Introduction to Business Accounts Receivable Financing Companies

For as long as there will be businesses who need money, there will always be accounts receivable financing companies competing for the business’ receivables.

Before I get into the three helpful receivable financing companies out there, let me shed some light on why there are so many companies offering factoring services out there. All businesses, no matter what kind or in what industry, need money to sustain day to day operations and grow.

While that will always be the case, it will also always be the case that money will remain the most scarce resource. It doesn’t grow on trees after all. It is because of that scarcity that business accounts receivable financing has become a widely offered practice.

If you want to know more about what is receivable financing, I suggest you read my article on that topic. In this article, I plan on writing about how factoring exactly works from the factoring company’s perspective.

How does the Accounts Receivable Financing process work?

As a business, you first have to put together a list of all the invoices that are owed to you by your customers and clients. Factoring companies typically require that these invoices are signed by the customer, along with some other customer information which depends on the factoring company’s guidelines.

This list is then sent to the factoring company, who conducts their own background checks on your customers to evaluate their risk. In other words, they are interested in the credit worthiness of your clients and customers.

Based on their research, they will either accept or deny your invoices. If they accept to take the invoices, they will decide what rate to charge you and how much money they can advance to you.

The company then goes through the individual invoices and notifies your customers that they have taken over the invoice. The notification informs your customers to pay them directly instead of paying your business.

It can take up to a week to get your advance (money) from the factoring company, although once a relationship is established it can take as less as 24 hours. Payments can be via paper check or direct deposit ACH which is a more common way of doing business now.

How much are you paid by the factoring company?

You will be paid the face amount (receivable balance) minus the discount rate, or the percentage that the company charges you for their services.

The first payment is usually up to 90% of what the company owes you, and once they collect from your customers, you will be paid the rest of the amount net of all the fees and charges. These fees are generally between 1% to 5%, though more commonly in the 3% to 4% range in my experience.

What are some good Receivable Financing Companies?

I can only speak from my experience based on the companies I have researched, tried and tested over the years. I have been an entrepreneur for a few years now, and I resorted to business accounts receivable financing first when I was denied loans by the banks and the SBA.

The following companies provided me with quality accounts receivable financing services when I first started out.

  • – JD Financial
  • – BTB Capital – Greg de Vries over at BTB knows this business inside out
  • – ACA – American Capital Advance

What Does A Politically Incorrect View of the Job Outlook Imply For Your Business?

Just when you thought the world was getting back to some form of normal, the economy changed again. And it looks like turbulent and roller coaster economic volatility is still here for the next few years.

For business that has to make decisions with mid-term and long-term effect, you want real information, not the recalibrated type oriented for immediate voter appeal. If so, you may benefit from mining the information in the article by best-selling author and financial advisor John Mauldin in the periodical Business Insider titled It is All About The Jobs — And Gold.

He suggests job statistics are worse than Washington wants to admit. As one example of a series of somewhat mundane sounding statistics, economic interpretations and risk management points, he refers to the fact that recent data keeps getting revised downward after being released.

Why does such a mundane sounding issue as changing prior month job data impact your business model decisions? This matters to you because (a) the optimistic spin goes out with pats on the back so you will move forward optimistically in your business tactics and strategy, (b) the revision downward gets a footnote after the fact, which is normally ignored, and (c) by revising the numbers downward after their initial release, it is easier to describe job changes in a later month as an improvement. So the short-term oriented government proclaims how well they are doing to help business and you have the wrong feel for the economic outlook.

If you are concerned about the possibility of whether or not, the economy could encounter a second downturn, even recession, think about this. His implication seems to be that we are teetering on a double dip recession, when there is such potential for upside if the administration and government were less anti-business on regulations and costs.

In spite of all these concerns, you have to make the business decisions today needed to run your business and life.

Should you hunker down to conserve cash and go more fiscally prudent in your company or view this as a strategic opportunity to be optimistic?

Every person’s situation, particularly their cash resources, is different. For those fortunate few with adequate to great access to financing, you might remember the concept that the time to make business decisions is to keep you head when others are losing theirs. Of course, keeping your head means looking at your industry and business opportunities truthfully and from an independent outside perspective. Those less fortunate in their current balance sheet position and future cash flow projections might consider how to move into the resource richer status to be able to take advantage of opportunities in this new turbulent world.

