The pallet manufacturing and distribution industry is very competitive. Whether you are manufacturing pallets, distributing them or both – managing income and expenses can be very challenging. You have to work with suppliers that demand quick or immediate payments. At the same time, your clients want to pay invoices in 30 to 60 days. Pallet manufacturing and distribution companies that cannot manage their income and expenses soon find themselves with cash flow problems.

Problems usually start when a client starts taking a little longer to pay their invoices, forcing you to dip into capital or to delay payments to your owns suppliers. If left unchecked, this situation can snowball into a major problem that threatens your company.

There are a few ways to manage this problem. One alternative is to try and negotiate delayed payments to your suppliers while trying to obtain quicker payments from your clients. Although worth a try, this type of juggling seldom works for the long term. A second alternative is to get business financing from an institution.

This can be a good alternative for larger companies who can show substantial assets and provide solid financial statements. Although qualifying for a business loan is not easy – business loans are usually available to well managed larger firms. But what can small or midsized firms do?

A better alternative may be to use factoring financing. Invoice factoring solves the dilemma of slow paying clients by providing an advance against their invoices. This quick payment provides the firm with the funds they need to meet expenses and grow the business.

Factoring has a number of benefits. It provides the company with stable and predictable cash flow, which smooths operations and planning. Furthermore, accounts receivable factoring (as it’s commonly called) is fairly easy to obtain. The biggest requirement is that the invoices you finance have to be from credit worthy commercial clients. Additionally, your company needs to be free from legal or tax problems or encumbrances.

Qualifying for factoring is relatively easy which makes it an ideal solution for small and medium sized clients whose biggest problem is that they cannot afford to wait to get paid by clients.

Most commercial cleaning and janitorial companies are small businesses – started by entrepreneurs who had an idea and plenty of motivation. Few, however, have plenty of capital. But that is understandable because janitorial companies tend to be easy to start – buy some supplies, hire some people and you are ready to go.

But there is a big catch to this business model – commercial clients don’t pay for janitorial services upfront. Rather, they pay on a net 30 to net 60 days. This means that you only get paid a month or two after completing the work. In the meantime, you still need to buy more supplies and pay your employees.

If your company is well capitalized, waiting to get paid is not usually a problem. On the other hand, if your company is not well capitalized, waiting can be a very serious problem. The simple solution to this challenge is to get business financing. This is almost always a problem for the company since few janitorial companies have substantial assets to use as collateral – and institutions need collateral to issue business loans. More often than not, the business owner will need to put their house (or other assets) as collateral to secure the business loan. However, business loans are not the only alternative.

One solution is to use invoice factoring. This financial tool provides you with a quick payment for your invoices, boosting your cash flow and enabling you to meet your expenses. To qualify for factoring you need to have invoices from credit worthy clients. This makes it an ideal solution for janitorial companies that handle commercial work for large clients.

Most factoring transactions are structured in two payments. You get the first payment, usually 80% of the invoice, as soon as the work is done and you invoice your client. You get the second payment, the remaining 20% less the financing fee, as soon as your client pays the invoice in full.

One advantage of factoring is that it enables you to leverage your client’s credit to your advantage. Furthermore, it’s a dynamic product that is tied to your sales. This means that your financing line increases as your sales to credit worthy clients increase. This makes it ideal for small janitorial companies who are experiencing growth.

Most businesses will need some form of business financing to succeed. One of the most common forms of business financing is a line of credit. As opposed to a business loan, a revolving line of credit can be drawn upon when needed. For example, companies like them because they can be used to manage the ups and downs of cash flow. Lines of credit have the added benefit of being (on average) cheaper than most other forms of business financing.

Lines of credit do have drawbacks though. One of the more important drawbacks is that they are subject to very strict underwriting guidelines. This makes them accessible only to companies that have plenty of assets, solid profitability and a good management team. Few small companies can qualify for them.

Their other drawback is that they have fixed maximums. That means that if you reach the line’s ceiling and need additional funds, you are usually out of luck. You will need to submit your account for re-consideration to your lending institution and request and increase. This may happen – or not.

There is an alternative to conventional lines of credit that has been gaining traction in the past few years. It’s called factoring. Invoice factoring is a financing tool that is directly ties to your sales. It allows you to get an advance on your net 30/60 invoices, eliminating the wait and providing immediate liquidity to handle company expenses and new projects. Since it’s dynamically linked to your sales it grows in tandem with your company. This makes it an ideal source of financing for small companies that are in a growth stage.

Factoring provides an easy proposition – you invoice your customer using traditional net 30 terms, but you get an 80% advance from the factoring company. This provides predictable cash flow, which enables you to run your business more effectively. You get the remaining 20%, less a financing fee, once your client pays the invoice in full.

Although factoring is not suited for every business, it’s ideal for companies that have heavy payroll and a lot of activity. Some examples include transportation companies, staffing agencies, security companies and construction subcontractors.

Finding business financing for any small or medium sized company in the construction industry has always been a challenge. As an industry, construction has always been difficult to finance. This is in part because each contract carries a lot of risk since many things can go wrong. Also, each contract has many players – the project owner; the general contractor; the subcontractors ; the financing institutions; which increases financing complexity.

Although demolition companies are considered to be in the construction trade, they are not always as affected by their issues and can be easier to finance. Demolition work tends to be done at the start of the project and is not subject to the usual overruns of other subcontractors.

Most demolition companies tend to get paid 30 to 60 days after invoicing. This is a common business practice but it can create serious cash flow problems. Few companies can wait that long to get paid and still cover their own payroll, rent and business expenses. Unless the company has substantial cash reserves, it will run into problems.

Most company managers will try to cover the cash flow gap with a business loan. However, few companies can qualify for business loans in this environment. Institutions will only provide business loans to companies that are well collateralized, have strong management and have impeccable financial statements. Few demolition companies will meet this criteria.

There is an alternative that is available to most construction subcontractors. It’s called construction factoring. Construction factoring solves the cash flow problem by advancing funds against construction invoices. Instead of waiting 30 to 60 days to get paid, you get an advance from the factoring company. The transaction is settled once the GC or commercial client pays.

