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An Alternative Financial Solution to Obtain Cash Flow with Factoring A/R Invoices

Cash Flow is the mainstream of any business, if you are not getting your invoices paid on time - you will eventually lack cash flow.

 
PRLog - Nov. 27, 2011 - A New Financial Solution
For A Businesses'| Lack of Cash Flow

If you are a business who deals with B2B or B2G businesses in the United States and Canada or cross borders, there is a Finance Institute and a group of Business people who want to ensure that your business succeeds,  in this time of constraint in the world economy.  The Business people are part of a
a group of successful people that have the money to ensure that businesses across the borders get some type of help to not only pay their bills but also to grow their businesses.  

It is a well known fact that today businesses are having a rough time with making their payments in the ordinary 2% - net 10 days, and are going beyond the net 30 days that is expected of most business, which helps facilitate all businesses cash flow.   But with what is going on in the economy these days, business are holding on to their funds for at least 60 to 90 days.  The average payments,  a recent report showed,  are being made in 73 days.  How are businesses to survive with an expected  up to 3 month wait for their funds and continue to run their businesses effectively?  Well this is why these business men have put together a somewhat unusual solution to a business lack of cash flow!

Most of the businesses in the above category are in the small to medium size range, and are the most susceptible to their local economy or even to world economy, (depending on the type of business).  These businesses usually sell to another business or to a Government Department (one or many) or both.  With that said, and the fact that these businesses are not paying and saving money with a 2% - net 10 day response, and not even a net 30 day response, tells these businessmen that something needs to be done and done quickly to ensure that these smaller businesses can continue to do business and even make money doing so.  This is both American and Canadian endeavour to help businesses out to survive these times of financial difficulties which are appearing more and more these days,  for many businesses.  

How you are probably wondering?  Well a business that deals with B2B or B2G businesses are usually selling goods or services.  The goods or services are usually requested by the receipt of a purchase order or service contract or agreement letters, whereby the goods or services are totally spelled out.  Usually once the goods are shipped and received or the service has been received  by the customer, an invoice follows by a business requesting that the goods or services should be paid either with a discount of 2%, thus 2% net 10 days, or net 30 days,  which does not allow for a discount.  However, with businesses not paying for at least 60, 70 and up to 90 or more days, this becomes a problem with a businesses cash flow!

Any business who does business with the proper paperwork in place and satisfied customers, can be accepted into this Financial program.  The business will have to ensure that the invoices match the purchase orders and that their customers received the products or services as specified on the purchase or service documents.  In mentioning services this does not usually provide for Construction services, as there are too many restrictions and also labour laws to be concerned about.  Therefore any other type of businesses, even those providing some sort of services can be accepted.  They could be Personnel Service Agencies, Doctors, Lawyers, Dentists, Landscapers, Garden Centers, Financial Planners, Computer Companies, and many others, too numerous to mention here.  

This is how it all works, you would contact myself, who is associated with a Factor.  The Factor inevitably makes all of the final decisions regarding the businesses they will draft up an agreement with.  This is not a contract...and they are not giving you a loan!  However, there is a fee for utilizing the advances that the Factor and your business agrees to.  The fees are paid back to the Factor over time, not at the commencement of the agreement for the advance funds.

The Factor's  job is to provide factoring on the proposed invoices that you would send him to be covered on this agreement.     He will do a very professional search on your debtor's invoices, without the Company being aware that this is going on, to ensure that they are businesses that eventually pay their invoices.  You can understand that a Factor and his business owners do not want to be left holding the bag without being paid over time! Neither do you want to pay needless fees, this is why a little research is carried out by the Factor.

Acceptance by a Factor, usually does not have any relation to your own business, there is no personal asset guarantee required,  but rather an agreement is drafted dependent on your clients debts, owing to you as their provider.  If the search by a Factor is extensive, there could be a small fee to cover these costs, and you may be required to sign a Validity Guarantee, that acknowledges that the said invoices are true and valid.  Because a Factor is not a Bank, there are no long forms to fill out, or other paperwork depicting a loan with interest payments.
Your Company holds assets of say $100,000.00 {these are in the form of accounts receivable invoices}.
And are stated in the Factor's Agreement, disbursements are twofold, and may be as follows:

   Invoice Total            $100,000.00

   Advance      (as agreed @ 80%)   $ 80,000.00  within 2 days of signing of the Agreement

   Reserve        (as agreed @ 20%)   $ 20,000.00

The reserve is determined by subtracting $80,000 advance from the $100,000.00 and therefore
equates to:  $20,00.00.  The advance is the 1st disbursement, with the reserve being the 2nd disbursement
The 2nd disbursement is paid back to the client in time when invoices are paid to the Factor, less 2.5% fee.

It must be mentioned that consignment or scanner sales do not qualify.  You also must be a legal entity business, a LLC, Corporation, Ltd., or Partnership, conducting business with like Companies.

Although you may not have heard of this solution previously, it has been done for decades in Europe and is a very well sought after financial solution.  That being said, some Companies have chosen to use the Factor indefinitely, and take over their accounts receivables Section.   This is not a requirement, you may use them until your first batch of invoices is cleared, and continue at your own discretion or not at all.

This is an acceptable practice for a new legal business as well as a long established business.  The fees that you pay for the service, is a tax write off and is after all a business expense.  When a Factor takes over your AR invoices, the Factor will send out letters to your clients...will they mind. No I don't think so, however, the business must agree that they will not accept any of these payments!  

Just remember when the Banks say “NO”  or wants to cut back on the loaning of funds, or raise your interest rates, perhaps due to the fact that you may be having a problem to pay your own bills, you do have a very good financial way to get the cash flow you need, and can utilize this cash flow anyway you want to, the Factor does not care what you do with the advance you are given.  


Marilyn Broomer,
http://www.mabcapitalmgmt.com
MAB Advertising

Write an e-mail at:  info@mabcapitalmgmt.com  if you need more specifics about this program,leave your phone number and I (Marilyn Broomer) will return your call as soon as possible.  Only interested businesses should return e-mails.

Please realize that this is only available for USA and Canadian businesses.  The Finance Institute's Factor is located in Canada and works directly with a Funding Company for both Canadian and American legal businesses.

# # #

I am working with a Factor presently and feel this is a great alternative financial solution for some businesses, including new start up businesses to help with their cash flow and eventually help their business grow. Consider when the Bank will not loan you the funds you need ....and you need another alternative, this could be your answer, find out more right here and on my website.

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Contact Email:
***@mabcapitalmgmt.com Email Verified
Source:Marilyn A. Broomer
Zip:K2S 1P2
State/Province:Ontario - Canada
Tags:alternative solution, cash flow, Finance, A/R invoices, factor, factoring, funding
Shortcut:prlog.org/11734267
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