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

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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. 

6 Reasons to Revise Your Receivables Factoring Agreement

6 Reasons to Revise Your Receivables Factoring Agreement

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As your business changes and grows, its financing needs will too. Here are six signs you should have your receivables factoring agreement reviewed and re-quoted.

6 Signs You Need a New Receivables Factoring Agreement

As with any other supplier or vendor, it’s only natural that you will review your invoice factoring agreement from periodically to ensure you have a factoring agreement in place that’s best for your business. Here’s why “now” might be a good time to take a fresh look at your agreement and your receivables factoring company.

1. The end of the invoice factoring contract term is approaching.

Just as you would review any other type of contract, before you renew your receivables factoring agreement you should review it and compare it against other offers. Factoring companies might be willing to eliminate unwanted clauses or offer you better terms or rates – or you may find that another factoring company is willing to do so.

You should pay very close attention to the fine print in your current agreement that would require you to provide your current factoring company with 30, 60, or even 90-day notice to terminate your agreement. Unfortunately, if you miss the termination window you may be forced to continue factoring with the same organization for another year or more.

What is receivables financing?
Receivables financing (also known as accounts receivable invoice factoring) is a business finance tool that provides your organization with immediate access to money owed to your business by your customers, without waiting weeks – or months – for the invoices to be paid. Find out more about Receivables Financing.

2. Increases in factoring fees or rates.

Since improving cash flow is an important priority for most businesses that factor receivables, when profits are negatively impacted by increases in costs or rates it’s important to evaluate whether your current agreement is the right one for your organization.

3. Disappointment with the customer service your receivables factoring company provides.

Poor customer service impacts more than just the client who is factoring invoices, it often affects their customers as well. When evaluating how satisfied you are with your factoring company, you may also wish to speak with some of your most valuable customers to ensure that the communications and collections being conducted by your factoring company are also beneficial to the relationship between your business and its customers.

Our goal is to provide the level of service that leads to high client retention and referral rates. We want clients to choose to stay with us throughout the time they employ invoice factoring as a finance tool and to feel comfortable referring colleagues to us on a regular basis.

4. Hidden fees are adding up.

An invoice factoring fee (usually a percentage) is only one of the potential costs that could be hiding in an invoice factoring agreement. We will review any agreement presented to you to explain the fee structure.

We help our clients get factoring contracts that are transparent and simple, with factors that don’t tack on fees for administrative work, schedule processing, proposals, due diligence, customer credit checks or notifications. Hidden fees might seem small but can quickly add up and negate some of the benefits that factoring invoices should be generating when it comes to your organization’s cash flow and working capital.

5. Not meeting monthly minimums (you want to factor fewer invoices).

If your current factoring agreement requires that you factor a minimum number (or amount) of invoices each month and you find that you do not need to (or do not want to) factor up to the minimum, it is a good time to reach out for new terms from your factoring company or to explore competitive proposals.

We have clients who want to use factoring only when its right for their business with contracts that enable them to factor as many (or as few) invoices as they desire. We believe that letting factoring clients retain control of these types of decisions is important, because it has a big impact on their organization as well as how satisfied they will be with our receivables financing service. Invoice factoring becomes an even more practical and helpful financing solution when you stay in control.

6. You simply don’t want to be locked in to a long-term contract.

Depending on the agreement you choose, you won’t have to sign a long-term factoring contract. Remember that this can be a matter of negotiation which could encourage Factors to offer you an agreement with lower rates, higher advances or some other perk.

We want to earn your business and referrals. We believe that once work with us you’ll be so pleased with the level of professional and personal service that you won’t want to leave. If at any time, you feel that the level of service provided by our team isn’t meeting your needs anymore, you’re free to leave without the fear of a long-term contract or exit penalties hanging over your head.

Ready to get a new receivables financing quote?
Whether this is your first request for an invoice factoring proposal or you’re already factoring invoices, we would be happy to give you a free, no-obligation invoice factoring proposal – you could go from approval to funding in days.

Business Turnaround Strategy and Invoice Factoring Go Hand in Hand

Business Turnaround Strategy and Invoice Factoring Go Hand in Hand

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The top priority in most business turnaround strategies is to speed up and stabilize cash flow, giving a company time to cut expenses, grow sales and regain momentum. Invoice factoring can play a key role as part of a business turnaround plan; here’s why.