One major difference between factoring and a business loan is that the factoring company considers your invoice to be strong collateral, provided it’s from a good commercial client or GC. Factoring is dynamically tied to your sales, and grows as your company does.

Factoring can provide predictable cash flow to companies who cannot afford to wait up to 60 days to get paid by clients.

The most common cash flow problem that companies have occurs because clients pay their invoices in net 30 (or net 60) day terms rather than paying immediately. Some companies have reserves that can be used to cover business expenses while waiting to get paid. However, most small and medium sized businesses don’t have adequate reserves and cope with this problem by juggling vendor payments.

Juggling and delaying vendor payments works to an extent. But if your business is growing, you will soon find that juggling payments alone won’t do the trick. Eventually you will run into serious cash flow problems that could affect your company’s ability to operate. And if the problem grows, you may be at risk of missing your most important payment: payroll.

The simple solution to the problem is to use business financing to cover any cash flow shortages until clients pay. Getting business funding in the current environment is complicated since institutions are only providing business loans to solid companies. To qualify for a business loan, most companies must have impeccable financing statements, experienced management and collateral that can be pledged as security for the loan. Few small or medium sized companies can meet these characteristics.

There is one alternative way to solve this problem – you can get a quicker invoice payment using a tool called invoice financing. With invoice financing, your client does not pay sooner. Rather, a financial intermediary provides an advance against your invoices. This gives you the liquidity you need to operate your company, without having to worry about when your clients will pay. You then settle the transaction with the financing company once your client pays the invoice in full.

Invoice financing is easy to obtain and available to most small and midsized companies. Since the finance company is funding your invoices, it’s important that you work with clients who have good commercial credit. The fact that financing is tied to your invoices also makes it very flexible as it will grow with your sales.
Invoice financing won’t benefit everyone though – the product is best used by companies whose biggest problem is that they can’t afford to wait 30/60 days to get paid by clients.

Food distribution companies tend to be cash flow intensive, They are constantly receiving products from suppliers, delivering products to clients, paying vendors and collection on invoices. This activity doesn’t always flow very smoothly – at least as cash flow is concerned. For example, it’s very common for small and midsized companies to have to pay their vendors in 10 days or less. At the same time, when they make a sale, large corporate clients insist on paying their invoices in net 30 to net 60 days.

This creates a discrepancy between the outflows of money (vendor payments) and inflows of money (invoice collections). The cash flow gap can cause serious problems unless managed correctly. At first most business owners try to juggle vendor payments – perhaps delaying some for a few days. If your business if growing, this strategy will not work for the long term.

A better alternative for some is to get business financing and use it to cover operations while waiting to get paid. One challenge with this strategy is that business loans are hard to obtain. Applicants need to have very solid financial statements, sufficient assets and an experienced team in place. These requirements put a business loan out of the reach of most small and medium sized food distributors.

There is an alternative way to solve this cash flow problem – and it’s easier to get than a business loan. It’s called invoice factoring. Factoring provides an advance on your net 30 invoices, providing the funds you need to operate the company while waiting for your clients to pay. The transaction is facilitated by an intermediary called a factoring company and the transaction is settled once your client pays the invoice in full.

To qualify for factoring, you must have a business that is free of judgments, liens and encumbrances and you must work with credit worthy clients.

Factoring provides predictable cash flow and frees the owners to spend their time where it gives the best return – growing their business.

Most transportation company owners have to constantly juggle responsibilities. They have to handle vehicle repairs, driver payments, insurance payments, office expenses and more importantly – collecting invoices. Collections can be source of problems for many transportation companies (or freight brokerages) since most clients pay their invoices in 30 to 60 days . Few can afford to wait that long.

One way to handle slow payment is to try and negotiate a quick pay – basically asking your clients to pay quickly. Some will do it. Others won’t, or at least will only offer it if you give them a discount. Although they are not always reliable, negotiating a quick pay can be beneficial in most cases.

If quick pays won’t work, your best alternative is to secure business financing to ensure you always have funds on hand to cover business expenses. This can be difficult for most owners since institutions require that all applications have stellar credit, assets that can be held as collateral and many years of experience. This will rule out business loans as an alternative for most small and midsized trucking companies. However, this is not necessarily a big problem since a business loan is not always the solution to this problem.

For many, freight bill factoring will be the better alternative. Freight factoring, as it is commonly known, can provide the equivalent of a quick pay by using an intermediary. The intermediary, called a factoring company, advances you funds against your freight bill. The transaction is settled once your client pays the invoice in full.

One of the advantages of freight bill factoring is that it provides predictable cash flow, enabling you to comfortably handle your business expenses. It eliminates having to worry about when your clients will pay.

To qualify for freight factoring you need to work with credit worthy clients. Also, your company needs to be free of liens, judgments and other encumbrances. Because of this, freight bill factoring is an ideal solution for small and growing trucking companies and freight brokers.

The number of business financing alternatives that are available to small and medium sized companies has dropped dramatically as a result of the financial crisis. Until recently, most owners could get a business loan by posting their house as collateral. Now that real estate prices have dropped substantially, banks find themselves saddled with worthless collateral and are being extremely careful with their loan portfolios. Only companies that can show profitable operations for a number of years, strong financial statements, demonstrated management leadership have a reasonable chance at getting business loans. Everyone else will need to find an alternative.

One alternative is a type of self liquidating transaction called invoice factoring. A self liquidating transaction is one that carries it’s mechanism for its own repayment. This feature makes them a very attractive source of financing to some companies.

Factoring is commonly used by companies that give 30 to 60 days invoice terms to their clients. Although large clients demand these payment terms, many small to medium sized companies can’t afford them. They need to get paid sooner so that they can meet their operating expenses. This is where invoice factoring comes in.

In a conventional factoring transaction, the client makes the sale, sends the invoice to the client and the finances it using a factoring company. The factoring company funds the invoice in two payments. The first payment covers about 80% of the invoice and is given soon after invoicing. The second payment of 20 % (less fees) is sent once the invoice is paid in full. The second payment closes – or liquidates – the transaction.

