December 11th, 2009
This success scenario is Part Six of a six part series designed to illustrate how invoice factoring can sustain and grow businesses in various industries.
Factoring for Advertising/Marketing Company
In Part Six we will explore the positive impact of factoring, also referred to as accounts receivable financing, on a business in the Advertising/Marketing Industry. In previous posts we explored factoring scenarios in the following industries:
- Information Technology
- Printing / Publishing
- Wholesale / Distribution
- Manufacturing / Fabrication
- Staffing / Temporary Personnel
We hope you enjoy this series of factoring scenarios and learn how Universal Funding can improve your cash flow and ensure the growth of your business. For the purposes of this successful factoring scenario we will call our advertising/marketing company, Heiver & Associates.*
The economic downturn brought about a very slow period for Heiver & Associates*, an advertising and marketing company with 22 employees. As the recession brought hard times upon many of Heiver’s clients, rather than the 30 day payment cycles they were used to, the A/R invoices weren’t being paid until 45-60 days out. The delay in these payments was really starting to cause cash flow problems.
The company’s CEO, Don Heiver, didn’t want to lose any of his clients by putting too much pressure on them to pay sooner, but he had to do something. After cutting expenses as much as possible and even reducing his own salary, Mr. Heiver was worried he might have to pay some of his bills with a personal credit card, which he really did not want to do.
Mr. Heiver’s brother, who owns a glass manufacturing company, had been factoring receivables for a few years in order to bridge the gap between invoicing and receiving payment from his customers. Luckily, Mr. Heiver took some advice from his brother before charging up his credit card and found Universal Funding Corporation (UFC) on the internet.
After speaking with a factoring specialist, Mr. Heiver filled out UFC’s one-page application and faxed it back, along with an A/R aging report and a sample invoice. Within minutes, he had a proposal in his email inbox, detailing the amount that could be advanced on his A/R invoices and the rate that would be charged.
Three days later, UFC approved Heiver & Associates for a factoring line of $75,000** per month, which consisted of an 85% advance and a 1.5% discount rate (factoring fee). Mr. Heiver faxed over his first set of invoices that same day and had cash in his bank account the next.
Invoice factoring was able to speed up the payment process, so that Heiver & Associates could stay current on their payables and keep away from credit card debt. Putting their receivables to work for them created a cash flow buffer through a difficult time and soon enough, business was back to usual.
* Not actual name. Representation based upon a combination of general examples.
**All dollar amounts are approximate value.
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December 2nd, 2009
This success scenario is Part Five of a six part series designed to illustrate how invoice factoring can sustain and grow businesses in various industries.
Factoring for a Fabrication Company
In Part Five we will explore the positive impact of factoring, also referred to as accounts receivable financing, on a business in the Manufacturing/ Fabrication Industry. In the final post we will explore factoring scenarios in the Advertising / Communications Industry.
We hope you enjoy this series of factoring scenarios and learn how Universal Funding can improve your cash flow and ensure the growth of your business. For the purposes of this successful factoring scenario we will call our fabrication company, Smart Tool & Die.*
A personal bankruptcy resulting from a divorce a few years back made Robert Grieben*, owner of Smart Tool & Die*, not a good candidate for traditional bank financing. He had exhausted his options with credit cards and loans from friends, but the nature of his industry meant a lot of cash tied up in A/R for at least 45 days.
When his customers paid their invoices, Robert spent much of this cash repaying his debts. He just couldn’t get ahead and he couldn’t afford to shorten the credit terms with his valued customers. Good business was still coming in, but the cash was delayed to the point that at one time he had to ask his engineers to wait an extra week for their paychecks.
Robert didn’t want to turn down business or lay anyone off, and he had already cut costs as far as he could, but he had to do something to solve the cash flow problem. He searched on the internet for lenders who work with clients that have poor credit and found that their interest rates would ruin him completely.
He searched for angel investors and partners, but none of them wanted to invest in a company with such a cash short balance sheet and a principal with a bankruptcy. Finally, he searched the internet for business cash alternatives and found a solution he’d never even heard of before. Factoring accounts receivable would provide the immediate working capital he needed.
Universal Funding was able to approve Robert in two days, based upon his customer’s credit worthiness, and advanced him 80% of his A/R the very next day. Robert did not acquire any new debt and was able to meet his obligations with a smart decision to factor invoices.
After three and a half years of factoring, Smart Tool & Die has paid off all debt, expanded operations and moved into a larger facility. Even after the bankruptcy fell off his credit report, Robert vows never to borrow money again. He enjoys being debt free while growing his business.
* Not actual name. Representation based upon a combination of general examples.
**All dollar amounts are approximate value.
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Tags: accounts receivable, accounts receivable factoring, alternative finance, bank loan, business capital, business cash flow, business credit, business finance, business growth, business lines of credit, business loan, business loans, cash flow, cash flow finance, cash flow financing, cash management, factor invoices, factoring, factoring accounts receivable, factoring companies, factoring invoices, financing small business, invoice factoring, small business, small business advice, small business blogs, small business capital, small business cash flow, small business credit, small business funding, small business loan, small business loans, traditional small business financing, Working Capital
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November 20th, 2009
This success scenario is Part Four of a six part series designed to illustrate how invoice factoring can sustain and grow businesses in various industries.