Top Business Turnaround Strategy Priorities for Distressed Companies

Implementing tactics for stabilizing cash flow and collecting payments on invoices as quickly as possible is usually priority one when business turnaround consultants come in to help a struggling business. Why? Simple: Speeding up cash flow buys time for a struggling business – time that is critical to allow business restructuring, operational, personnel and procedural changes to be enacted, take root and begin making a difference.

In Best Practices for Turning Around Distressed Companies: The First Steps, the CEO and managing partner of NYC Advisors LLC advises that step one in a business turnaround strategy is to get control of cash and cut unnecessary expenses, including “Collecting your accounts receivables as quickly as possible,” even if it means offering cash discounts for faster payment.

In lieu of offering cash discounts to customers for remitting payments within the first few weeks after an invoice goes out, a struggling business could receive payment on a customer invoice within 1-2 days of when the invoice is generated by factoring, or selling, the invoice to a factoring company for a small fee (called a factoring fee). Furthermore, the factoring fee charged for same day payment on customer invoices will probably be significantly less than a quick-pay customer discount and may even be tax deductible.

Invoice factoring could be preferable to offering customers early payment discounts for many different reasons; such as:

  • Early pay discount still means a delay in collecting on receivables of a few or even several weeks
  • There is no guarantee that a customer will take advantage of an early pay discount, especially if it’s a fairly minimal percentage
  • If early pay discounts are offered to all customers, over time a business could earn significantly less than it might have otherwise collected
  • Customers may come to perceive early pay discounts as “the real price” of goods or services and devalue them in the process
  • Customers may compare terms and demand that their terms be equally favorable to others
  • Early pay discounts may need to be fairly significant (5%, 10% or even more) to get customers to pay right away, whereas your factoring fee will likely range between 4-8%.

Invoice factoring offers a business tools that can stabilize cash flow right away, at a minimal cost. We have programs with factoring fees that start as low as 4 percent which is less than many customer early-pay discounts. In addition, instead of waiting a couple (or several) weeks for customers to pay, factoring clients can get free same-day funding on invoices factored with us, with advances up to 90 percent of an invoice amount.

How Invoice Factoring Can Fuel a Business Turnaround Strategy

For struggling or distressed companies, low cash flow is often the most pressing challenge to address. Speeding up cash flow is a top priority. Without adequate and consistent cash flow, a struggling business will not have time to remediate the problems with its pricing, personnel, marketing, purchasing, overhead and other operational areas that can turn a struggling company back into a thriving enterprise. In other words, speeding up cash flow gives a struggling business the working capital needed to put other components of its turnaround strategy into motion.

Invoice factoring enables businesses that invoice customers for payment on terms to collect payment on invoices immediately, without waiting for customers to pay, for a small fee (called a factoring fee). We can help distressed companies get agreements into place so they get an advance of over 90 percent of the face value of the invoice within 1-2 days of when an invoice is factored at a small cost (or factoring fee) which could be as low as 4 percent.

Here’s how the process works:

DAY ONE Client factors a $10k invoice $10,000
Receive a 93% advance on the invoice $  9,300
Factoring company earns 4% $     400
3% held in reserve $     300
DAY 30, 45 or even 90+ Customer remits payment in full
3% reserve returned to client $     300

 

In this example, factoring the invoice gives a struggling business access to as much as $9,300 on the same day the invoice is generated, and ultimately collects another $300 for a total of $9,600 collected. If the same business elected to extend a 5 percent within 14 days early pay discount to its customer instead, it might wait up to two weeks to collect any money on the invoice at all, and still only receive $9,500 of the invoice amount.

If the customer elects not to take advantage of the early pay discount, the business could receive the full amount but may wait 30, 60 or even 90 days to collect on the invoice. In addition, the business owner or bookkeeping staff may have to invest hours of time on collection phone calls and reminders before the customer pays.

Another advantage of choosing invoice factoring to speed up cash flow as part of a business turnaround strategy (instead of offering customer fast-pay discounts) is that the business can continue (or begin) to extend favorable payment terms to its customers as a marketing advantage. Since the business can collect on the invoice on the same day it’s generated, it does not have to spend time or resources chasing payments or worrying about how quickly a customer will pay.