One immediate advantage of invoice factoring is that it allows clients the ability to offer payment terms to their clients with confidence – knowing that they can get money sooner if their business requires it. Additionally, factoring transactions are based on the credit strength of the invoice backing them. This allows small companies, who sell to large credit worthy businesses, to leverage their roster of clients to get financing.

Factoring is ideal for small and midsized companies whose biggest problem is that they can’t afford to wait 30 to 60 days to get paid.

After long negotiations, your star salesperson makes a big sale to a new client. This is a big enough sales that it could easily make your year. There is only one minor catch – your client is asking for net 30 terms. They will pay your invoice 30 days after receipt. In the meantime, you need to cover all costs of the sale (products and services) plus all your business costs. Should you make the sale?

It’s a tough question to answer. If you are confident that your client can pay the invoice, then making the sale is probably a good idea. If you are not confident they will pay then you should be very careful and remember that it’s only a true sale if the client pays.

But how can you determine if your new client will pay? The best way to determine if your new commercial client is likely to pay their invoice is to check their commercial credit. A good commercial credit report will provide your clients track record of paying clients and will suggest a credit limit. Although credit reports are not perfect, they are a very good tool to have if you need to make a quick decision. If you need to make a credit decision for a very large sale, you should consider buying reports from several providers and doing more thorough credit evaluations. Two well known providers of credit reports are Dun and Bradstreet and Experian Business Credit.

There is another problem with net 30 sales. What if you want to make the sale but cannot afford to wait 30 days to get paid? If you have that problem you should consider factoring the invoice. Invoice factoring is a form of financing which advances funds against your invoices from credit worthy commercial clients. The quick payment by the factoring company also enables you to offer net 30 day terms with confidence, knowing that you can finance the invoice if you need money sooner.

When you factor an invoice you get two payments. The first payment is given upfront, as soon as your invoice the client. It’s usually for 80% of the invoice. The second payment , the remaining 20% (less fees) is given once your client actually pays the invoice.

One of the advantages of invoice factoring is that your financing line is dynamically tied to your company’s sales. This enables to grow your business knowing that you can always tap into the factoring line if you need to fund your invoices.

Although there are many methods to finance and capitalize a company, the financing transaction is usually structured and secured in one of two ways. Either your put up collateral as security or you give up some ownership of your company (equity). Both methods have their benefits and drawbacks. One of the major benefits of using collateral instead of giving up equity is that you retain ownership and control of the business. This can be very important for business owners who want to retain their independence. When you sell equity, the buyers become your new partners – for better or for worse.

Most small and medium sized companies look for financing because they have cash flow problem. Although you can fix these problems by selling equity and recapitalizing the company – it’s not always the easiest solution.

One business financing alternative is to get a business loan. Although business loans are a popular tool to finance a company – they can be hard to get. The current lending environment is very difficult and institutions are only extending loans to very low risk ventures. To qualify, most companies need to have strong financial statements, multi year profits, seasoned management, substantial collateral and good growth potential. Few companies meet these criteria, especially small and midsized companies.

If the cash flow problems are caused by slow paying clients – rather than by low sales – invoice financing may be the right solution. Invoice financing is a simple solution that provides a funds advance on your slow paying invoices. It plugs the cash flow gap, providing the money you need to pay suppliers, employees and other business costs. More importantly, it smoothes out cash flow, providing predictability and allowing the business owner to focus on other tasks.

Most invoice financing transactions are structured as two advances. The first payment is given to you as soon as you invoice your client. It’s usually 80% of the invoice. The second advance, which is 20% less the financing fee, is given once your client actually pays the invoice.

One of the advantages of invoice financing is that is easier to get than other forms of financing. If your business is free of liens and encumbrances and you invoice credit worthy commercial clients, you have a good chance of qualifying.

Most midsized companies have always been in a peculiar position when they seek financing. Often times they are too big to qualify for most small business financing packages, and too small to qualify with large financial institutions. Although many providers focus on “middle market” companies, finding the right financing can be a complex endeavor. This has become even more challenging in the current economic environment which strongly discourages institutions form risk taking.

Most midsized companies either need capital for new projects or need funding to smooth out cash flow. Their main focus tends to be on using lines of credit as a way to handle their cash flow problems. Unfortunately, the underwriting standards for a line of credit are similar to those of a conventional business loan. Most institutions require that the company have solid financial statements, good growth prospects and a well seasoned management team. And even if you meet these requirements, success is not guaranteed.

If your company has cash flow problems, there is an alternative source of funding your should consider. It’s called factoring. It’s an ideal solution if your business is affected by customers that pay their invoices in 30 to 90 day but you can’t afford to wait. This problem is very common and it forces companies to dip into reserves (if you have them) while they way to get paid.

Invoice factoring provides a simple an elegant solution to this cash flow problem. It gives your company an advance on invoices from credit worthy customers, providing quick funds that can be used to pay expenses and pursue new opportunities. The transaction is settled once your customers pays for the invoice in full.

Most factoring transactions are structured with two payments. The first one covers about 80% of the invoice and is provided soon after invoicing. The second one is for the remaining 20% (less the factoring fees) and is provided after your clients pays the invoice. Factoring fees vary and are determined by the size of your invoices, your sales and the credit quality of your clients. In most cases qualifying for invoice factoring is a lot easier than qualifying for business loans.

One advantage of factoring is that it is tied to your sales – and it grows with your sales. This makes it an ideal solution for midsized companies that need flexible financing to grow.

Companies that sell to commercial and government customers almost always get paid for their services on net 30 to net 60 day terms. This means that they have to wait up to 60 days from the time of invoicing to be able to collect a payment. Most firms cover expense during this delay by using their cash reserves or relying on a bank line of credit.

This strategy tends to work well, unless you have limited cash reserves and are unable to get a line of credit. Institutions underwrite their lines of credit much like business loans and other business financing products. They require two or three years worth of financial reports about your company. They require that the company and the owners have substantial assets. And, they require that all the records be spotless.

If your company cannot meet the institutions funding criteria you will usually be out of luck, especially in the current economic environment. Conventional underwriting standards are very strict. However, there is an unconventional approach to financing your business that works for many industries.