7 Simple Tips for Starting a Business

Our son was just nine years old when he started his business, Pencil Bugs. It was a great learning experience for all of us and he had some amazing experiences along the way including publishing his first book. However, in 2011 at the ripe old age of sixteen, he decided he wanted to move on to other things so Pencil Bugs officially became extinct and he retired from his business.

Over the years, we have continued to receive emails from kids and parents wanting to know about entrepreneurship. Typical questions have been: How do I start? Where can I get help? How much money will I need? How do I decide what type of business to start?

Regardless of your age, there are basic tips that every entrepreneur should know. However, this is certainly not an all-inclusive list.

  1. Write it down. As soon as you get an idea, document EVERYTHING in a journal and date your entries. You may be need this to help prove that an idea was yours before someone else’s. Make sure the journal is a glue-bound type. If you use a 3-ring binder, for example where pages can be added, there could be a question whether you added in new pages after the fact to support your claim.
  2. Keep it simple. Sometimes the best ideas are those that make other people slap their forehead and say, “Why didn’t I think of that?”
  3. Find your passion. There are many opportunities for entrepreneurs so you might as well do something that interests you. People are usually more successful if they enjoy what they’re doing.
  4. Do your homework. Researching your potential business inside and out before you jump in with both feet is a lot like a school assignment. If you try to answer the questions at the end of the chapter before you read the text, you won’t have the whole picture. Also, check out the competition. The more you know, the better your decision.
  5. Business plan or not? While it’s absolutely essential to have some idea of the direction you want to go, it’s not always necessary to write a formal business plan. However, if you are looking for outside investors, most likely someone will want to see a well thought-out plan.
  6. Don’t overspend. Many businesses fail because they spend too much too soon. There are a lot of ways to be frugal, especially in the beginning. From free advertising and marketing strategies to the DIY approach, you don’t need to go broke trying to start your business.
  7. Have patience. While it may seem like someone hits it big with a product or service, success doesn’t happen overnight. It usually takes years to put all of the pieces in place. It’s okay to start out small and build sensibly as you go.

With Internet today, we all have unlimited resources at our fingertips. There are endless webinars, videos, and articles that can be accessed for free and much of that information is just as good as what you would have to pay for. Wherever you find your information, take time to learn from those who have been there, done that, and are still doing it successfully.

Entrepreneurship is growing strong as people want to have more control over their future and not rely on companies to give them a paycheck. The support and resources are out there for entrepreneurs but you need to take the first step and be willing to do what it takes to go from just having an idea to turning it into a successful business.

Small Scale Business: Still Potentially Big Bucks In the Right Hands

There is a small town in a Midwestern state. It is not a busy, bustling metropolis by any stretch of the imagination but there are a few franchises of nationally known companies. And in this town, there are also other businesses, including a few that are mid sized and some that are much smaller. There is a small scale business inside of this town that at first blush would not be all that impressive but a glance at the woman’s books might change your mind. While hers is a much smaller business by size than the others in that immediate area, she is actually making much bigger profits. There are several reasons why this is true.

The People in the Small Scale Business

One of the major reasons that a small scale business might be highly profitable despite its size is the people that are involved. They care more about the customers because every single customer lost can be the last. A huge company can anger and outrage a small percentage of their customers and still turn a profit but a small scale business cannot. Because they are so small, they know each other well and it shows. They know their customers, if not by name right away, by preference. The business from before is that way: the owner is a smiling, pleasant and very knowledgeable person, she knows a little bit about every single item in her lovely shop and she knows what each person has bought in the past and what she might be able to show them now.

The Items that a Small Scale Business Has to Offer

In a huge market, there can be a wide range of items, but not a lot of selection within each category. It is an ironic contradiction in terms that can be very frustrating when you are looking for a certain type of item. On the other hand, the small scale business will not have everything that you could possibly want but may specialize in one or two types of things instead, giving your far more options in that category. In our example company, the main focus is on jewelry and organic spices and fragrances- every scent of incense in pretty jars line the bigger part of one wall and the hand made jewelry sparkles and glistens in design cases. She can tell you about the scents or the stones that she is selling, the perfect working model of what makes a small scale business the perfect reprieve from cookie cutter, bland and boring, big box retail stores.