Debtor Finance or Factoring can Finance Your Plant and Machinery

Purchase Equipment or Machinery to Streamline Your Workflow

Purchasing new equipment and/or software for a workplace can sometimes be a huge lump sum cost for a business and a drain on working capital. Nevertheless, it is important to realise that by having the most up to date software and machinery you are reducing cost and saving time. You are also remaining current and up to date.

Common Mistakes

A common mistake that a lot of business make is holding on to an older piece of equipment that is constantly breaking down. Not only are you paying money repeatedly to repair this old equipment or have new parts shipped in, but you are causing delays in the production line or the distribution chain which may result in a loss of customers who are sick tired of experiencing the same delays. They will go to a competitor that does have the latest, the best and the most reliable.

In addition, you are also likely to be increasing labour cost due to down time when plant and equipment is out of action. Sometimes the task may need to be completed manually or in some inefficient and costly way.

Update your plant and equipment

It is also beneficial to simply update outdated software because clients value suppliers that use the latest technology. For example, think about how inconvenient it is when you come across a cash-only establishment in this day and age.

Across the board, it is in your best interest to keep software and machinery up to date, it will save you money in the long run by streamlining processes and keeping customers happy

 

Use Debtor Finance to Fund an increase in Sales or Production Staff

Employ More Sales Staff or More Production Staff

Often when small businesses start gaining momentum with marketing, log jams can be created in their sales funnel. This means that you are unable to keep up with the number of new inquiries you are attracting. If you don’t respond to an enquiry you will lose the opportunity, there are plenty of competitors out there ready to eat your lunch! Often, if you are attempting to do everything yourself as an owner-operator you can find yourself wasting time with dead-end leads and missing out on potential clients because you have taken too long to get back to them.

As a business person it is important to recognise that you cannot do everything yourself and even if you cannot afford to employ someone on a full-time basis it may be beneficial to look into outsourcing sales tasks. Outsourcing offers a plethora of benefits such as scalability, reduced costs, and trained staff.

Either way, having more working capital will allow you to take up one of these alternatives which should result in business growth.

Employ a BDM

Many businesses also find it helpful to employ the services of a BDM (business development manager). The person in this role will take care of sales by maintaining and growing existing clients as well as following up on interested parties, in addition to making cold calls and chasing new business. You will be updated on their progress, but you are able to use your time to focus on the bigger picture.

You can also add manpower and staffing to your production or distribution department, so you give better service to your customer.

Use Invoice Factoring to Boost Your Sales and Marketing

Increase sales and marketing budget

It can be hard for business owners to justify a large marketing budget. Now more than ever, there seem to be more and more free options available to reach new customers.  Whilst free or very cheap, options like email and social media both have their place in the marketing game. it often takes the skills of a professional to actually make these channels reach the right demographic and keep them maintained to a high standard. This costs money and this is where Invoice Factoring can help.

Sometimes, as a business owner, we have to admit to ourselves that we don’t have the time or the skills to do our own marketing. In this case, it is worth increasing your marketing budget to employ the skills of a professional. You reap a return on your investment with the new customers you will attract. At the same time, you will also be giving your existing and your new customers the attention and service they expect. This is because you are focusing on the customer and not putting all your energy into marketing.

Invoice factoring releases capital and allows you to concentrate on your core skills.

Choose Your Target Media

One of the most under-utilised options when it comes to advertising in industry publications. This is the perfect way to reach your target market, there is no question it is reaching the right people because the only people engaging with an industry publication are those already in the industry, those looking to get into the industry and at worst those who are close to the industry.

Advertising in a trucking magazine seems much less glamorous than creating a colourful Instagram campaign, but, in reality, if you are looking for truckers you may as well spend your money somewhere that you know they will be listening.

It is also important to note that we live in a world where potential customers are being constantly flooded with emails. Consider this when you are creating an email campaign, how will your email stand out? Visual stimulation is a great way to stand out because the human brain will process images faster than words. It could be in your best interest to employ a creative type to take charge of this process for you and don’t forget you can reuse visuals and logos once they have been created, so think of it as an investment.

Target and be Focused

Precise and efficient marketing will attract the type of customer you want and sometimes you have to be willing to spend money to get to this demographic.

 

Use Factoring Finance to Negotiate Prompt Payment Discounts from Suppliers

Negotiate prompt payment discounts from suppliers with Factoring Finance

 

Factoring finance is a tool that you can use in many ways. All businesses love customers and clients that pay quickly. They do not have to chase for payment. In fact, suppliers love prompt payers so much that they are often willing to offer discounts to those who do it consistently. You can be one of those customers by using Factoring finance.