As mentioned earlier, most companies that have cash flow problems have them because they can’t afford to wait 30 or 60 days to get paid by clients. This gap can be covered using invoice financing. Invoice financing provides an funds advance on your slow paying invoices giving your company the necessary liquidity to cover expenses while waiting to get paid. One advantage of invoice financing over other solutions is that you can leverage the credit quality of your clients to your advantage. In an invoice financing transaction, the funding company buys the invoice at a discount, with the expectation it will be paid in 30 to 90 days. If your clients have good commercial credit, the funding company will likely buy the invoice. This feature enables small companies whose biggest asset is a solid roster of clients to use invoice financing.

A second advantage of invoice financing is that it grows with your sales. Your funding line will usually be determined by the size of your invoices and the credit quality of your clients. This funding flexibility enables small companies with big potential to grow organically.

Trying to get business financing for a construction subcontracting business is extremely challenging and will remain very difficult for the foreseeable future. Most experts predict that it will take years for the industry to regain a stable footing in the economy. And until that happens, most institutions will be very reluctant to provide business loans to subcontractors.

Although the situation may look dire for some, there are many construction subcontractors that are doing very well in this environment. And they span the industry from cell tower construction, to demolition, to carpenters, to HVAC companies. These companies are doing well but cannot get the business financing they need simply because they are in an industry that is currently considered risky by lenders.

Most subcontractors look for business financing because they have cash flow problems that originate because they get paid in 30 to 60 days after invoicing. Basically they deliver the work, send an invoice and wait to get paid. Unfortunately, few have the capital to wait. They needs fund to pay employees, office expenses and suppliers.

One alternative to solve this problem is to use construction factoring. Construction factoring provides an advance on slow paying invoices, providing the cash flow a company needs to meet expenses while waiting for their invoices to get paid. The transaction is fairly simple, a factoring company advances you a portion of your invoice – about 75% as a first payment. Once your client actually pays the invoice, the transaction is settled and you get the reminder second payment of 25% (less the factoring fee).

One advantage of construction factoring over a conventional business loan is its flexibility. The factoring line is not fixed but rather is based on your invoices. It grows with your sales. Furthermore, most factoring companies look at the credit of your GC (or commercial customer) as one of their more important funding criteria. This makes construction subcontractor factoring an ideal solution for small and medium sized companies whose biggest assets are solid clients.

Factoring financing is an effective solution for companies whose biggest challenge is that they can’t wait 30 to 60 days to get paid by clients.

Large companies usually pay their invoices in 30 to 45 days. It’s a standard practice in which few companies make any exceptions. Lately, due to the past recession, companies have started lengthening their payment times. Many now pay their invoices in 60 or even 80 days. This has caused a number of problems to small business owners who depend on timely payments to be able to run their companies.

Why do many large companies take so long to pay their invoices? On the administrative side, paying an invoice usually requires that paperwork be reviewed by several people and that deliveries be checked. Furthermore, most invoice payments need to be approved by several layers of management. given all the moving parts, the process of getting all the proper paperwork and signatures can actually take a couple of weeks. However, there is another reason why companies take so long to pay invoices.

One of the main advantages of paying invoices in 30 to 60 (or more) days is that the company gets to use your product for free for a couple of months. One could argue that it’s the equivalent of getting an loan from you – the supplier. Delaying payments basically gives your client use of the cash that otherwise would have been used to pay you. From this perspective, it’s obvious why they chose to pay invoices in 30, 60 or even 90 days. This strengthens their cash flow.

But what can you do if you need the money sooner? Asking for a quick payment seldom helps, although sometimes you can get companies to pay you in about 10 days if you offer them a 2% discount. This is seldom reliable though. Another alternative is to use business financing. Although business loans can be used to solve cash flow problems, a better solution may be to use invoice factoring. Actually, invoice factoring is specifically designed to solve the problem from slow (but solid) paying customers. It advances funds on your slow paying invoices, providing the funds you need to cover operations. The transaction with the factoring company is settled once the client pays the invoice in full. Most factoring companies will advance funds based on the credit quality of your clients, provided your invoices are free of liens, judgments and other potential encumbrances.

Factoring can be an effective solution for companies that have good potential but cannot afford to wait for their clients to pay.

Having customers that pay their invoices on time is critical to the success of any business. Late paying customers affect your cash flow and therefore your ability to meet your own obligations. In most commercial transactions customers pay their invoices in 30 to 60 days. This is commonly known as offering terms.

Offering terms to a customer is no something that can be taken lightly. Many business owners like to congratulate themselves when they close a big sale and send the invoice to the client. Careful owners save the congratulations until after they get paid. But how do you make sure that customers pay you on time?

There are a number of things that you can do to make sure clients pay one time. Apart from delivering good and timely services, the most important thing you can do is check their commercial credit rating. This will tell you whether they have paid their past suppliers in time. Although not a perfect indicator, it’s useful to know. For example, if a potential client has a track record of paying all their invoices 90 days past due, what are the chances they will pay yours on time?

It’s usually a smart strategy to check a clients commercial credit before making the actual sale. One additional thing you can do to help customers pay on time is call them soon after delivery to verify that they are happy with the work/product. Lastly, always verify that they have the proper paperwork (invoices/etc) to process your payment. Many payments are delayed simply because vendors forget to submit the proper paperwork .

Sometimes, clients simply pay slowly and there is not much that you can do about it. This can wreak havoc on your cash flow and threaten the stability of the business. If this happens, you should consider invoice financing.

Invoice financing is an innovative form of business financing that provides an advance payment using your invoices as collateral. Invoice financing is a convenient alternative to business loans that offers substantial flexibility. Although not a cure all, invoice financing can help companies whose biggest problem is that they can’t afford to wait for their clients to pay.

Most growing companies run into cash flow problems at one time or another. The recent recession has made this problem all too common, forcing managers to find strategies to cope with these problems. Many cash flow problems are caused by customers delaying their invoice payments. In the recent past, most commercial customers paid their invoices in 30 to 45 days. As conditions deteriorated, they started paying at slower rates, sometimes taking up to 70 days to pay.

