How can Receivables Finance Gives You Working Capital For Business

If you are currently experiencing financial setbacks, remember that there is a solution to your business problem. And that is not to close down and add loans to your existing flooding debts. You have to be resourceful and think of other ways how you can add funds to your cash account. Ever heard of receivables finance? That’s right, you can use your accounts receivables to get cash and solve your financial struggles.

Receivable financing is a method of getting funds for your business by means of selling your accounts receivable. It is where you find a factor that can buy your accounts for a discounted amount. Most of the time, you will get 90-95% of the total amount of your accounts receivables. You will also spend additional for factoring fees. But, compared to the amount you are going to receive, the discount and fees are worth it to spend.

Working capital, on the other hand, is the money you need t use to survive the day-to-day activities of your business. It can be computed using your current assets and your current liabilities. Let’s not focus on the equation. You need this capital in order to get your business going. So, how can receivables finance help you get your working capital?

First, receivables finance gives you the amount of cash you need. If you are short on cash and you need actual money to buy your inventories or pay your existing liabilities, you can rely on receivable financing. Your accounts receivable will be converted into cash that you can utilize for your everyday business activities.

Also, receivables finance allows you to reduce your current liabilities if that’s the main purpose of your sale. Some debts are not meant to be long overdue. You have to pay your loans in order to get a good credit standing so banks and financial companies can lend you money in the future. With receivables financing, you can now pay your creditors without applying for a new loan. Remember that it’s never a solution to pay a loan for another loan.

Receivables finance serves as your cash cow. Although it is opposed to the substance of your accounts receivables, the method of converting your accounts into cash can be your only way to get a good amount of working capital. It’s really a good thing that factors exist to give you a chance of survival. Without this method, you will only push your business to its limit.

Why Account Receivable Financing is Useful

There are many benefits to Account Receivable Financing. Companies that need a lot of capital pressure to find a better or faster option. This funding is independent of corporate credit or time spent at work. As long as the company has customers with good credit and unpaid bills, debt financing is a viable option for commercial financing. Below, we will analyze in more detail only some of the many benefits of generating capital in this way.

Fast money

Account Receivable Financing is a great way to get money quickly. Most factors can ensure payment of bills within 24 hours. Initially, this process may take longer. However, as soon as the company establishes relations with the employee, the process takes place quickly. If a company does not have an open credit line, it is difficult to come up with a faster way to increase commercial capital. Even in cases where a credit line is used, the company is required to pay interest, which can be very expensive. There are no such costs associated with debt financing.

Easy Money

Account Receivable Financing is a small amount. When a company wants to get a bank loan, you should be prepared to jump through circles. You will need to have all the financial documents in order. For a small business, this may require a nasty trip to an accountant. They should also be prepared to answer any questions the bank has. If they cannot do this satisfactorily, they will not be eligible for a loan. In addition, many banks will not give money to new companies, it is often those companies that need them most.

A business credit rating does not matter.

If the company has the opportunity to get a bank loan, you should get a good credit rating. In this day and age, you may need an excellent credit history, without defaults. Fortunately, companies that use debt financing do not have to worry about this. The factoring company takes care of the credit history of the customers who are billed, and then the company that stores these accounts because they will receive money from them.

Today, obtaining bank financing has become more difficult than in the past. Banks do not want to give up their money now. They reject loan applications from good credit companies that have been operating for a long time. Commercial financing becomes more difficult than ever, but not in every way. Account Receivable Financing is a very easy way to make money. As long as the company has outstanding bills held by customers with good credit, they may be eligible to receive funds.

Invoice Factoring Mistakes to Avoid

It can be a miserable experience as you are waiting for a long time for your customers to pay. This could even be a serious problem for the cash flow of your business. But the good news is that invoice factoring is a good option, as it will provide you with the opportunity to receive a cash advance in regard to invoices that are not yet paid. However, it is to be noted that this system does have some complexities. Therefore, it is important to be aware of key mistakes to be careful to avoid.

1. Not being informed of the fees in the fine print

It is important to read the fine print regarding the fees pertaining to the issue of invoice factoring. This means that you need to check if there are any additional fees above the factor rate. When you decide to use invoice factoring, you, in essence, are selling the invoices that are unpaid for a discounted rate to the factoring company which will provide you with a cash payment instantly.

2. Payments that are misdirected

It can take a while to comprehend how factoring functions. As a result, an error that tends to be prevalent frequently is the fact of payments being misdirected. In other words, the business receives payments that really should be directed to the company that is providing the factoring service. When you choose to use a factoring service, it is necessary to designate the setting up of a new bank account in order to ensure the redirection of payments to the company that is providing the factoring service. It is necessary to inform customers which account they are to make their payments to. If there is a mix up in payments going to the wrong account, the company that is providing factoring service may charge you some extra hefty fees for such mishaps.

3. Purchase orders that are submitted

It is wrong to submit a purchase order to the company that is providing the factoring service. This is due to the fact that a purchase order is not an invoice. Purchase orders only show a representation of products and services that have not yet been provided to the customers. A purchase order is only a sort of commitment to buy particular products or services, but no payment has yet been made for the item. Therefore, not revenue is yet owed, which is why the purchase order cannot be processed by the company that is providing the factoring service.

POST HOLIDAY CASHFLOW SOLUTIONS

How to deal with the “out of office” phenomenon and a slow start to the new year…

One of the major downsides that comes with dealing with a lot of small businesses is the waiting game that business owners are forced to play every January. Many entrepreneurs take an extended period off work at this time leaving you with nothing but a “gone fishing” sign and unpaid invoices.

Not only is it frustrating having to wait weeks for invoices to be paid but it can often mean that January is a write-off in terms of business growth. Thankfully, invoice factoring services like the one that Nova Business Finance offers are available to small business owners who can’t afford to wait for their payees to get a tan.

How does it work? At Nova we have a range of finance and factoring options that can help small businesses during this time whether they need quick cash to keep them going or they are looking for a more stable cash flow that will help their business grow.

Invoice factoring
This is for those of you who are waiting on payments from clients who are either still on holidays or are just having a slow start to the new year. We understand that waiting on invoices to be paid can impact on a business in many ways and cause so much unnecessary stress, particularly at this time of year when so many of us are facing the financial hangover from Christmas.

Invoice factoring can help your business meet payroll, take advantage of supplier discounts and provide capital to purchase new equipment. We do this by advancing 80% of the invoice value to you within 24 hours of approval and allowing you to pay this back with fees when you are paid by the client. Nova is able to provide this service on an “as needed” basis for those of you that only require funds advanced for a short amount of time or for a few clients. However, most businesses find it extremely helpful to use our “full ledger” service which means that we advance on all invoices all the time and provides stable cash flow for your business year round.

In addition, invoice factoring can be used to finance a start-up. At Nova we know that the beginning of a new year can signal a period of hope for the ambitious among us and can be a great time to focus on growing a new business. By using invoice factoring you don’t need to put a crazy amount of capital on the line like you do with a bank. In fact, if you have an invoice that we can advance on we can help you!

Assistance in credit collections
Unfortunately, for some businesses the slow holiday period is not the only reason that they are waiting on invoices to be paid. In fact, sometimes as small business owners we are forced to chase those who owe us money. This can get to a point where outside assistance is required because it can be a drain on the resources of business to continue this follow up and it can create unwanted hostility. Go into the new year with no old invoices waiting to be paid by letting Nova help you retrieve what you are rightfully owed.

Contact us now to become a part of the Nova family!

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.