Invoice Funding: A Popular Choice For Small Business Financing Needs

Posted by on October 24, 2011 in | Comments Off on Invoice Funding: A Popular Choice For Small Business Financing Needs

Invoice funding has become a popular way for small-business to meet their financing needs. As small businesses feel the credit crunch, they are opting for alternative ways to fund their growth and sometimes, simply to pay their bills. Since the recession, banks are less apt to loan out money especially to those that aren’t a great credit risk.  This often means that even companies with good and decent credit will find it hard to raise the capital they need through debt. Invoice funding, also known as invoice financing, is quickly becoming the go-to method in some industries. This is especially true for small businesses. Small businesses were amongst the hardest hit in recession, not only did sales drop but they had (and continue to have) the worse chance of being eligible for a bank loan. It was difficult prior to the recession and now it is almost impossible to get a loan. Invoice funding allows small businesses to receive cash based on work they had already completed and not rely on banks. A company that bills their customers will complete jobs and then get paid afterwards. It may take up to 90 days to see any money from a job that has been finished and paid for.  This means that these companies have to come up with operating capital to pay workers and also for any materials that were necessary to do the work, from their own resources. For a small-business this can be very draining.  In fact, it can even be difficult for larger businesses. However, typically big companies often have so many clients that they may have more cash on hand.  Also, even if they find that they need money, they can apply for loan and have a better chance of securing one because they likely have more assets and have been in business longer. A small-business does not have any of these advantages, at least not in many cases. Invoice funding allows small businesses to sell their invoices to a factoring company. This is a way for them to make money from jobs already completed much sooner then they would otherwise.  In fact, the factoring process from beginning to end can happen  as fast as three days but may take a little longer if this a company is involved in the process for the first time. This is because they will have to set up an account and hand over either their customer’s credit applications or information. This is because if a company’s customers have bad credit, it may be difficult to attract a factor. While it is not necessary for the company itself to have good credit, the people that owe them money must have. The factor will pay for the invoices at a discounted rate, somewhere between 80-90%.  They will then collect these monies, return them to the original owner of the invoices and then subtract their fee. The process can be very easy and can be...

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How to Get Working Capital With Invoice Funding

Posted by on October 24, 2011 in | Comments Off on How to Get Working Capital With Invoice Funding

For many businesses, generating enough working capital to keep things running can be a challenge. When the company invoices their clients, they may have to wait up to 90 days before they receive payment for goods or services they have already delivered. While this may be convenient for customers, it can put much stress on a business’s cash flow. Companies are forced to wait before they receive money they have already earned. Meanwhile, business must carry on as usual. There are bills and employees to be paid and supplies to be purchased. These things must be handled even if their customers have not yet paid a business. For many companies, dealing with this can be a great challenge. For some, it may even cost them their business. Many rely on debt to infuse cash into their coffers so they can continue to operate, though this is not always necessary. One excellent alternative that many companies either do not know about or fail to utilize is invoice funding. Invoice funding is rather simple. A company sells their invoices or receivables to a factor. This factor will purchase them at a discounted rate, generally between 70% – 90% of their full value. This money is paid in cash and can be used for whatever the business needs it for. The factoring company then collects on the invoices, returning the money to the business they purchased them from, minus a fee. This allows the company who sold the invoices to generate the capital they need to operate or even grow their business without assuming a bank loan. While debt can be an effective way for a company to raise money, it is not always the best or safest. Anytime a person takes out a loan; they put their business at risk if they are not able to pay it back. Debt can put a company under a tremendous amount of stress, because if they are not able to pay back what they owe, they may have to return property they purchased with debt or even be forced out of business. Invoice funding leverages work that a company has already done. By selling their invoices, it is no longer necessary to take out a business loan. Business loans can be difficult to qualify for, and they are nearly impossible to obtain if a company has not been operating for very long, or if their credit is not very good. Invoice funding also tends to be much cheaper than a loan. Most factors charge between 1% and 3%. The final amount is dependent upon a number of things, mostly the creditworthiness of customers and the due date on the invoice. An invoice due in 15 days will be cheaper than one due in 60...

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Milwaukee Wisconsin Midwest Telecom Contractor – Invoice Funding

Posted by on October 17, 2011 in Cable Sales, Success Stories | 0 comments

Paragon Financial Group, Inc. is glad to announce successful invoice funding for a startup door-to-door cable sales contractor headquartered in Milwaukee, Wisconsin. The company provides door-to-door marketing for cable sales to residential customers through a nationally recognized cable service provider.  Plans are to open at least two more offices adding additional representatives to serve the entire Midwest.

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