Why Factoring Finance Help To Generate Money and Improve Your Business

Saying that Factoring Finance Australia is a good way to generate more money would be an understatement. It is one of the best new ways to boost the financial status and it also doesn’t come with new debt or a long waiting period. Financing options for companies are dwindling down as we speak. This makes factoring finance much more useful than ever before. It might sound like a new idea, but its been here a while. And you know how it goes with great ideas, it usually takes time before we fully grasp their full potential.

With bank loans becoming harder to get, harder than ever some might say, factoring finance could be the next best thing since it can generate cash in as little as a day or two. This is accomplished by businesses being able to leverage their receivables for money, that might seem it came out of the blue. Previously you would need to wait a few months to get the money you need. But with this alternative, you can get it in a few days, or as long as it takes for all the invoices that the company sells to be repaid.

If you are running a small business, this is probably the best option for you. Bad credit rating is something plenty of small businesses have to face as their reality. This is especially the case for those who are just getting things started or are in business for a year or two. With this alternative method, they can easily collect all the cash they need. Bad credit scores can stop you from getting a loan from a bank, but with today’s financial market, banks should be considered as an option of a bygone era. Only every fifth or fourth small business, depending on the state you are in, can get a bank loan. And loans are always far more risky than this type of operation

In short, factoring finance allows you to sell what your customers own you before they even sell it. If you have an investor, or buyer who is ahead of the cure, who knows the potential of your company, this financing method will help both of you get things off the ground. The biggest plus, along with the small amount of time, is that you won’t take on any debt. The debt was a constant reality for business owners in the past, but in the time that we are living now, that reality is shifting for the good of business owners.

Comparison Of Invoice Discounting From Bank loan

When discussing the invoice discounting with referral partners and potential customers, they often try to compare the value of money by debiting with the cost of capital on bank loans. This comparison is not easy to make because the processes are very different. Here is an excellent way to explain the difference.

Creating Relations for invoice factoring is a quick and straightforward process. Funding can be done within one week after receiving the application. Compare this with the lengthy and often complicated process of obtaining a bank loan. Even in the best of times, you must provide the bank with a lot of historical information, answer any questions, and wait a long time for the approval of the Credit Committee. In the current chaos in the credit markets, requirements have become more stringent and complex. Factoring offers instant cash flow after establishing relationships, transferring funds to your bank account within 24 hours of receipt of bills.

Many factoring companies offer additional services that are not provided by banks. For example, if you want to add new customer accounts, the factoring company will provide you with a free credit check. The collection can be carried out by the staff of the factoring company professionally and politely, which leads to a decrease in bad debts. Reports are transmitted on time and continuously, helping the client to monitor the debt closely.

All factoring agencies will send the amount of money to the invoice company. Not every billing company is the same, so some will offer more generous terms than others. Therefore, the more the factoring agency wants to provide, the more the company sells accounts, the better. Globalization agencies will charge a fee for their services for taking over. With that in mind, make sure you have prepared a shortlist of potential globalization companies that you think might be useful for your needs, and then compare the taxes they all charge. From there, you can make a more informed decision about which company offers the best value for money in general.

Bank loans often require personal guarantees from business owners, and most of the time they have to make other guarantees. Globalized companies only need first place in business accounts. No personal guarantees are required, and no other assets are required. This arrangement not only provides the client with the working capital he needs. The amount that can be calculated is limited to the receivables group.

What is Debtor Finance and How Can It Grow Your Business?

The most common method of debtor financing is called Factoring. This involves a business selling their invoices to a factor”(a third party). These are usually sold at a severely discounted rate, as the factor is taking on the risk attached to the debts not being honored. It is a common method for distressed companies to maintain a healthy flow of cash, regardless of their industry or size.

One of the key terms to understand is financing without recourse. This refers to a finance company bearing the loss of unpaid debts, while recourse allows the finance company to pursue the company they provided the finance for any unpaid debts. Obviously “without recourse” offers much more favorable terms to business looking for finance.

Getting approval for debtor finance increases a business’s chance of recovering from their cash flow problems. Without this finance, they would not be able to maintain the day to day running of their business. Debtor financing can ensure that companies can get instant access to cash flow, instead of having to wait for it to drip in from their debtors.