Slowing payments can have serious repercussions for the business. At first, you can counter their effects by paying your own suppliers at a slower rate. If left unchecked, it may jeopardize your ability to meet critical payments – like payroll. One you are at risk of missing payroll the business is in grave danger.

One way to deal with this problems is to build a cash reserve. This is easier said than done as few small companies have the resources to build a reserve. Another alternative is to use business financing to cover the gap.

Using a business loan to cover expenses while waiting to get paid by clients can work if used properly. Most business loans are designed to buy goods and are paid on an amortized schedule. This makes them cumbersome to use if you are only interested in covering expenses while waiting to get paid. A better solution would be a revolving line of credit. The problem is that all these solutions are subject to strict banking underwriting standards, and are a viable option for companies with substantial assets.

There is a better alternative though. It’s designed specifically to solve the cash flow problems generated by slow paying clients. The solution is called invoice factoring. An invoice factoring program will give you a funds advance on your slow paying invoice. This enables you to cover business expenses while waiting for your clients to pay. Once your client pays, the transaction is settled by the factoring company.

As opposed to most conventional business financing products, invoice factoring is relatively easy to qualify for. You need to have invoices from credit worthy clients that are free of encumbrances and liens. This makes it an ideal solution for small companies whose biggest assets is a list of solid clients.

Corporate cash flow nightmares are more common than most people think. Thanks to the current uncertainty about the economy, many companies have started delaying payments to their suppliers. They still pay, but they pay later. Two years ago, invoices usually got paid in 30 to 45 days. Now they may take 60 or even 70 days to pay. Large customers delay payments for one single reason – it helps their own cash flow. They get to use the cash, that was destined to pay your invoices, for 15 or 30 more days. Think of it as an interest free short term loan that you make to them.

Having clients that pay beyond terms can create a cash flow nightmare. Many business owners run their business very tightly, with little room for error. It only takes a few late payments to throw operations into a tail spin. When this happens, business owners compensate by starting to pay their own bills late. This can easily get out of hand and start affecting the ability to meet payroll. If you are at risk of missing payroll you know you have a nightmare in your hands.

Since making clients pay quickly is no usually an option, there are two possible solutions. One solution is to start building a reserve fund ahead of time. This ensures you will always have money to cover all expenses. But this comes at a cost because money in the reserve fund can’t be used in other parts of the business. And, few companies have the resources to build the fund.

A second alternative is to look for business financing. This will usually solve your problem, if you get the right type of financing at the right time. Unfortunately, asking for a business loan when you are in the middle of a cash flow disaster seldom works. Most financial institutions will only give business loans to companies that have solid financial records.

A better solution may be to use invoice factoring, which provides an advanced payment for your invoices. Factoring covers your customers payment gap and provides the liquidity you need to operate your business. Furthermore, most factoring companies are used to working with clients that have financial problems or are turning around their business, so few will be too concerned if your financial statements show some problems.

Factoring is a very specific solution, it helps bridge the gap between delivery of services and payment, and can help stabilize cash flow. It’s an ideal solution for companies whose biggest problem is slow paying clients.

Finding a way to finance your business in the current economic environment remains pretty difficult. Most institutions have tightened their business financing standards and will only offer business loans to large companies that have substantial assets and impeccable financials. Unfortunately, few small companies have been able to weather the recession without a substantial financial impact. And thanks to the recession, most small businesses don’t have impeccable financial statements – that’s why they need business financing. Fortunately, a business loan is not the only financing alternative.

Is your company having cash flow problems because customers are paying their invoices slowly? If this is the case, and If your customers have good commercial credit, you may be able to use invoice financing. Invoice financing bridges the gap between delivery of service and payment and helps companies with cash flow problems. This solutions provides predictable cash flow, enabling the company to meet expenses and capitalize opportunities.

There is one critical advantage of that differentiates invoice financing from other solutions. Your customers credit is much more important than your own company’s financial situation. This means that companies whose biggest asset is a solid list of customers can usually benefit from invoice financing.

Most invoice financing transactions are structured as invoice purchases – where the financing company buys the financial rights to your invoices and pays you immediately. They settle the transaction once your client pays the invoices in full. The key point is that the finance company buys the invoice, therefore they are very interested in the credit worthiness of your client. They consider that to be the strongest collateral for financing. And this allows you to leverage your clients financial strength to your advantage.

Having good paying clients is a key requirement to qualify for an invoice financing program. Additionally, your invoices need to be free of legal encumbrances such as liens or judgments. Generally, invoice financing works best for companies that are reasonably free of problems. However, it can also be used in turnaround situations where funding is needed to restructure operations.

Finding business financing for a company has always been a challenge. to complicate matters, the current economic environment has made it a nearly impossible task to find investors. Nowadays, investors are looking for safe investments, and unfortunately, small and medium sized companies are not considered safe investments.

Although investor financing has many benefits, you should also consider alternatives that don’t require that you give up ownership in the company. One common way to finance a company is to use a business loan. Although business loans are well known, they can be difficult to get because they have to go through a strict underwriting process. To qualify for a business loan, most companies need impeccable financial statements, solid assets and a few years of positive operating experience.

One alternative to business loans is factoring financing. This solution specifically helps companies with cash flow problems that arise from slow paying clients. It provides a cash advance against slow paying invoices, enabling your business to cover operating expenses. By reducing the number of days it takes you to get paid, invoice factoring can help free cash flow that can be deployed to new projects and growth opportunities.

One of the advantages of invoice factoring is that it is reasonably easy to obtain. Most factoring companies structure the transaction as a purchase, meaning they buy the invoice from you. Since they are buying the invoice, their biggest concern is the credit quality of your clients. This means that small companies or medium sized companies with a short track record but very solid clients can usually qualify.

Factoring companies buy invoices in two payments. The first payment covers about 80% of the face value of the invoice. Your company gets this very quickly. The second payment covers the remaining 20% of the invoice, less the factors fee. This payment is usually provided shortly after your client pays the invoice in full.

Invoice factoring is a flexible financing solution that can help small and medium sized companies that have cash flow problems.