Understandably, though many businesses are simply not in a position to pay within (say) 7 or 10 days on a regular basis. If debtor finance or factoring finance is effectively used you could be in a position to do this. As a result, you might be able to negotiate as a discount. You could reduce costs and allocate more funds and resources to grow your business.

Become a Preferred Customer

In addition to giving you discounts, suppliers will often give prompt payers access to other benefits. These can include benefits such as first access to new products and general preferential treatment.  That may include your orders being pushed through first. Your suppliers LOVE prompt payers. Factoring finance can put your business in that position.

Many small businesses can find it intimidating to negotiate with a supplier. It is important to remember that you will not reap any of the benefits of a good relationship without actually starting a conversation with your supplier.

You Should Negotiate

Negotiation is not everyone’s strong point, but it is crucial for business owners to know that they are the ones with the ultimate power in these situations. If they have the cash that is. It is up to you whether you buy products off of them, not the other way around.

Another tactic that many businesses employ, is utilising multiple suppliers. This ensures that you are keeping everyone honest and on their toes. When you have more than one supplier they are aware that they are in direct competition with each other.

Prompt payment discounts can be arranged with suppliers and it is possible to be a prompt payer by utilising debtor finance.

Learn to negotiate and do not be afraid to walk away from a supplier if they are not offering you the best price.

To find out more about factoring finance click here.

 

Use Debtor Finance or Factoring to Buy More Stock

Buying more stock/inventory using Debtor Finance or Factoring

It is common practice in business to work using a “just in time” inventory management system. This means that you hold minimal stock and buy “just in time” to fulfill anticipated orders. Hopefully, you have anticipated soon enough. Many don’t realise you can use debtor finance or factoring to cash flow your inventory.

Obviously, for businesses that are just starting out this method minimises risk as capital is not being held in excess stock.

However, for more established businesses, or businesses keen to grow; there are arguments for holding some additional stock.

 

These include:

1. Increasing customer satisfaction

• It is a known fact that we live in a world where people are used to getting what they want instantly, like NOW; and this is no exception in your business. By holding more stock you are able to fill orders quickly and therefore guarantee customer satisfaction.
• In addition to filling everyday orders promptly, having an inventory of stock means that you are able to cater to customers that need orders filled “right now” instead of simply having to turn these customers away. When you are able to solve a supply problem with that Customer you have been trying to get for years, you may have won a customer for life. Again, debtor finance or factoring can assist here.

2. Reducing costs by taking advantage of supplier discounts

• Suppliers and wholesalers often offer significant discounts when you buy in bulk when you buy more units. So not only are you decreasing the cost per unit but you are able to also take advantage of potential sales that the additional inventory brings.

3. Greater control in the event of supplier delays

• Unfortunately, it is not unheard of for suppliers to experiences delays. This can happen unexpectedly and often when you need stock fast. So, especially if you are in an industry that often experiences these issues, it can be helpful to mitigate the risk of this by having a level of inventory that you can use to fill orders in the meantime. If there is a jam in the supply chain your competitors are also likely to be impacted so not only are you reducing risk for yourself but you are gaining an advantage over your suppliers.

4. Larger range of stock is better for merchandising

• Also, having a larger range of stock available for immediate purchase is better for promotional and merchandising purposes. Customers will be attracted to a store that looks like it stocks a large assortment of products and having full shelves helps give off this impression.

Overall, it is in your interest to think about how buying more inventory could benefit you by reducing both costs and risk.

A business that need to carry stock should consider debtor finance and factoring to fund their stick acquisitions.

 

Want to know more; click here

Unlock Your Hidden Capital and What to Do With It

Introduction About Your Hidden Capital

Growth is the goal of all businesses, unfortunately, it can be difficult to allocate the resources and funds to do this when stock needs to be bought, wages paid and outstanding invoices loom. However, if businesses had the capital that they had earned today in their hand tomorrow rather than in the standard 60 to 90 days then the funds to grow your business would be available. Many don’t know it but there is capital sitting idle in many businesses. This is about releasing your hidden capital and what you can do with it  This is actually possible, to release your hidden capital, through debtor finance, sometimes called factoring or invoice finance. It’s a working capital finance tool that many business owners are unaware of. The below diagram illustrates how this simple process works and how you can use money from completed sales to finance new ones straight away rather than waiting for payment so that you can play catch up with existing clients.

A significant benefit of debtor finance is that the finance you receive is not tied to the value of your home, other real estate or any other asset. This means that the finance you are eligible for is dependent on the size of your business and the growth of your business, which also means that it grows with your business.