In addition to receiving a much needed injection of cash, the business owner is also relieved of the burden of chasing unpaid invoices. This saves a lot of time and effort that can now be used to increase the profitability of the business. Getting debtor finance is also far easier and faster than obtaining a business loan.

Debtor financing is a fast and effective way to reach your short term financial goals. Keeping a positive cash balance frees business owners from a lot of unnecessary worry and stress.

There are many debtor finance specialist locally, they use their vast experience in many different industries to process your application as quickly and efficiently as possible. Most have the ability to approve your application and deposit up to 80% of the funds in your account within 24 hours of your application. Once again much faster than a business loan would ever be approved. The fact that most of these companies operate independently of the larger financial institutions means that they can operate free from the red tape. You no longer have to worry about the indignity of begging a Bank manager for the funds. Once you have good credit, getting debtor financing should be a straightforward process.

Why Invoice Financing is the Key to Your Business Success

Have you ever encountered a problem running your business especially When clients have not paid their invoices?

This is the most common problem encountered by businessmen. Most of them spend their time trying to track down payments from the client who have not yet paid the invoices. But guess what? Some give up and end up closing down the business. And so today here is a solution for you. Invoice financing is here to solve this problem by unlocking the cash that is tied invoice and consequently speeding up cash flow for your business. Invoice financing is also referred to as receivable finance or invoice discounting.

How it works

After providing your customers with goods and services, what follows is to invoice them, then the invoice details should be sent to the finance provider or the supplier for the invoice finance for business process. Following the formal business rule that states that the percentage of the product face value should be paid within 48 hours, or any given time frame, ( depending on the business or company rules) by the customer. The payments from you will be received, and you will find that it is less by the service fee detected by the supplier or finance provider.

Importance

Invoice financing gives the business owners the way to transform invoices into cash instantly and also helps them to avoid making awkward phone calls towards pushing clients to pay for debts. Apart from settling business owner worries about payments, there are other main importance of invoice financing to a company or an individual business. i.e.

• Company/ Business Gain No Additional Debts

The money issued to a business or a company is neither a Loan or a debt, but just cash in advance . and there will be no additional liability added to your balance sheet.

• Minimal Fee

The cost of financing fee is lower than the normal bank rates, micro-finance among other money lending institutions.

• Helps In Meeting Customers Demand

Invoice financing allows you to continually be in positions to meet your custom product or service demand through instant and fixed lines of credit.

• Office Support

Invoice Finance help support the business or company in pushing for Payments, handling billing, contacting clients about invoices and doing credit checks. This creates time for the staff to work on other issues and thus helping the company save time they used to do this job.

• Helps Customer Service Improvement

Invoice financing helps provide the business owners with a piece of mind to focus on customer service other than worrying about cash-flow.

However, the discovery of the invoice finance plan, most companies and businesses have experienced continuous business improvement and reliable service delivery to its customers, since financial constraints are no longer the obstacles to business success. Choose the invoice finance today and you will experience a great change on your way to success.

How can Invoice Finance Save Your Failing Business?

You find yourself in the same position many companies have in the past, but you have clients and active projects, but you have no cash. You have a list of successfully completed work, but all you have to show for your effort is a pile of invoices. This is of no consequence to your creditors, they expect to be paid today. Never mind the rest of your overheads that don’t just go away because you have cash flow problems. But getting a short term loan had proven difficult. But there is another solution available. Is your company in danger of failing?

Have you heard of invoice financing?

If you find yourself in the above situation all is not lost. Fortunately, some lenders are smart enough to know your pile of invoices aren’t worthless. But they certainly might be if you are forced to close your doors. They will analyze your invoices to see if they can be used as security against a loan. This will allow you to stay in operation until your debtors settle their accounts. Your business can continue to work and create additional streams of income, instead of grinding to a halt, due to circumstances outside of their control.

The lender will treat it as a collateralized loan, they might be willing to front you 80% to 90% of the cash. You will receive the balance once your customers pay their invoices. Minus the fees of course. these lenders recognize the fact that most successful businesses experience cash flow problems. This does not mean these companies will inevitably fail, most continue to grow, with the help of an invoice loan. These institutions also offer financial advice to businesses to help prevent this occurring again.