It’s not unusual for small and growing manufacturing companies to have some cash flow problems. Most of them stem from the fact that there is a delay between delivering your products and actually getting paid for them. This delay can last from 30 days and go up to 90 days and is a common industry practice.

The problem is that few manufacturing companies can wait that long to get paid. They have a number of current expenses that must be paid for – rent, supplies, electricity and salaries. The discrepancy between dollar inflows and outflows can cause major headaches to manufacturing company owners.
Getting clients to pay quickly is one possible way to fix this problem. It seldom works though. Most of your clients actually need to delay payments themselves to keep their cash flow straight. Another alternative is to use business financing to bridge the gap.

Most company owners will try and use a business loan to solve this problem. Although business loans can have several advantages, conventional loans tend to lack the flexibility needed to solve this problem. Furthermore, qualifying for a business loan can be a daunting task that requires weeks or months of work. Your lending institution will likely require that your company been in good financial health, have solid assets and have seasoned executives.

There is another solution that may work better than a small business loan. It’s designed to specifically reduce the gap between outflows and inflows – it’s called invoice factoring. Invoice factoring uses a financial intermediary (a factoring company) to finance your invoices while waiting for your client to pay. This strengthens your cash flow providing the liquidity you need to meet current expenses and tackle new orders.

Since your invoices are a liquid asset, most factoring companies buy your invoices outright. Because of this structure, they make most of their funding decisions based on the creditworthiness of your client. This enables you to leverage the creditworthiness of your clients and use it in your favor. Most small companies whose biggest assets is a roaster of good (but slow)paying clients can usually benefit from factoring.

One of the worst nightmares for a business owner is not being able to get the financing they need for their business. For many owners, the need for financing occurs when they have a cash flow emergency . Unfortunately, trying to get business financing during a cash flow emergency is very difficult.

Most cash flow emergencies happen due to the difference in timing between income and expenses. Often, expenses happen first. Income then follows. Due to this, companies need to have a cash reserve to handle expenses. However, business owners sometimes overextend themselves and get into trouble.

For example, most companies sell their products/services to other businesses on credit because large clients demand it. So companies give their client 30, 40 or 60 days to pay their invoices. However, the company itself must still meet its obligations while it waits to get paid. It has to pay suppliers. It has to pay rent. And most importantly, it must meet payroll. Sooner or later, the company may face an unexpected expense and run into trouble. It won’t be able to wait until an invoice gets paid. That is when the problems start.

Asking clients to pay sooner seldom works. Few, if any, will agree. Most clients pay their invoices in 30 to 60 days because that is how they keep their own cash flow healthy. An alternative is to look for business financing. Most business owners will focus on trying to get a business loan. The problem is that business loans are hard to get – especially if the business is in trouble. The lending institution will usually need to see audited financial statements, strong assets and excellent growth prospects. Few companies with cash flow problems meet this criteria.

A better alternative may be invoice financing. Invoice financing is specifically designed to strengthen cash flow by providing interim financing until invoices are paid. It provides the financing quickly, usually a few days after invoicing, enabling you to cover your operating expenses.

One important advantage of invoice financing is that the financing company uses the commercial credit of your client (who is paying the invoice) as part of their decision process. This makes it a viable solution for companies whose major strength is that they work with creditworthy clients. Additionally, most invoice financing lines can be setup in around a week, making it an ideal situation for companies that need funding quickly to cover an emergency.

Finding small business financing in the current environment is very difficult. Lending institutions are being very cautious and are only providing business loans to companies that have impeccable financial statements, a long history of growth and substantial assets. Because of this, few small companies can get a business loan or other forms of conventional financing.

Fortunately, not all financial problems need to be solved with a business loan. Many cash flow problems, common to small business, can be solved using invoice factoring.

Most small companies run into cash flow problems because they don’t have an adequate reserve of capital to handle unexpected growth or costs. This situation is worsened by the fact that small companies usually have to give clients 45 to 90 days to pay invoices. This leaves the small company with the hard costs of delivering their product or service while having to wait for payment.

Asking clients to pay their invoices sooner will not work. Most clients, especially large corporations, require 45 to 60 day payment terms. Most will have these payment requirements in their contracts and won’t show flexibility. And unfortunately, if you don’t provide them with payment terms, someone else will.

This is where invoice factoring comes to play. You can get an advance on your invoices using a financial intermediary, called a factoring company. This provides you with the liquidity you need to operate your business. The factoring company holds the unpaid invoice until maturity and then settles the transaction with you when the client pays.

One of the biggest advantages of invoice factoring is that it enables you to leverage your invoices. Factoring companies look at the credit worthiness of the companies paying the invoices as an important components in their funding decision. This means that a small company whose biggest assets is a client list of large credit worthy companies can usually qualify for this form of financing.

At one point or another, almost every company will need some form of business financing to grow the business to the next level. For small companies, finding the right type of business funding can determine the difference between success and failure.

One of the most common reasons that small companies look for funding is cash flow problems. These are usually caused because clients don’t pay their invoices immediately, but rather pay them in 30 to 60 days. The company dips into their reserves to cover expenses, while they wait to get paid. And if the company has minimal reserves, as small companies do, there is a chance that the company will eventually run into problems.

You can address this cash flow problem in three ways. Your first option is to try and get clients to pay their invoices sooner. This has little chance of success since large companies usually demand 45 day payment terms and put a clause to that effect in their contracts and purchase orders. Your second option is to get a business loan from an institution. The problem with that strategy is that business loans have difficult qualification criteria. Institutions require that your company have impeccable financial statements, a solid growth history and substantial assets. Almost by definition, small companies do not have substantial assets.

Your third choice is to finance your invoices. Invoice financing solves the cash flow problem by providing an advance against you slow paying invoices. This provides your company with the liquidity it needs while reducing the burden of waiting for invoices to be paid. The transaction works by using a financial intermediary, who funds your invoice and holds it to maturity. The transaction is then settled once the clients pays the invoice.

Most invoice financing transactions are structured as a purchase – where the financing company purchases the invoice from your company at a discount. Since the financing company is purchasing the invoice, one of the most important criteria for their decision is the credit worthiness of your client )who is paying the invoice). This feature makes invoice financing accessible to small companies whose biggest asset is their customer list.