Often, it is the small business that struggles the most to access working capital finance from banks to grow, so, this guide offers a snapshot of how you can access capital locked in your business and ten potential ways you can use that capital to grow and improve your business.

 

What could you do with working capital that you had unlocked through invoice finance when you ha tove access your hidden capital

 

Here are some suggestions or what you could do and with the hidden capital you have unlocked

1. Buying more stock/inventory

2. Negotiate prompt payment discounts from suppliers

3. Increase sales and marketing budget

4. Employ for sales staff or more production staff

5. Purchase equipment or machinery to streamline your workflow

6. Expand into different product lines or services that compliment your current business and distribution channels

7. Expand into different regions, states or overseas

8. Take sales and marketing online

9. Undertake the research and development project you have thought about

10. Work ON your business not IN your business

 

Youy can find ouy more TODAY by phoning 0467 299 303 or Click Here.

Consider Factoring and Accounts Receivable Financing

Running a Trade Services of Trading Company in Australia? Low on Short-Term Funds? Consider Factoring and Accounts Receivable Financing!

Without the various trade workers that make themselves available for such a rich variety of services. Many of us would be stuck contending with problems by ourselves. It is not always easy to keep your accounts receivable current, and with some of your clients taking invoices on terms like net-30 or greater, it can be weeks after a job before you see payment.This is why you should consider Factoring and Accounts Receivable Financing

That can lead to a cash crunch that leaves you looking for options. Don’t rely on personal credit cards or other options when you have unpaid invoices for completed work. Consider the value in contacting a factoring company in Brisbane By factoring your accounts receivable and transferring the payment collection duties to another firm, you can gain cash in exchange. There are many things you can accomplish with this new-found source of money. It may even spur you to change your invoicing practices. How can you choose someone to work with for factoring finance in Australia? You won’t need to look far: Nova Cash Flow Finance has the experience and customer service skills to help you today.

Flexible solutions for factoring and accounts receivable financing in Australia.

Many banks are reluctant to work with small trade companies at all. They are even more hesitant to extend lines of credit or a loan for working capital. Nova Cash Flow Finance instead exists to help you unlock the funds already waiting for you in the business accounts receivable records.

Think about what you would do if you received a proposal for a huge job– perhaps an exciting opportunity to work with your first truly major client. To do the job, though, you may need extra equipment or infrastructure you lack. Your budget does not have room for such a purchase yet– but if you had access to much of the outstanding invoices on your books, you could seize the opportunity instead. Through factoring and accounts receivable financing, Nova Cash Flow Finance makes these scenarios a reality.

Contact the Nova Cash Flow Finance team today to learn more

Turning to accounts receivable financing in Australia is an excellent way to cash in debtor invoices while also avoiding the burdens of taking on a loan. Whether you choose to use the money to catch up on expenses or to probe opportunities for growth, you can continue plying your trade without such immense financial pressures. We understand that time is often essential when you need to consider factoring invoices, which is why our quick response times make Nova Cash Flow Finance an asset for your company. To discuss your financial needs and explore what we can do for you, contact us 24 hours a day by calling on 1300 138 186.

It is not always easy to keep your accounts receivable current. With some of your customers taking invoices on terms like net-30 or greater, it can be weeks after a job before you see payment.

By factoring your accounts receivable and transferring the payment collection duties to another firm, you can gain cash in exchange. Nova Finance instead exists to help you unlock the funds already waiting for you in the business’s accounts receivable records. Through accounts receivable factoring, Nova Cash Flow Finance makes these scenarios a reality.

Turning to accounts receivable financing in Australia is an excellent way to cash in debtor invoices while also avoiding the burdens of taking on a loan.

What is the Factoring Reserve in the Factoring Relationship?

What is the Factoring Reserve

Factoring Reserve is an integral part of the Factoring process. Factoring Finance works by funding the individual invoices of a small business.  The funding is done as two separate payments.  The first payment is called an advance and normally covers usually in two installments. The first payment covers approximately 80% of the total value of the invoice and is called the ‘advance’. What is the Factoring Reserve? The Factoring Reserve is the 20% (or other amounts) that is not advanced up front. The percentage amount of the advance is negotiated at the beginning of the factoring relationship and remains at that percentage for the duration of the agreement and for every invoice.  The advance is deposited to your bank account soon after the factor receives and processes the invoice.

The reserve amount

The second payment is called the rebate.  If the advance is 80%, the at the point of funding the 20% is called the ‘Reserve’.  The factor takes the 20% and puts it in a reserve account in the event of debtor non-payment.    

