Going through the business loan application process with a financial institution can be a challenging and time consuming task. Preparing the application package usually requires a lot of effort and time while you collect the relevant information – past tax returns, financial statements, sales projections, management team biographies and so on. But getting financing is usually critical for the success of the business, so the business owners and managers go through the process. So what do you do if after all the effort you invested in getting a business loan, your application is declined?

The biggest mistake business owners can make at this point is taking it personally and losing their calm. The smart approach is to keep calm and detached. Although easier said than done, this is an important step that may help you get the funding you need. Your next step is to try and find out why the application got rejected. Sometimes, lending officers won’t want to go into details about your rejection because they fear offending the client. However, this information can be critical for your success, so try to persuade the lending officer to give you some details – but do so in a friendly manner. One approach that can work in this circumstance it to say something along the lines of ” I understand that your institution won’t be able to help me. However, I plan to apply at another institution. Could you help me understand how to strengthen my application?” Then be quiet and listen carefully. The information the lending officer provides you will be very valuable and will help you in your subsequent applications.

Once you have gathered this information, you should meet with you financial professional and re-assess your application and needs. This is very important, unless you are a financial professional yourself, you should get the advice of one. You should also decide whether you should re-apply for a business loan or an look alternate business financing product.

One alternative source of business financing that has been gaining traction during the recession and ensuing credit crunch is invoice financing. This tool can help businesses that are having cash flow problems caused by customers are paying their invoices more slowly. Many times, invoice financing can be used as a stop gap solution to help shore up your business while you look for a more permanent business financing solution.

One last thing to keep in mind is that a number of lending institutions are in bad financial shape and are only lending money to their absolute best customers. In this case, a business loan application rejection may be more a reflection of the financial health of the institution, rather than that of your business. If you plan to obtain bank financing, it’s a good idea to go to the FDIC’s website (www.fdic.gov) to check out the health of the bank. You will need a financial professional to help you review the data, but it will save you time by allowing you to focus only on healthy institutions that have the capabilities to make loans.

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.

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.

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.

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.

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.

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.

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.

Most companies experience a cash flow shortage at one time or another. Unfortunately, thanks to toughening economic conditions, cash flow shortages are becoming common place. As a general rule, experts recommend that companies keep a cash cushion that is equivalent to six months worth of operating expenses available as cash in a bank account. The cash cushion can cover any variations in your cash flow and enables the company to operate efficiently.

There is a problem with this strategy, though. Few small companies can afford to have that much money tied in a bank account. Especially in the current economic environment. But without it, the company is exposed to serious problems if customers start paying late or if they face an unexpected expense.

One way to bridge any gaps in cash flow is to get business financing. Getting a business loan can be difficult and time consuming. Lending institutions have tightened their due diligence requirements and will only provide business loans to companies that have solid balance sheets, seasoned management teams and well developed growth plans. The problem with this is that few small companies have solid balance sheets. In this case, an alternative source of funding called invoice financing may be the right solution.

Invoice financing can reduce/eliminate the 30 to 60 day wait to get paid for your accounts receivable. It provides an advance payment for your invoices, smoothing out your cash flow and ensuring you are better prepared to meet your expenses and address new opportunities.

Financing your invoices is fairly simple. You work with an invoice financing company, who evaluates the quality of your account receivable and provides an advance based on those results. One important advantage of invoice financing is that the financing company considers the invoices to be strong collateral. Because of this, small companies with a solid list of clients can usually benefit from financing their invoices.

Business owners are usually surprised that a business that has solid income can actually have serious cash flow problems. Sounds like a contradiction, but consider that income is usually booked when you invoice the client – not when they pay. And in the commercial world, clients pay on “terms” and can take 30 to 60 days to pay for their invoices. This cash flow gap can surprise many business owners and create serious problems to the company.

One way to handle the gap is to try to convince clients to pay their invoices sooner. Sometimes this works. Oftentimes, it doesn’t. Clients like to pay invoices in 30 to 60 days because it helps their own cash flow. You can be sure they will be reluctant to change their payment habits.

Another alternative is to apply for business financing. The current lending environment is difficult though, and getting a business loan will require substantial work and take time. Since most institutions are being very careful with their business loans, you can expect them to be very diligent and require a lot of documentation, such as financial and tax reports. And even if you have reasonable financial statements, there is a chance your request will be denied for other reasons.

There is a third alternative is to use a financial intermediary to get a quick payment on for your invoices. Invoice financing, as the process is called, is relatively straight forward. A financing company advances a payment against your net 30 to 60 invoices. They hold the invoice until it pays, while you get immediate use of the money. The company charges a fee, usually a percentage of the invoice, for this service.

One advantage of this form of financing is that the financing company provides you with financing based on the strength of your invoices. This enables small companies with a good list of clients to get this form of financing. Another advantage of invoice financing is that it’s easier and faster to qualify for than a small business loan.

Invoice financing can be a great solution for companies that have good clients but can’t wait 30 to 60 days to get paid for the products and services.

Let’s examine a situation that is all too common in business. A small business lands a contract to supply products or services to a large company. It’s a solid contract that calls for ongoing deliveries and will be very profitable for your company. However, there is a small problem. Your client has asked that you give them 60 days to pay the invoices.

This puts you in a complicated situation. If you try to negotiate for a quicker payment, your client may think that your firm does not have the financial wherewithal to provide the product or service. If you agree to those terms, you have to be prepared to cover all expenses for two months. It’s a difficult choice. What’s worse, if you can’t afford to wait 60 days to get paid, your only alternative is to turn the opportunity away.

The common solution is to get business financing and use that to cover the 60 day gap. However, few conventional financing products are designed to solve this problem. A line of credit is probably a good solution. A business loan, on the other hand, may not be the best solution. Although business loans can help address this problem, they tend to be better suited to buy capital goods and equipment.