Sooner or later, almost every business will run into cash flow problems. Although ideally you want to prevent these problems, this is not always possible. Part of running a business involves, at times, living a little bit on the edge. Sometimes, you go a little farther than you should have.

One of the more common causes of cash flow problems is slow paying clients. These happen because most commercial sales are not paid immediately, but rather 45 to 90 days after the product or service has been delivered. Few business owners can afford to wait that long to be paid, though. There are constant business expenses that have to be covered.

Common wisdom suggests that companies should keep a cash reserve that is large enough to cover expenses while waiting to get paid. This works beautifully in theory but seldom in practice. The truth is that most small companies keep inadequate reserves.

One way to fix this problem is to complement the cash reserves with business financing. Selecting the right type of business financing to help with this problem is critical. Most business owners will first try to get a business loan. They soon find that business loans have difficult qualification requirements. The business must have a profitable track record and impeccable financial statements. Also, the business and the owners need to have substantial assets. Few will actually be able to get the loan.

However, a business loan is not always the right solution. You can eliminate the cash flow problem from slow paying clients by factoring your invoices. Invoice factoring provides you with a funding advance on your invoices. This enables you to cover business expenses while waiting to get paid. The transaction is facilitated by a factoring company, who buys the invoices from you (at a discount) and hold them until maturity. Since the factoring companies buy invoices, their biggest concern is that the invoice will be paid. Although the factoring company wants to make sure the company selling the invoice has no major problems, they are more interested in the credit worthiness of the company paying the invoices. This makes factoring an ideal solution for small companies who don’t have a lot of credit or a long track record – but have a solid list of clients.

Common wisdom suggests that companies should keep a cash reserve that is large enough to cover expenses while waiting to get paid. This works beautifully in theory but seldom in practice. The truth is that most small companies keep inadequate reserves.

One way to fix this problem is to complement the cash reserves with business financing. Selecting the right type of business financing to help with this problem is critical. Most business owners will first try to get a business loan. They soon find that business loans have difficult qualification requirements. The business must have a profitable track record and impeccable financial statements. Also, the business and the owners need to have substantial assets. Few will actually be able to get the loan.

However, a business loan is not always the right solution. You can eliminate the cash flow problem from slow paying clients by factoring your invoices. Invoice factoring provides you with a funding advance on your invoices. This enables you to cover business expenses while waiting to get paid. The transaction is facilitated by a factoring company, who buys the invoices from you (at a discount) and hold them until maturity. Since the factoring companies buy invoices, their biggest concern is that the invoice will be paid. Although the factoring company wants to make sure the company selling the invoice has no major problems, they are more interested in the credit worthiness of the company paying the invoices. This makes factoring an ideal solution for small companies who don’t have a lot of credit or a long track record – but have a solid list of clients.

The current economic environment has been particularly tough for trucking companies and freight brokers. Winning client accounts is harder than ever. Likewise, keeping clients requires work very hard to meet their ever changing demands. To complicate matters, few clients pay their invoices quickly. Most commercial clients take anywhere from 30 to 60 days to pay their freight bills. This puts a considerable stress on your cash flow since you still need to pay for drivers, fuel and repairs. Few companies can actually afford to wait and tend to run into working capital problems.

There are two common ways to deal with this cash flow problem. The simple solution is to ask clients for a quick pay. Unfortunately, the simple solution is not easy at all. Clients have the upper hand and will usually demand to 30 day terms or threaten to take their business elsewhere. The second solution involves using business financing to close the gap in the cash flow. The problem with this strategy is that business loans are not easy to obtain in this environment. Most institutions will only make a business loan to a company that has a solid multi-year growth record, outstanding financials, substantial assets and a well seasoned management team. Few transportation companies can meet all these criteria.

There is a better way to solve the problem by using a solution that provides the equivalent of a quick payment. It’s called freight bill factoring. It works by using a financial intermediary called a factoring company, who advances funds against your freight bills. They settle the transaction once your client actually pays the bill. One advantage of factoring is that it provides the equivalent of a quick payment, without requiring your clients to pay faster. This makes it easy to integrate in most organizations.

Freight factoring is easier to get than other forms of financing. To qualify for this type of financing, your business must have solid commercial clients, be free of lawsuits and encumbrances and have good growth and stability potential.

Although conditions are improving as we are emerging from one of the worst recessions in history, getting business financing remains very hard. This is difficult for small companies because they are having the hardest time getting financing even though they need it the most. Outsourced labor companies such as security guard companies and staffing agencies are noticing a significant improvement in their sales but can’t follow through because they are not well financed.

To make things harder, commercial customers that used to pay their invoices in 30 days are now taking 45 days or longer to pay. This creates a serious cash flow problem, since security guard companies need to cover payroll on a weekly basis. Few companies can afford to wait that long to get paid.

One way to solve this cash flow problem is to shorten the time between delivery of services and receipt of payment. Since asking clients to pay sooner seldom works, the alternative is to use invoice factoring.

Invoice factoring provides an advance on slow paying invoices. The mechanics are simple. You sell the invoice to a factoring company, who pays you for it upfront. This provides you with the funds you need to meet your companies expenses. The transaction is settled once your client pays the invoice in full. Factoring companies always structure the purchase in two parts. The first part, called the advance, covers 80% to 90% of the invoice and is given to you immediately. The second part, which is the remaining 10% to 20% is provided once your client pays. The factoring fee is usually deducted from the second transaction.

Invoice factoring has been gaining popularity in the past few years. And in many circumstances, invoice factoring can provide a better solution than a business loan. Furthermore, factoring is easier to get than most business loans.

A major advantage of accounts receivable factoring is that factoring companies look at the credit quality of your invoices as one of the most important parameters in their funding decisions. This means that small but well run companies whose only asset are invoices from good clients can usually qualify.

Most companies that have weathered the recession have been left in a shaky financial position – where that can’t completely capitalize the current economic recovery. For many companies, cash flow has degraded to the point where they are living from client payment to client payment. For example, most commercial invoices used to get paid in 30 days. Now it usually takes 45 to 65 days to get paid. Sometimes even longer.