Factoring for the Printing Industry
In Part Four we will explore the positive impact of factoring, also referred to as accounts receivable financing, on a business in the Printing Industry. In successive posts we will explore factoring scenarios in the following industries:
- Manufacturing / Fabrication
- Advertising / Communications
We hope you enjoy this series of factoring scenarios and learn how Universal Funding can improve your cash flow and ensure the growth of your business. For the purposes of this successful factoring scenario we will call our Printing company, InWest Printing, Inc.*
InWest Printing, Inc.* opened their doors for business in 1997 and learned quickly the “feast or famine” nature of cash flows in the printing industry. Within the first year they had spent their start-up capital, but had managed to secure contracts to print all of the ER forms for 92 state hospitals. The future looked very bright, but the present problem was a glaring lack of cash.
Printing carbonless quintuplicate ER admission forms was a complex and expensive process, so InWest knew they had to run as big of a batch as possible all at once. Adding another complication, the hospitals had no place to store pallets of forms, so they required monthly drop-shipments and 70 day terms for each invoice. Since the customer is always right, InWest agreed to the terms.
The cost to run the first one million ER forms was roughly $150K**, which was about $145K more than they had available, and they wouldn’t see their first payment until 70 days after the first delivery. InWest needed cash and needed it fast.
When the bank declined their loan application due to no collateral, no credit history, and very little time in business, luckily the banker suggested factoring receivables as an option. Universal Funding created a program consisting of a combination of accounts receivable factoring and purchase order funding that provided the cash necessary to get the paper rolling.
InWest was able to fund their operations; print, store, and deliver the forms; as well as take on other jobs, all without having to wait for the hospitals to pay. They had not borrowed the money, so they had no debt and no payments. Universal Funding had paid InWest’s suppliers and then did the waiting for their customer payments. Within two years this printing company was able to grow their profits to a point in which their cash flow was no longer dependent upon factoring.
* Not actual name. Representation based upon a combination of general examples.
**All dollar amounts are approximate value.
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November 12th, 2009
This success scenario is Part Three of a six part series designed to illustrate how invoice factoring can sustain and grow businesses in various industries.
Factoring for the Wholesale Industry
In Part Three we will explore the positive impact of factoring, also referred to as accounts receivable financing, on a business in the Wholesale Industry. In successive posts we will explore factoring scenarios in the following industries:
- Printing / Publishing
- Manufacturing / Fabrication
- Advertising / Communications
We hope you enjoy this series of factoring scenarios and learn how Universal Funding can improve your cash flow and ensure the growth of your business. For the purposes of this successful factoring scenario we will call our Wholesale company, J.J. .Jacobsen, LLC*.
J.J. Jacobsen, LLC* is a wholesaler of specialty gifts and souvenirs. Business was good for the first four years with monthly sales growing to the $80K range**, and then suddenly things got a whole lot better. That is, a major amusement park chain approached J.J. with a contract to stock all of their gift shops.
Even though J.J. knew he didn’t have the capital to fund monthly $165K orders, he needed this opportunity to grow his business to the next level. J.J. accepted the purchase order, and then began to scramble for whatever cash he could put together. His current cash flow just couldn’t support this large of an order.
He was able to come up with about $25K, but it wasn’t enough to order the products from his manufacturer in China, who didn’t offer payment terms. A colleague suggested factoring as a way to acquire the cash needed to fulfill the big order, which would surely result in enough profit to expand according to J.J.’s goals.
With nearly $90K in accounts receivable, J.J. was able to factor enough invoices to raise another $55K in cash and supply the order. That new contract increased his profits by 52% within a year, not to mention the fact that he is now equipped to handle larger scale orders from other big clients.
* Not actual name. Representation based upon a combination of general examples.
**All dollar amounts are approximate value.
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November 3rd, 2009
This success scenario is Part Two of a six part series designed to illustrate how invoice factoring can sustain and grow businesses in various industries.
Factoring for the Staffing Industry
In Part Two we will explore the positive impact of factoring, also referred to as accounts receivable financing, on a business in the Staffing Industry. In successive posts we will explore factoring scenarios in the following industries:
- Printing / Publishing
- Wholesale / Distribution
- Manufacturing / Fabrication
- Advertising / Communications
We hope you enjoy this series of factoring scenarios and learn how Universal Funding can improve your cash flow and ensure the growth of your business. For the purposes of this successful factoring scenario we will call our Staffing company, My People Corporation*
My People Corporation, a temporary staffing company that provides a wide variety of skilled personnel, saw a rare opportunity to significantly grow their business in a short period of time. Due to the downturn in the economy, My People guessed that many companies that had laid-off workers because of decreased revenues would still need staff to perform those jobs on a limited basis. Also, with the increase in layoffs, My People predicted they would see an influx of new employees registering for placement with their company.
My People had been paying their staffers biweekly for years, but wanted to gain a competitive edge over other staffing agencies in the area, so they decided to shorten their pay frequency. Within a few months, the predictions began to materialize and they started to experience a high demand for their services, as well as an increase in the personnel to meet that demand. Unfortunately, they lacked the working capital to pay new staffers on a weekly basis while waiting for clients to pay 30 day invoices. They needed a fast cash flow solution to make payroll.
>> Read on to see the solution My People found. >>
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