Benefits of Our Invoice Factoring Services for Your Business Turnaround Strategy

Our goal is to help our clients grow their organizations from where they are today to where they want to be tomorrow. This mantra has impacted the way Corsa Finance tailors invoice factoring programs for our clients and how we do business. For distressed companies, our program can make invoice factoring even more effective as part of a business turnaround strategy, with potential benefits such as:

  • No factoring minimums – clients only factor when it’s best for their business
  • No long-term contracts – use factoring as a transitional, short-term or long-term solution
  • Low factoring fees
  • Competitive advances and fast funding
  • Personal, professional customer care with a knowledgeable account manager
  • Program tailored to the needs of the business instead of a “one size fits all” approach

A free, no-obligation quote is all it takes to find out how factoring invoices can instantly speed up and stabilize your organization’s cash flow, creating a consistent flow of working capital that enables your business to regain market share, keep customers, employees and vendors happy and put your company on a faster track for growth.

We would be happy to provide you with a free, no-obligation quote for invoice factoring services, even it you simply want to compare it with your current factoring agreement to be sure your business is getting the maximum benefit from receivables financing: 

Solving Slow Cash Flow with Invoice Factoring

Beyond Price and Profit – How Slow Cash Flow Can Hurt You

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Profitable business can still be poor ones. Slow cash flow can slow or stall growth. Plan for healthy cash flow, not just profit margins, to build a growing, sustainable business.

High Profit Margins Won’t Keep Slow Cash Flow from Hurting a Growing Business

The number one reason businesses go under is not lack of profits, but lack of cash, or slow cash flow. It is not enough to plan and price for profitability. To be successful, grow and thrive, you have to accurately forecast and plan so that your business has adequate money coming in.

In 10 Things Every Small Business Needs to Do, Bplans.com cites the number one reason small businesses go bankrupt as slow cash flow — not lack of profits. It’s a good reminder that accurately predicting the ebb and flow of your small business cash flow and planning accordingly is going to be a key factor for your success.

Small business cash flow is represented in financial statements in essentially three forms:

  • Operational cash flow is money coming in or going out as a result of an organization’s business activities; obviously to be sustainable, a business needs to have more money coming in than going out (although short term periods of negative cash flow should occasionally be planned for and *managed).
  • Investment cash flow is money received from the sale of long-life assets or spent on capital expenditures (things like investments, acquisitions or assets expected to have a long life)
  • Financing cash flow is money received from the issue of debt and equity or money paid out as dividends, share repurchases or debt repayments

Small business cash flow can be impacted positively or negatively for a number of different reasons:

  • Sales (volume) higher or less than expected
  • Payment terms that you extend to your customers
  • Naturally occurring seasonal or cyclical highs and lows
  • Interruptions to the customer buying cycle, such as economic recession or concerns
  • Introduction of new technologies, additional competitors or other changes to the marketplace
  • Influx or depletion of numbers of potential customers in your target markets
  • Equipment failures or facility deficiencies
  • Lack of inventory or space needed to achieve adequate sales volume

Apart from the unexpected, many of these factors that can create slow cash flow should be considered as you draw up your business plan and revisit your long-range plan from year to year. In fact, many of these conditions should reveal themselves in the SWOT and PEST exercises common to most (formal) small business plans, long range plans or marketing plans.

Solving Slow Cash Flow with Invoice Factoring

One way to mitigate short term slow cash flow challenges is to take advantage of small business funding options, like those provided by Corsa Finance. We offer small business cash flow financing through invoice factoring (also called accounts receivable factoring).

Small business funding through invoice factoring occurs when a company that invoices their customers for payment factors – or “sells” – the invoice to a factoring company at a discount (for a low factoring fee). When they do so, they receive up to 93% of the invoice amount immediately instead of having to wait for customer to pay the invoice. Once the small business’s customer has paid the invoice any amount held in reserve goes back to the small business, too. Factoring can eliminate the problem of slow cash flow completely, since invoices can be factored on the same day a customer invoice is generated.

Better cash flow = better business performance and growth!

Whether you employ one of our business finance tools to improve cash flow and get access to working capital or you have another means of financing, having adequate cash flow to meet operational needs and to execute business growth strategies is critical for the long term health and success of your small business.