Although payments seem to take longer to come by, expenses seem to pile on very quickly. You have suppliers to pay. Payroll. Utilities. Office expenses. And the list goes on. This creates a serious gap in your company’s cash flow. And this gap can prevent your company from growing once the economy improves and sales start increasing.

One way to fix this problem is to ask clients to pay their invoices faster. However, this seldom works as most clients are paying slowly because they have problems of their own. The alternative solution is to get business financing. Few companies are able to obtain business loans in the current environment though. Institutions are only lending money to companies that have impeccable financial statements, substantial assets, years of experience and well seasoned management. And even if you meet this criteria, qualifying for a business loan is far from certain.

A third approach is to fix the cash flow problem using accounts receivable factoring. This solution reduces the cash flow gap by financing your invoices, and therefore reducing the amount of time it takes you to receive payments. The transaction uses a third party financing company referred to as a factoring company.

The transaction mechanics are fairly simple. Once you have an invoice from a credit qualified client, you sell it to the factoring company, which pays you for it in a few days. The factoring company will buy your accounts receivable in two payments. The first payment is usually for 80% of the invoice. You get the remaining 20%, less a factoring fee, once your client pays the invoice in full.

Qualifying for accounts receivable factoring is easier than qualifying for conventional business financing. The most important requirement is that your clients need to have solid commercial credit.

Most business owners are confronted with a tough economic environment. They have to work harder and longer to get sales. And when you do get the sale, clients insist on paying their invoices in 30 days or more.
Although giving 30 to 60 day payment terms to commercial and government clients is customary, it can also drain your company’s resources. Few companies have the necessary cash cushion to cover all their operational expenses while they wait for clients to pay. There are two ways to solve this problem.

The simple solution to this problem is to get clients to pay their invoices quickly. In reality, this strategy seldom works because large corporate clients are used to getting 30 – 45 day payment terms. If you can’t offer it to them, they will go somewhere else. The second solution is to get business financing, and use it to cover the cash flow gap.

Getting a business loan in the current lending environment can be very difficult. Most institutions have tightened their lending requirements and will only provide business loans to companies that have a solid track record of performance, impeccable financial statements, seasoned management and substantial assets. Unfortunately, few companies can meet this criteria.

However, there is a different way to solve this problem. It provides the equivalent of a quick invoice payment – but without requiring your clients to pay quickly. It’s called invoice financing. With invoice financing, a funding institution provides advance on your invoice. This gives you immediate liquidity to cover business expenses. The transaction settles once your client actually pays for the invoice. The funding institution charges a fee for their service, usually based on the size of the invoices and the time they took to get paid.

One advantage of invoice financing is that it’s easier to get than a business loan. Having high quality commercial customers is the most important criteria for funding, since funding is based on your invoices. This makes invoice financing an accessible solution to small and medium sized companies who have a solid client roaster.

One of the side effects of the current recession is that business financing has become hard to get. A few years ago, business credit was flowing and companies could shop from bank to bank looking for the best terms. Nowadays, even companies that have solid financial statements are having problems getting a business loan. This situation is not likely to change for the foreseeable future as many lending institutions have capitalization problems and won’t be able to lend much until these problems are solved.

Because of this, many companies that need business financing will need to find an alternative – or do without. One alternative that has been gaining popularity is invoice factoring.

Invoice factoring is designed to solve the cash flow problem that are generated when clients pay their invoices in 30 to 60 days. While extending 30 day payment terms is common for commercial clients, many small and midsized companies can’t afford to wait that long to be paid. They have a number of expenses that need immediate handling, such as supplier payments, payroll and rent. Factoring invoices can reduce the days outstanding on invoices substantially, putting your company on a solid financial footing.

The mechanics on invoice factoring are fairly simple. Once the work or product for an invoice is delivered, you sell the invoice to an intermediary company called a factoring company. The factoring company examines the business credit of the company paying the invoice (your client), and if acceptable, buys the invoice from you at a small discount. This provides a quick source of funding that can be used to cover operational expenses and grow the company.

Most factoring transactions are structured with two payments. The first payment, called the advance, is for about 80% of the invoice amount. The second payment, which is for the 20% reserve (less fees), is rebated once the invoices is actually paid in full.

The biggest advantage of factoring is that it’s easy to obtain. Most small and medium sized companies can get it, provided they have solid clients and no encumbrances on their assets. This makes invoice factoring an ideal solution for companies that cannot afford to wait 30 to 60 days to get paid by their clients.

Although the economy is recovering, the strength and duration of the recovery remain uncertain. Because of this, many companies are reluctant to hire permanent employees, opting instead to use a temporary staffing agency to fulfill their personnel needs.

The staffing industry has seen a considerable increase in their level of activity as companies start ramping up their production. Although this is very good for the industry, it also creates a cash flow problem. The employees that are hired by the agency need to be paid weekly (or every two weeks), but clients pay their invoices in 30 to 60 days. Therefore, staffing agencies need a financial cushion to handle these expenses until their clients pay. The demands on this financial cushion will increase if the agency lands a new contracts.

One easy way to fix this problem is to put more capital into the business – either directly or through investors. This can be complicated, and could involve giving up some equity in your company. Another alternative is to get business financing – either through a business loan or a line of credit. Both of these products can be hard to get as the company will need to show solid assets, an experienced management team and a well crafted business plan. The problem is that staffing agencies don’t have assets in the traditional sense of the word – there is little if any real estate, and no machinery or equipment. The assets are their employees, and those walk out the door every day. There is an alternative to conventional business loans that can work well in this situation – it’s called invoice factoring.

Invoice factoring provides an advance payment for the staffing agency’s accounts receivable. This reduces the time you wait to get paid from 45 days to just a few days. This reduces your reliance on a cash cushion and provides liquidity to meet your company’s expenses.

Also, invoice factoring is easier to get than conventional financing. Most factoring companies consider your invoices to be strong assets. Because of this, a factoring company will usually be willing to extend financing to small businesses that have potential and solid customers. This makes invoice factoring a very accessible form of financing.