Monthly Archives: November 2008

Author : Kris Koonar

The fear of recession looms large and it is better to be safe than sorry The credit crunch is affecting the economy and difficult times are predicted ahead Recessions are not the best things to happen, as you would find number of people losing their jobs, which in turn would affect families and businesses But, if you take some precautions now, when you really can, then you can survive and face recession In situations like this, Invoice factoring can be of great help to keep your business running during the recession period The improvement in the cash flow would do you good to keep your business moving in these tough times

Invoice factoring is selling invoices that you have raised on your customer There are factoring companies, who are prepared to buy good factors and pay you up to 80% to 85% of the invoice value They will collect the invoice amount from your customer and pay you the balance amount after deducting factoring fees

Benefits of invoice factoring

Instant cash: The factoring process is a boon to businesses that face situations like slow payments from customers Though a customer may be an owner of a big business, yet payments may not be received from him immediately on raising the invoice Sometimes smaller companies are affected by not getting new business due to the lack of instant cash flow They cannot bid nor have provisions required to start a newer project In such situations, if the business invoices are sold, instant cash is made available They may have to agree on different terms to acquire a new business The complete factoring process may not even require more than 48 hours, if your relationship with the factoring company already exists

Working capital: Though the customers may pay you later, any business is required to have a working capital You require money to take care of some immediate expenses like payments of rent, taxes, salaries etc In such times, if you sell your invoices to the factoring companies, you can get cash to take care of these expenses If your sales increase, even though with a lower rate during recession, you can make use of these sales to gain some capital Your financial needs would thus be taken care of

Eliminate bad debts: If you have selected non-recourse factoring, then it eliminates bad debts from your financial statement, as the factoring company takes up the risk of non-payment by customers upon themselves This helps you not to have many bad debts, which otherwise would reflect badly on your financial status When you select your customers, you can take the help of these factoring companies and list only those credit worthy customers that matter to these factoring companies

Early payment discounts: When you get cash in hand, you can use this to pay all your dues and get an early payment discount You may also find it useful to make immediate or even down payments on purchase of raw material and gain discounts from these payments, which helps you to reduce your manufacturing costs Though the margin is reduced due to factoring, such discounts help you to improve your earnings

By using the factoring company’s services, you can face recession to some extent With your finances in order and with the help from these factoring companies would ensure that you are careful in your financial matters and thus sustain through the tough times

Freight Bill Factoring with the best rates and service. Current factoring rates can be found here: http://www.phoenixcapitalgroup.com Continue reading →

Author : Kris Koonar

Recession seems to be inevitable with the current turmoil seen in the world financial markets It appears that the business fraternity would find it hard to run their businesses Hence, it is necessary to take precautions to recession proof your business Invoice factoring can be one tool that can help your business wade through the turmoil in the market A steady cash flow that is monitored on a regular basis and substantial amount of working capital is critical to keep the businesses running You may have to find finance options and use them wisely and avoid approaching banks for loans to keep your business moving

Invoice factoring is considered beneficial to recession proof your business, even when bank loans are available to fund your business But, the banks would take time to approve the loans For small startup businesses with low credit scores, bank loans may not be easily available and banks would be reluctant to offer loans, since they do not have assets with them In such situations, invoice factoring comes to your rescue

The major benefit of Invoice factoring is the instant availability of working capital Since your customers pay you late, and you have to do your payments like taxes, rents, bills etc on a timely basis, such cash requirement can be rescued by factoring the credit invoices Moreover with immediate payments, you may even get the benefits of trade discounts Taking into account all these factors, like payments of bills, taxes etc for the month; you can then plan factoring of your invoices accordingly

Rather than factoring all your invoices at once, you could select invoices to factor and cater to your immediate needs This way, your cash flow is regulated Similarly, if the need arises for urgent cash to undertake new projects, these invoices can be factored and you can receive funds within 48 hours This way you do not lose any opportunity to grow With improved sales, you would have more invoices

Another advantage of factoring is that your receivables are reduced from your financial statement and there would be lesser bad debts If you choose non-recourse factoring, the factoring company takes the risk and responsibility for non-payment by the customers Your cash and fund flow statement also would show that you are in a better financial situation This also helps to improve your credit scores This way you would build up your company’s finances With some assistance from the factoring companies, you can bring in a lot of discipline in your finances With proper selection of credit worthy customers, your risk of losses is substantially reduced Another advantage is that the factoring companies undertake the responsibilities of collection of payments from the customers, which reduces your burden of collections that would have otherwise raised your related costs

During recession, it is important that you are careful to deal with your customers You make sure that you have good relations with them and take some efforts to ensure that your invoices get paid on time Check you receivables regularly and plan to recession proof your business It is important that you are constantly aware of your financial status and make efforts to retain your customers

Freight Bill Factoring with the best rates and service. Current factoring rates can be found here: http://www.phoenixcapitalgroup.com Continue reading →

Author : Kris Koonar

Recession and a credit crunch have hit every market and many businesses are facing a tough time dealing with the situation It is important for businesses big or small to draw up a plan to overcome these times One very useful tool to recession proof your business is by factoring invoices that you have in hand You are sure to feel the pinch with payments trickling in and increasing costs In these circumstances, factoring should be top of your agenda

During a credit crunch your cash flow needs to be managed extremely carefully Monitor it regularly with a substantial amount set aside for at least 3 months You may have big customers but your payment terms flexible To add to that your customer may pay up later than the stipulated period Your need for capital does not diminish There would be certain payments that you cannot forgo or postpone You require funds to take care of rent, taxes, bills and overheads Factoring can be of great use to you if you have an important asset in your hand That asset is the invoice receivables that you have in hand You can sell them off to the factoring companies for a small fee Depending upon your cash requirements you can choose to sell your invoices to the factoring companies Factoring companies may pay you an advance of even 85% to 90% depending upon certain factors

It is important for you to have a steady flow of working capital and therefore necessary to beef up collections However, in tough times that will be limited By factoring your invoices you get the cash you urgently require This is useful to make prompt payments, which can help get you better trade discounts You should keep a check on your creditors and stretch them sensibly without hampering your cash flow or loosing out on good discounts unnecessarily

You cannot depend on you bank for your funds and more so if yours is a small business It takes a lot of time to get loans and can be expensive Similarly, banks may or may not give you loans if your credit scores are low In such instances, if you have a big invoice from some credit worthy customer you can get funds from a factoring company with ease For them your credit scores are not as important as those of your customers You can get funds in a matter of 48 hours once you have established a good relationship with the company Another advantage is that you can also bring some discipline to your financial matters You can plan on what invoices to use and when as per the need You need not sell out all in one go and then have nothing left in hand You can ensure that your finances are well managed and planned well in advance

With the enumerable advantages that factoring has to offer, keep it on top of your list to counter the recession Planning in time will help you tide through these tough times

Freight Bill Factoring with the best rates and service. Current factoring rates can be found here: http://www.phoenixcapitalgroup.com Continue reading →