text, voice-over, set beginning and end slides – and more. Once complete, share easily onto your website, social media, YouTube channel, email marketing and more.

6. Cash Flow Tools

While Corsa Finance’s realtor commission advance doesn’t technically fall under the category of “realtor apps,” it is a must-have realtor tool for expediting cash flow. As soon as a purchase and sale agreement or lease agreement has been signed around, the clock starts ticking, and you start waiting to receive the money you earned on the deal. The clock might tick on for weeks – or even months. Meanwhile, the expenses you incurred to do the work of the deal have already been billed to you, and maybe even paid.

Waiting on a commission for weeks or months could result in a cash flow shortage for your real estate agency. A real estate commission advance resolves this cash flow shortage by giving you access to working capital that would otherwise be tied up in commissions payable to you at a later date, but without impacting the transaction’s closing date, buyers or sellers.

You might also like: 4 Ways to Use a Commission Advance for Realtors

7. Lead Management

If you need more relationship management than Outlook alone can provide, Zillow’s Premier Agent offers the ability to manage leads, set meetings, track interactions and keep track of your lead generation pipeline, alone or as part of a team. The program can connect leads from more than 35 sources so you can manage them all in one place. You can also record your phone calls and have them sent to your inbox in case you need to review them again later.

  • Robust lead management
  • Lead distribution and monitoring
  • Task management
  • Listings management – although some tools are not available to Android users

8. Prospecting – Demographics

If you want to know the general demographics of a city or zip code, check out the wealth of free data available to real estate professionals on claritas360 (formerly claritas Prizm). Enter in any zip code and find out about its demographics by lifestyle, social group, income, household composition, age and ethnicity.

Another great resource for realtors to discover information about specific cities or zip codes is City-Data.com. Instantly find historical statistics about:

  • population
  • number of homes, condos and apartments
  • real estate property taxes
  • profiles of local businesses
  • education
  • ethnicity
  • income
  • median home pricing – and more

Demographic data can be of great use to you when looking for trends, identifying prospect-rich neighborhoods or even tracking which are likely to be the next up-and-coming areas where buyers will want to live.

Do you have favorite realtor apps you can’t live without? Leave your recommendations in the comments below. 

5 Ways to Make Your Business More Profitable by Factoring Invoices

5 Ways to Make Your Business More Profitable by Factoring Invoices

Few businesses can say they don’t want improved cash flow. From budget deficits to delinquent accounts, here are five signs your business might be more profitable by factoring invoices instead of waiting on customer payments.

Getting paid more quickly can help entrepreneurs, startups and small businesses in a big way by improving cash flow and supplying the cash-on-hand needed to grow.

Small businesses often dream of landing a big account but find that large corporations hold all the cards when it comes to setting terms, including pricing, profit margins and timing of invoice payment. Slow-paying customers make for fast cash flow drains that can hurt a small business, erode profits and even threaten viability.

The good news is that there is more than one way to improve cash flow. Factoring invoices can put the power back in your hands and give your organization the money it needs to become more profitable and grow more quickly over the short or the long term.

5 Signs a Business Should Consider Factoring Invoices to Become More Profitable

  1. Discouraged by Delayed Payments

By the time you make a sale, the math is already upside down. When you consider that you have incurred costs for marketing and advertising, manufacturing, shipping, supplies, transportation, payroll and all of the other costs of doing business, it’s easy to see why it would be discouraging to wait for customers to pay on time, let alone waiting on customer payments that are past due.

Analyzing 409 companies from Standard & Poor’s 500-stock index puts the average time to pay suppliers at 46.5 days, but also notes that small businesses wait even longer to get paid, two months on average. Delayed payments mean delayed reimbursements for the costs you’ve incurred as well as delayed reinvestment in order to grow your business.

When you factor invoices, you collect payment immediately. This empowers you to maintain more consistent cash flow and ensures that you will have money on hand to meet expenses.

  1. Dealing with Budget Deficits

When you are waiting for customers to pay, cash flow challenges can compound. If you make late payments, you may incur penalties that further erode your company’s profits. When you factor invoices, you gain immediate access to the money customers owe you. As a result, you can pay your creditors more quickly. Knowing that you will have the cash needed to pay can even give you leverage with suppliers that will enable you to save money by negotiating more favorable terms with vendors or allow you to take advantage of volume discounts. When you cut your costs and save money, you improve your profit margins!

  1. Desire to Limit Risk of Defaulting Customers

Slow-paying customer accounts are bad enough; but what happens when your customer can’t pay at all? Dealing with bad debt is one of the costs of doing business that can cut into your profit margins in a big, bad way.

Bad debt is a big problem. In 2010, US businesses placed $150 billion with collection agencies, who were only able to collect about $40 billion of that total (www.debtcollectionanswers.com). The SBA (Small Business Association) reports that only about 1/3 of all new businesses will still be around after 10 years. If a customer has filed for protection or gone out of business, even costly recovery efforts may prove fruitless.

Factoring invoices with a non-recourse factoring company is one way to protect your company – and your profit margins – from the negative impacts of bad debt. Non-recourse factors assume the credit risk for factored invoices, which can reduce or even eliminate your organization’s risk from bad debt.

  1. Looking for Competitive Advantages

Being able to improve profits and better manage cash flow can lead to additional perks that can help your business become even more profitable. Factoring invoices gives you access to the money locked down in customer receivables right away – without waiting for customers to pay. Since waiting on customer payments is no longer a problem, you can create a competitive advantage for your organization by extending more favorable terms to your customers.

  1. Pursuing Bigger Opportunities

Since factoring invoices allows you to reinvest in your business more quickly, you can also grow more quickly. Whether you want to take on more work simultaneously, pursue bigger projects or land bigger fish, factoring gives you the ability to put more capital to work to promote and market your business, to expand, or to pay for supplies and the up-front costs needed to serve larger accounts or take on more jobs at the same time.

Request a free, no-obligation quote and expedite cash flow by factoring invoices instead of waiting on customer payments. Contact us at 855-882-6772, speed up the process by applying online or email us using the short form below.