Lenders are more focused on the value of your invoices than the finances of the company. So regardless of your overall financial health, this avenue could be just the solution you need, there are other options available, but you might have a more difficult time qualifying for another type of finance.

If you are approved for cash flow finance for business, the next step is to change your business model to ensure you do not find yourself in this situation again. Gets some financial advice to ensure you have access to cash in the future. Talk to your customers about paying in a more prompt manner. Anything that prevents having to leverage invoices to keep your business afloat in the future.

What is Factoring and How Can It Improve Your Business?

Factoring can be defined as a process where a business sells its invoices to a factoring company and in return, it receives instant payment as a cash advance. Just for a small fee, the factoring company makes the debt follow-up and handles all the payment issues which are not yet settled, getting rid of all the difficulties associated with the administration of the invoice.

Factoring is very crucial to any small business as it can enhance the cash flow and promote the growth of the company as it ensures there is consistent flow of income and also guarantees that there are no monetary assets held up in invoices thereby providing quick access to funds which are meant for the business though they are yet to be paid by the debtors. Factoring is ideal for a start-up business and small companies.

How factoring can improve your business:

Invoice factoring ensures the businesses have quick access to cash flow, conveniently and is an excellent option to traditional means of financing. Factoring can improve your business in a variety of ways.

Improves cash flow and generates working capital quickly without incurring debts

Since it isn’t a loan, account receivable finance can aid you in accessing the funds you require quickly, with minimal credit requirements. This makes it possible to secure working capital without damaging your credit, without accruing debt or negatively affecting your credit rating. Securing a loan from other financial institutions such as banks will impair your credit score which can make it difficult for you to secure loans from any other institution.

Factoring can better your credit

As a result of increased cash flow you have realized through factoring, you can better your credit score as well as the credit ranking.

Since you can factor your receivables and have huge amounts of money quickly, you are well placed to settle the debts from other companies which may have extended you credit on time. This enables you to strengthen your relationship with your other creditors.

Paying your debts or bills on time is one of the ways of improving your credit score and not exploiting all the available credit. If you can follow these two things consistently then you will boost your credit score and this will help to qualify for huge amounts.

Factoring enhances your credibility

When you decide to partner with an invoice factoring company, paying bills on a timely manner cannot only improve your credit score but also enhance your credibility. Settling your bills on time helps to strengthen your relationship with the companies you acquire goods and services that your business requires. Contractors and vendors tend to build trust with businesses that settle their bills on time and this may lead to an extension of their credit. 

What are the Benefits of Factoring and How to Apply for it?

Factoring allows companies to obtain the repayment of their receivables without waiting for the payment periods to lapse. How do the methods of financing and debt collection actually work? What are the benefits for the company?

Factoring is aimed at all companies, although SMEs use this technique for generally smaller amounts than large groups. This market allows a company to receive an advance payment of an invoice by assigning it to a financial institution named “factor”. From an accounting point of view, this method is therefore for the company to take invoices receivables from its balance sheet to turn them into cash.

This method of financing can take many forms. Classical factoring involves the company giving up its invoices to the factor in return for immediate financing. It is particularly suitable for small structures. This financing technique, therefore, has several advantages over the discount that is not available to start-up companies, but also in relation to bank overdraft or securitization.

There are other less known forms. Among them is unmanaged notified factoring, which is more relevant to companies with a significant turnover. In this case, the structure transfers the notified receivables to the financial institution but is responsible for internally relaunching and collecting the customer invoices. The advantages for the company are numerous: the ability to control the customer relationship from A to Z, benefit from a cash advance or maintain certain transparency with customers.

Then, confidential factoring allows a company to maintain the management of the receivables while the regulations are financed by the factor. However, in this situation, customers are unaware of the existence of a contract between the company and the factor. In the case of reverse factoring, the company mandates the factor to pay its suppliers in its place which allows it to benefit from a commercial discount and pay it at the normal expiry date. Finally, factoring import-export concerns companies that develop internationally with a similar operation to conventional factoring. This last technique allows the company to outsource the management of the international customer, to consolidate and secure its orders.

