Out of challenge comes opportunity. The real estate bust has forced a number of banks , trusts and real estate companies to foreclose on properties. Basically, they were transformed from being mortgage holders into being property owners, at least until they could sell the properties in the open market. This created a serious challenge for banks since they do not have the staff or expertise to maintain these properties. And with this, a new opportunity was born for property preservation companies.

Any home owner knows that houses and apartments need a lot of care. It’s seems that almost every week the yard needs work or something needs to be fixed, patched or painted. To make matters more complicated, few foreclosed homes are returned in good condition. Far from it. Most are full of debris, in poor shape and in need of substantial repair work. This is where property preservation companies come in. They are the first ones to come into the foreclose property and restore it into good shape, making the property livable again. Then, once the property is restored, they work maintain it to ensure that it remains in good shape.

By their very nature, property preservation companies are labor intensive. They need a staff of people who are proficient at fixing things. They also constant need of supplies in order fix homes. Their biggest problem is that most banking customers pay their invoices in 30 to 60 days, which creates a cash flow problem. The property preservation company needs to cover all its expenses while waiting to be paid. This can be very challenging since few companies are well capitalized and can’t afford to wait. Furthermore, it’s hard to grow a company if you have to keep a large reserve of cash just to cover current expenses.

One way to solve this problem is to use business financing. However, few companies can qualify for conventional business loans, especially since banks and other financial institutions still have some reluctance to lend. One alternative that has been gaining popularity is called invoice factoring. This solution reduces the time it takes your company to receive payment down to 2 days. Factoring invoices provides your company with predictable cash flow and eliminates the guesswork of when you invoice will be paid.

The most common way to set up a factoring transaction is to have the factoring company act as an intermediary between your company and your customer. Your company sells the invoice to the factoring company, who pays for it immediately. The transaction concludes once your customer pays the invoice in full. At that time, the factoring company settles the transaction.

Most factoring companies purchase invoices in two installments. The first installment is called the advance and is given to you at time of purchase. Most advances are for 80% of the gross value of the invoice. The second installment is called the rebate and is provided to your company once the customer actually pays for the invoice. The rebate will be for the remaining 20%, less any financing fees.

The most important requirement to qualify for invoice factoring is to have credit worthy commercial customers. This is because their invoices are the collateral that the factoring company is purchasing. Property preservation companies have a nice advantage here since most banks are still reliable payers. Additionally, your company needs to be free of liens , judgments and legal problems.

Invoice factoring is a form of business financing that has been gaining a lot of notoriety in recent years. It is a specialized form of business financing that is designed to help companies that offer net 30 to net 60 terms to their customers, but can’t afford to wait that long to get paid. Factoring invoices solves this problem by advancing funds to companies based on their slow paying invoices. This improves their cash flow and helps them stabilize operations, allowing them to grow.

Most factoring transactions are structured as the purchase of an invoice by a factoring company. The purchase is done in two installments. The first installment is called the advance, and is provided as soon as you sell the invoice to the factoring company. The percentage that is advanced is based on your industry, your track record, the payment record of your customer and market risk conditions. Most advances average 80% of the invoice. However, transportation companies using freight factoring can get advances as high as 90%. Likewise, staffing companies can get factoring advances that go as high as 90%.

The second installment, called the factoring rebate, is paid to you once the customer pays the invoice in full. The rebate will include the remaining amount that was not advanced, less any fees. For example, if the advance was 80%, the rebate will be 20%, less any factoring fees.

When a factoring company purchases an invoice from your company, it can do so with recourse or without recourse. In a recourse factoring transaction , the factoring company has the right to sell back to you any invoices that have not been paid within 90 days, regardless of the reason for nonpayment. A non recourse transaction is a little bit different. The factoring company will absorb the loss of a non paid invoice if (and only if) your customer does not pay the invoice due to a declared insolvency (such as a bankruptcy) during the purchase period. Each factoring company engineers transactions in their own way, so you should familiarize yourself with the terms of your contract.

One very important aspect of a factoring transaction is the notice of assignment. Before you start factoring invoices for a particular customer, the factoring company will need to setup the customer. This is usually a fairly quick process where the factoring company checks your customers commercial credit, and then notifies them that their invoices will be factored. The notification letter, commonly referred to as a notice of assignment, informs your customer that you are working with a factoring company, who is helping you with your receivables. It also contains a new payment address. Many times the payment can continue to be made in your company’s name, provided it goes to the new address. The notice of assignment is fairly standard in the factoring industry but each factoring company has its own version of it.

Although factoring transactions appear to have many moving parts, they are fairly simple to implement and can be easily integrated into most companies. One of its most important benefits is that factoring is flexible. The line is dynamic and tied directly to your sales. You can easily grow your financing – as necessary – provided you sell good products or services to a diverse number of credit worthy customers.

The U.S. government buys billions of dollars worth of products and services from commercial companies every year. This has held true even during the credit crunch and recession of the past few years, making government sales one of the more attractive opportunities during the past few years. In response to this trend, a number of companies have started or grown their government sales departments.

Generally, government suppliers are either selling products or services. The financial challenges that these two types of suppliers face are different. Product suppliers need capital to purchase goods, that can then be resold to the government to fulfill their purchase order. Service suppliers, on the other hand, need to cope with the fact that government invoices can take up to 45 days to pay after delivery of service, which affects cash flow.

Unless the company is well capitalized, government suppliers will need business financing to be able to meet their obligations and grow their companies. One alternative is to use a business loan to improve cash flow. The challenge is that business loans are difficult to obtain in the current financing environment. Most financial institutions will require solid financial statements, showing at least a couple years of profitable operations. Additionally, the company will need to have substantial collateral. Few companies can meet this criteria.

There are two alternative forms of financing government transactions that have been gaining traction in the past couple years. They are purchase order financing and factoring financing. These two financial tools are available to most government suppliers.

Purchase order funding solves a common problem for government suppliers that sell products – how to pay your suppliers so that you can fulfill your government purchase order. It solves this problem by paying your suppliers on your behalf, and then settling the transaction with your company once the government pays for the goods.

Factoring, on the other hand, solves a different problem. Most government service providers need to wait up to 45 days to get paid for their services. But few can afford to wait that long because they have obligations to meet, such as payroll and rent. Invoice factoring provides an advance against the government invoice, providing the liquidity your company needs to meet its obligations. This transaction is also settled once the government pays the invoice.

Both of these alternatives are easier to obtain than conventional financing and have the flexibility to grow with your business. To qualify, your company must have viable government purchase orders, decent margins and be free to liens and judgments.