When the invoice is paid the factor, it is receipted and the 20% (less any fees) is paid to the small business owner.  This is called a rebate payment.  The amount that was in reserve is taken out of reserve and any fees due are deducted and the balance related to the small business owner.

The reserve amount plays a key role in non-recourse factoring if the invoice is not paid. Specifically, debtor default means the factor must assume the entire loss.   Although the reserve may not make good their full loss, it does protect them to some extent.

In recourse factoring when the invoice is not paid the factor can recover the amount owed from future invoices or a combination of the reserve amount and future invoices.  

The reserve/rebate payment does not represent complete protection for the factor but it does act as a sharing of the risk in the event of non-payment by the debtor.   

At all times the factor will endeavor to recoup their losses and make themselves whole by putting them in the same position as they were prior to funding the invoice.

the seller and this gives them some relief in the situation.

Speak to the experts NOW on 0467299303 or click here

What is the Liability of the Seller or Business with Invoice Factoring?

Invoice Factoring – Sellers Liability

 

Invoice Factoring is a simple and efficient way to release the cash in your unpaid invoices by giving you access to working capital that lets you grow your business. Like all financial transactions, there are some drawbacks. One of the most important things to be aware of here is the legal obligation on you as the business owner if the debtor does not pay the invoice.   Essentially there are two types of invoice factoring, recourse, and non-recourse invoice factoring.  Let’s examine those in more detail.  

Recourse factoring and non-recourse factoring

 

With recourse factoring, the factor, ‘buys’ your invoice and gives you an advance payment against it.  The advance is at a discounted amount of the face value of the invoice.  If your customer does not pay the factor within a set time period, usually 90 days the factor will recourse the invoice.  If the debtor defaults on payment, you have a legal obligation to buy the invoice back from the factor.   This is usually done by recovering the amount from future invoices.  

 

In a non-recourse factoring agreement, the factor does not ask the business owner to buy back the invoice in the event of debtor non-payment.   Any losses, unpaid invoices or late fees are absorbed by the factor. absorbed by the factor, leaving the business owner whole.  This type of factoring is more risky for the factor and is priced accordingly.

 

On the face of it,  non-recourse factoring looks as though it may be the better option for the business selling the invoice to the factor.  

 

Both types of factoring have advantage and disadvantages.   Recourse factoring comes with a lower transaction cost but as already identified the business owner is responsible if the customers default on payment.  On the other hand, non-recourse factoring offers a risk-free transaction for the business owner but often carries a higher transaction cost.

Before deciding which type of factoring to take up a business owner should carefully asses their debtor’s ledger and the value of their invoices. If the overall invoice amount is small, the business owner may decide that the company can absorb the risk that comes with recourse factoring.

Factoring with Nova Cash Flow Finance – the Role of Sellers Creditworthiness

Factoring with Nova Cash Flow Finance

When an SME is facing cashflow problems mainstream, thinking by big financiers is that the business owner will call on personal savings. Unfortunately, by the time the cashflow crunch hits, personal savings have already usually been exhausted. Also exhausted are those of close family and friends.  When you are experiencing cashflow distress it’s time to consider factoring with Nova Cash Flow Finance.

Next step is NOT a loan.  Although its difficult for a small business to get a loan to assist growth when times are good there’s no chance during cashflow distress.  The chance of a bank approving a business loan or overdraft in hard times is almost impossible.  

Time to consider factoring but you have no money in the bank and no security to offer.

That’s okay.  The whole premise of factoring is that the risk is in the debtor’s ledger of the business owner. Not the business owner. So if you have no money in the bank and no security to offer but you have a good spread of debtors, that pay reliably then this is what the factor will look at to assess your eligibility for funding.

The question of creditworthiness

To the Factor, the creditworthiness of the debtor is the biggest factor to consider before approving a funding line. When an application for factoring is made by the business owner, the lender first checks the applicant’s creditworthiness.

Negative information will not necessarily impact a client application for a funding line. However, it is always investigated.

What can impact the application is negative credit information on the debtors.

Risk management presents a constant and ongoing challenge for all factors no matter the size.   To ensure the factors interests are fully protected the debtor must be assessed for risk of non-payment. This does not need to be done repeatedly for the same debtor but every debtor needs to be assessed.  The process is thorough and there can sometimes be a gap between submitting a debtor for approval and funding the debtor’s invoice.

Factoring to the rescue

The factor will fund the underlying asset or invoice of the business owner at an agreed percentage of the invoice value.   This makes factoring an immensely useful tool for business owners who have just set up their company or those who are recovering from an economic downturn that has affected their cashflow.

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