With slow cash flow, you may have trouble meeting day to day operational needs, you might come up short for payroll, or you might find yourself unable to make capital investments in order to grow. With expedited cash flow, you will be able to execute many business growth strategies, such as:

  • Expanding, renovating or remodeling
  • Meeting expenses on time, including payroll
  • Replacing broken, aging or obsolete equipment
  • Hiring additional employees
  • Purchasing larger quantities of inventory or new product lines
  • Adding new service capabilities to your service menu
  • Executing large-scale marketing initiatives
  • And more

We would be happy to help you decide if invoice factoring can help your business. Feel free to contact us at 855-882-6772 or request a free, no obligation quick quote for cash flow financing online and get answers in as little as 24 hours. 

5 Ways to Make Your Business More Profitable by Factoring Invoices

5 Ways to Make Your Business More Profitable by Factoring Invoices

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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.

business growth signs

7 Signs Point to a Real Need for Business Growth

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Complacency is a trickster; don’t fall for it. These seven signs clearly indicate that now is the right time for business growth.

The Time is Right – 7 Indications that Business Growth Should Be Your Top Priority

Complacency is a trickster. Not only does it creep up on us unawares, it also creates blind spots, leaving us open to missing opportunities or warning signs. If one or more of these seven clear signs that point to the need for growth apply to your organization, it might be time to prioritize marketing and operational strategies that can help you grow your business.

7 Characteristics of a Business Needs to Grow to the Next Level

  1. Benchmarks hit – or missed.

It is said that Alexander the Great wept simply because he believed there were no new worlds to conquer. If you have hit the goals you set for your business, it’s time to set new ones. Conversely, if you have missed goals and benchmarks that you anticipated reaching by this point, it could well be that your business needs to grow to meet them.

  1. Cash flow challenges. It’s common for a business to experience cash flow challenges from time to time; however, if your business has a track record of coming up short when it comes time to meet operating expenses or payroll, or you do not have the money you need to expand – or even replenish – inventory, then it is very likely that your business needs to grow in order to enjoy more stability and sustainability.

At Corsa Finance, solving business cash flow challenges is our specialty. Clients use our invoice factoring services to speed up cash flow in order to more easily:

  • Meet operating expenses and payroll
  • Finance business purchases, repairs, and renovations
  • Cover unexpected expenses
  • Maintain cash flow during cyclical or seasonal lulls
  • Replenish or expand inventory
  • Add new products or services
  • Expand by adding location square footage or opening up new locations
  • Execute strategic marketing campaigns or pay for new marketing tools
  • Hire temporary staff seasonally or while growing
  1. Employees are stretched too thin – or becoming bored.

One sure sign that you need to grow your business (so you can hire more employees) is when you and one or more of your staff are stretched too thin, wearing too many hats, or juggling too many responsibilities – often with the result that tasks aren’t getting done on time or they fall completely through the cracks.

On the other hand, employees who are bored, disengaged, or disinterested may be telling you that it’s time to grow your business. Adding new projects and challenges to employees’ jobs may be just the thing to keep them interested and engaged with your business.

  1. There’s new technology on the horizon.

Your business may need to grow in order to keep pace with technology advances in your industry; conversely, the emergence of new technology may be providing you with new ways to grow your business.

  1. Customers losing interest or shopping around.

If customers believe that they know all there is to know about your business or have experienced all the benefits your products and services offer, they may begin to lose interest or shop around to see whether competitors may have something more to offer.

Keep customers interested by growing your business (expanding or changing your product or service lineups) and engaging in marketing campaigns that create intrigue, incentivize loyalty, or stimulate word-of-mouth marketing.

  1. Your industry is evolving.

Technology is not the only industry innovator that may make it desirable for your business to grow. Finding more efficient ways to do business, new ways to promote a business, or identifying new target markets can all mean that it’s time for your business to grow beyond its old boundaries.

  1. Competitors are gaining ground.

Whether in the form of direct competition or indirect competition (e.g., there are substitutes or alternatives to your business or its products or services), when competitors begin to eat away at market share, it’s a sure sign that your business needs to grow and evolve, as well.

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Do you need improved cash flow for business growth?

Here are four things that must be part of your plan for business growth:

  • Clear vision, understandable, well-defined mission, and a strategic marketing plan
  • The right people on your team
  • A plan for how infrastructure will evolve with business growth
  • Working capital and business financing tools

We provide receivables invoice factoring services that can be used for business growth and sustainability.  We would be happy to help you determine if factoring can help your business or provide you with a no-risk, free proposal for business financing that could take you from approval to funding in a few days – or even faster.