HOW DOES FACTORING WORK?

The factoring contract is based on a tripartite relationship between the supplier, the factor and the customers. More concretely, it works as follows: the company that subscribes to the factoring contract sells products or services to its customer and then sells the invoice to the factor who becomes the owner. The latter makes a cash advance to the company and finances it in a timely manner. The customer of the company at the origin of the factoring contract must pay his invoice directly to the factor.

The factor takes care of the recovery of the invoices. In the case of unpaid bills and depending on the nature of the contract, the latter may assume the losses or claim the amounts due to the company. The credit institution can also offer a credit insurance contract to guarantee payments. By
subscribing to credit insurance, the company secures its receivables, guarantees its receipts and can obtain financial information on its partners.

WHY CHOOSE FACTORING?

Factoring has several advantages for the company. It is first and foremost a financing tool that enables it to improve the management of its operating cycle by ensuring the rapid settlement of its receivables. This helps to increase the company’s cash flow and reduce the need for working capital. Indeed, cash is a key element since it is used to pay salaries and suppliers. Thanks to this operation, the company does not need to resort to the bank loan.

Then, this technique allows the structures to lighten their administrative burden because it is the factor that ensures the functions of monitoring and recovery of invoices. By delegating these tasks, the company reduces its financial costs and saves valuable time.

Another advantage related to the use of factoring deserves to be emphasized: the elimination of the risk of unpaid bills. The factor can offer its client credit insurance that guarantees up to 100% of the
purchased receivables. The factoring company Credit Agricol leasing Factoring offers, for example, a complete solution to companies to optimize the management of their receivables and allow them to benefit from the financing of the invoices transferred, the management of settlements and the recovery of receivables as well as credit insurance to guard against the insolvency of their clients.

Factoring, however, has certain limitations to be known among which include the lack of flexibility of certain factors and the cost of this service. Thus, the establishment of such a contract requires to study in advance the additional costs that it generates for the company. It may be wise to compare offers from several companies to get the most out of this technical product.

Save Your Business With Debtor Finance

Invoice debtor finance is a form of financing through which a business can obtain fund to run its operations against an invoice whose payment has not yet fallen due. It is a common form of financing among small and middle-sized business startups. It is one of the most preferred forms of financing as it is relatively easy to obtain money against these financial instruments.

It is common in those business entities that extend 30 or 60-day payment terms to their debtors after supplying goods but cannot wait until term lapses. It is common for those businesses that do not have steady cashflows or business reserves to cater for the period that you will have to wait. Since there are those financial obligations that the business has to meet between supplying the goods or products and receiving the payment, as an owner, you will have to find ways to meet these obligations, hence invoice debtor finance.

Can it save the business?

Invoice debtor financing can act as a lifesaver for your business when you hard-pressed for cash. With the 30 or 60-day delay period, most areas fo the business can suffer especially when you do not have any other source of income. If your business has a tight cash flow, you might not be able to bid for more jobs as you won’t have the money to service the contracts. This may lead to delayed contracts which will adversely affect your relationship with your business partners which will greatly impair your chances of future contracts.

If you are however able to free some money from the already completed projects, you will be able to bid for more work and deliver in time. With time, you will be liquid enough that you will not need to take the debtor invoice finance to facilitate your contracts. The beauty about these financing is that the risk of losing money is quite low since most of the debtors will pay once the period lapses. This means that you can accrue some obligations to be settled once you receive your pay.

From these illustrations it is clear that invoice debtor finance can save your business is well utilized. The most important thing is to ensure that you take it with the organization with the most favorable terms. Again, when choosing the organizations to supply to, ensure to get the ones with the least possibility of default as this will avoiding creating unnecessary risk to you and your financier.

Common Causes of Cashflow Problems

Proper cash flow is the goal of all entrepreneurs. This is the key to growth and a good continuation of business cash flow is the flow of working capital finance and expenses within the enterprise… Cash flow provides the fuel you need to pay for your small business. Cash flow problems can lead to a disrupted business structure, an important indicator of declining business.