There is one solution that is specifically designed to solve this problem. It’s called invoice financing. As its name implies, invoice financing provides funding for your net 30 to net 60 invoices. This is equivalent to getting a quick payment on the invoice and enables business owners to cover business expenses without having to wait up to 60 days to get paid by clients. It provides stability to company’s cash flow, enabling the owner to better manage expenses and to better determine which opportunities to pursue.

Most invoice financing transactions are structured as a purchase, where the factoring company finances the invoice in two installments. The first installment, usually 80% of the invoice, is made as soon as you invoice your client. The finance company withholds 20% to cover any invoice discrepancies or underpayments. However, the remaining 20% less the discount, is advanced as soon as your client actually pays for the invoice.

Offering 30 day payment terms, or net 30 as it’s called, is a requirement for companies that sell goods and services to larger companies or the government. As a matter of fact, thanks to the recession, most companies are paying their invoices in 45 or as many as 60 days. Larger companies do this because it’s a source of cheap financing for them. They get use of your services and products for up to 60 days before having to pay for them.

While this arrangement is good for the larger businesses making a purchase , many small and medium sized vendors can’t afford to wait 60 days to get paid. They have their own expenses to deal with – salaries, rent and vendors. Due to this, growth will be limited to the amount of available capital. Vendors will sign on new clients until they reach the point where they can no longer afford to offer terms – and then stop growing.

One way to extend your capabilities and support growth is to get business financing. Some financial products address this problem better than others. Small business loans, for example, can be used to cover operating expenses but are not ideal as they are usually better suited for buying assets or making certain types of investments. Lines of credit offer more flexibility than a business loan in this case, but like most business loans have bank imposed maximums or limits.
Usually, a better solution is to use invoice financing. As its name implies, this solution provides you with financing based on your invoices. The financing company advances you funds against your invoices, enabling you to cover operating expenses.

By financing your invoices you can offer net 30 to net 60 terms without having to worry about waiting for payment. This provides you an important competitive benefit while improving the financial stability of your business. Invoice financing is a flexible solution as it dynamically adapts to the changes in your accounts receivable. This enables you to focus on the most important task of all – growing your company.

One of the most important features of invoice financing is that it’s easier to obtain than other forms of financing. All you need is a business that is free of liens/judgments and has a solid roster of clients who pay their invoices in 30 to 60 days.

Managing the cash flow of a growing business is a constant juggle for company managers. On the revenue side, most of your clients want to pay their invoices on 30 to 60 days. On the expense side, you have to deal with many immediate expenses that have different payment timeframes. Most pressingly, payroll, which tends to be either monthly, biweekly or weekly.

One way to improve your cash flow is to demand that your suppliers give you the same terms you offer your clients. In other words, if you give 45 days of payment terms to your clients, you want your suppliers to give you 45 or more days. This is easier said than done. Unless you own a large company or have impeccable business credit, most of your suppliers will demand quick payment.

One of the easiest ways to get into a cash flow squeeze is to have clients that pay in 60 days but have expenses that are immediate. Your only solution is to cover the gap with your company’s resources until invoices get paid. Unless you are careful managing your sales, revenues and expenditures you are bound to get into trouble and run out of resources.

One way to solve this problem is to use business financing. Although a small business loan is seen as a solution by many, they have their own challenges. They are hard to get, require extensive application processes and more importantly, require that the company and its owners have impeccable credit. An alternative to a conventional business loan is to use invoice financing.

Invoice financing eliminates the 30 to 60 days invoice payment wait, helping companies gain a more stable financial footing. It’s provides the funds you need to meet you immediate expenses, enabling you to tackle new opportunities.

One critical difference between invoice financing and other products is that invoice financing companies look at the credit worthiness of the company paying the invoice as their most important source of collateral. This feature makes invoice financing a viable alternative to small companies with thin or no credit, but a strong list of clients.

Most invoice financing transactions are arranges as an invoice purchases, where the factoring company finances/purchases the invoice in two installments. The first payment, usually 80% of the invoice, is made as soon as you submit the invoice to your customer. The remaining 20% ,less the discount, is advanced as soon as your client actually pays for the invoice.

Having a business loan application rejected can be a very heavy blow for a business. Ultimately, this may mean that the business will not be to invest for growth – or not be able to cover certain expenses. For many companies, having business financing is a requirement for growth as they need funds to be able to expand the company into new opportunities.

The two most commonly known financial products that are used to improve a company’s cash flow are conventional small business loans and lines of credit. Although these two products are the best know, they don’t always provide the best solution. If the biggest challenge your company has is that you can’t afford to wait 45 days to get paid by your commercial clients, you should look into invoice financing.

Most commercial transactions follow the same format. The product or service is delivered, along with an invoice. The client then has between 30 to 60 days to pay your invoice, depending on the terms you offer. Many companies have no alternative other than to offer payment terms simply because large companies demand it. It is a cost of doing business, though it could cost you your business if you can’t manage your cash flow properly.

One way to solve this problem is to use invoice financing. Invoice financing is a fairly straight forward product that has been gaining market traction in the past years. It eliminates the 30 to 60 days invoice payment wait, helping companies gain a more stable financial footing. One critical difference between invoice financing and other products is that invoice financing companies look at the credit worthiness of the company paying the invoice as their most important source of collateral. This feature makes invoice financing a viable alternative to small companies with thin or no credit, but a strong list of clients.

The majority of invoice financing transactions are structured as an invoice purchase, where the factoring company finances the invoice in two installments. The first payment, usually 80% of the invoice, is made as soon as you submit the invoice to your customer. The remaining 20% ,less the discount, is advanced as soon as your client actually pays for the invoice.