Here are some of the common causes of cash flow problems:

You have a lot of debtors:
Many businesses today offer their customers credit so that their customers can offer products and services immediately even if they do not have the cash available to them. Credit sales have a direct impact on cash flow, especially when customers cannot pay in the agreed time. The loss of time to pay by customers, especially when they are forced to pay a large sum, makes you get little money.

You have too many creditors:
Having too many creditors can mean that your business has a large amount of debt to repay. This is especially catastrophic for cash flow when your business is ineffective, you have very limited cash reserves, and your creditors already require payment. Late payments may increase rapidly, making it more difficult to pay the outstanding amounts. Delay in payments can also affect your relationship with creditors and may lead to other problems, such as lower credit terms and premium rates.

Over-financing your business: Borrowing large amounts of money for your business can lead to additional charges, such as interest, and may require a shorter repayment plan. If you are not afraid of raising your debt, you can control your company. The more money you earn, the more difficult your borrowing terms will be, usually at a higher interest rate. Loans often delay the future crisis of cash flows, which may be worse than the crisis they are currently facing.

Failure to Leverage Factoring or Inventory Financing: Failure to use this financing solution when producing a product or service for a customer can result in a short-term cash flow problem. Think about using factoring to request a customer or inventory to buy the stock needed to create a product or service to help the company’s cash flow problem in the short term.

Excessive investment:
Excessive investments, such as excessive trading volume, can cause negative cash flows. Businesses with sufficient resources may be tempted to purchase non-priority assets. This can, of course, lead to business failures, because existing funds, which should be available to fund day-to-day operations and any unforeseen expenses, are related to the asset purchased. Alternatively, assets such as cars and buildings can be rented to provide more funds.

Effective planning of Working capital finance is of great importance to the business to avoid other problems. To solve the cash flow problems your business and face, you can also use the services of a business restructuring expert to help you plan and manage your money efficiently.

How to Improve Your Business Cashflow

Cash flow can make or break a business, but many small business owners do not do everything in their power to maximise it, and the result is loss of opportunity and stress for the company and the owner. On the other hand, there are some simple steps that can be taken to drastically improve business cash flow, which will also improve business management, i.e. use globalisation and how it can be used effectively to help the corporate cash flow. Here are some tips to improve your business cash flow:

Develop good terms and conditions:
Having good conditions is not only a good business practice for large businesses. It is a very good practice for small business owners to make sure that their clients know when (and how) they expect to pay. Be sure to include items related to late payment and interest, and that debt collection costs will be transferred to the customer. I had many customers who thought they could transfer the fees to the debt collection agency only to see that they had to absorb these costs themselves because they did not recognize their customers.

Perform credit checks on potential customers or customers who do not pay in cash.

Many small businesses deal with any business they can acquire and make credit checks only when problems arise. It is often too late to check for problems. It may be better for your company in the long term to reject the customer immediately if he or she has a bad credit record, free payment or fixed arrears. Fee payers are often troublesome customers. These are usually backward, and it is usually impossible to satisfy and find any reason or justification for choosing errors in the company, and draining resources as they do.

Factoring finance:
If you are a small company that is just starting, it is very important that payments for sales are made at a regular rate. There are cases when payments are so heavily supported that the company is very close to bankruptcy. Cash flows from the company occur at a normal rate because the services provided to produce goods cannot be stopped. So outgoing money and no money cannot lead to serious problems. In cases like these, there is another real option that companies can use. This option is called Factoring Finance. Factoring companies usually buy pending invoices from these companies at a reduced price and charge the full fee from customers at a later date. It helps both the company and companies. From the company’s point of view there is no need to sell the product, just buy an invoice at a lower price and get the full amount. The difference leads to profit.


Forecast your business’s cash flow:
Many businesses spend a lot of time planning, budgeting, analyzing sales, overhead, profit and loss, and balance sheets, but they can forget cash flow. Get a good accountant. At a minimum, make a monthly plan and if it seems you can be a little tight, set up weekly or even daily forecasts. Develop a business plan for your money – if you look at how you can pass some payments, or talk to a factoring company to see how they can help.