Invoice factoring has been around, in some form or another, for centuries. It’s one of most tried and true forms of business financing out there.
Like all things in this day and age, technology has impacted the evolution of factoring. Businesses have begun to sprout up offering online auctions for a company’s receivables, where a business owner can post an invoice and have random investors buy it for a discount.
In theory that means an easy way to generate quick cash flow on an as-needed basis. Plenty of companies have tried these online factoring services, but some problems are beginning to surface. Problems that don’t happen when using a factor like Universal Funding.
When using an online auction-type factor, you never know who is buying your invoice. In fact, one invoice could be split between more than one investor. That may not seem like much a problem… until you consider that each invoice will be verified by the investor who buys it. That means your customers will be the ones bombarded with calls attempting to make sure the invoice is genuine. Do you want your customers dealing with the inconvenience and frustrations of that? That’s especially true if you do repeat business with the same customer over a long period of time. That customer is going to get awfully sick of fielding phone calls from different people every time you invoice them!
By factoring with Universal Funding, you still get a great rate and you get your cash just as fast. Plus, you always work with the same person and you know who is buying your invoices and can rest assured you and your customers will be treated with complete respect.
Unlike the auction sites, we are not a one-shot wonder factor. We build relationships with our clients and debtors and help businesses grow. We believe in and have adapted the latest technologies into our business, but one thing we’ll never stop doing is partnering with our clients and investing ourselves personally into their growth and success.
As our industry evolves, you can be sure our commitment to you and your business never changes.
Traditional bank financing just doesn’t move fast enough for companies that do business in the oil and gas industry.
Oilfield service companies often have all kinds of equipment to help in the production and transportation of energy. Power units, vacuum trucks, frac tanks and anchor trucks are just a sample of the machinery companies operate on a continual basis. Demand for that equipment continues to skyrocket, which means business is moving fast.
In fact, business moves so quickly in this industry that companies need to have financing in place that can expand as fast as new opportunities arise. When a company knows growth is coming, it needs a flexible credit facility available to meet its needs no matter how much the company has in revenues and expenses.
Relying on the slow pace of bank financing can mean missed opportunities for new business. Out on the field, that could mean equipment sitting idle; which means no money coming in.
Accounts receivable financing, though, offers the flexibility to quickly respond to new opportunities while providing a credit limit that keeps pace with a company’s growth. In short, it means the equipment keeps running and the cash keeps flowing.
Universal Funding can provide that flexible financing along with the peace of mind in knowing there are no worries about trying to figure out the next financial relationship. We also know that things change fast, and make sure our clients have access to their account rep whenever a need arises. Whether there’s an issue that needs solved or a new opportunity that requires more funds, that person is always available to help.
In the oil and gas industry, a company has to strike while the iron is hot. The potential cost of not taking on a next job or customer is huge, but we all know it takes money to make money. Universal Funding can supply that money, and a business owner can rest assured that the business will grow and the next opportunity will easily be within reach.
Invoice factoring helps many industries, including manufacturing
We all know the economy has been in the dump the last few years. And yes, that has made things considerably more difficult for many businesses. Things like getting bank loans, offering terms to customers and waiting longer to receive payments have wreaked havoc on many small and medium-sized businesses.
None of this is new. The stories have been told on blogs and finance sites and in newspapers over and over again.
Factoring companies, including Universal Funding, have stepped up and shown many businesses how accounts receivable financing can bridge the gap in a slow economy and keep the cash moving. But what about in an improved economy? Does invoice factoring still have a place when an economy is growing?
You better believe it.
In fact, factoring might even be of more benefit when the economy as a whole is growing. One of the top benefits of factoring is the opportunity to grow a business. This is possible because factoring makes cash turn over faster, meaning a business has the ability to take on more orders, purchase more supplies and hire more employees. It also gives business owners more time to focus on what they do best: make smart business decisions.
In a slow economy, a manufacturing company, for example, might factor its invoices to make up for extended terms it offers to its customers, or to make sure it can pay its suppliers and employees on time.
In a growing economy, that company might experience an increase in orders but not have the cash available to fill them. Invoice factoring helps businesses free up capital to fulfill those incoming orders, allowing the business to grow immediately alongside demand, rather than limiting growth as a business waits for invoices to be paid.
Whether the economy continues to stagnate or gains momentum remains to be seen. Whatever happens, factoring your invoices with Universal Funding can put you in the best position to succeed and grow.
Plenty of new and existing small businesses have benefited from invoice factoring.
Many companies take advantage of this fast cash funding source and continue to use the money for whatever purposes they wish. They’ve purchased new equipment, paid their vendors early, paid their employees on time, paid off crushing bank debt, invested in marketing, taken on new customers and more. Most importantly, they have lifted the burden of worrying about cash flow and eased the financial stress on their businesses.
But is factoring for all businesses?
No. Unfortunately, not all businesses qualify to benefit from invoice factoring. Universal Funding is proud to offer factoring services to B2B companies in industries we are well-versed in serving. Those include:
- Oil and energy
- Printing and publishing
- Staffing and temporary personnel
- Business service providers
- Transportation and trucking
- Wholesale and distributing
- Manufacturing and fabrication
We are also open to speaking with business owners who operate B2B companies in other industries. If you run a reputable business and work with credit-worthy customers, odds are good that we can secure financing to help you grow.
Invoice factoring can assist a lot of businesses with their finances, and getting approved is easier than the stringent requirements set by banks.
Invoice factoring is great for new and small businesses that aim to expand. This financing option allows you to receive payment on your invoices well in advance of the due date. There is no need to wait 30-90 days for the customer to pay the invoice. Simply put, you get your cash immediately and we play the waiting game with your customer.
If invoice factoring sounds like something you might be interested in, please contact us or simply fill out the Rate Inquiry Form on the left side of this page.
Like many companies, the economic downturn brought about a very slow period for a mid-size U.S. ad agency.
The recession hit many of the agency’s clients hard. Rather than the 30-day payment cycles the agency was used to, the A/R invoices weren’t being paid until 45-60 days out.
The delay in these payments started to cause some serious cash flow problems.
The company’s CEO didn’t want to lose any of his remaining 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, he was worried he might have to pay some of his bills with a personal credit card, which, for obvious reasons, he really did not want to do.
Luckily for this CEO, his brother ran a glass manufacturing company and had been factoring receivables for a few years in order to bridge the gap between invoicing and receiving payment from his customers.
It’s a good thing the brothers spoke before the ad man began charging up his personal credit card. A quick referral to Universal Funding Corporation fixed everything.
After speaking with a factoring specialist, the agency CEO filled out Universal’s quick one-page application and faxed it back, along with an A/R aging report and a sample invoice. That same day he had a
proposal in his inbox that detailed the amount that could be advanced on his A/R invoices and the rate that would be charged.
Three days later, Universal approved the agency for a factoring line of $75,000 per month, which consisted of an 85 percent advance and a 1.5 percent fee. (The agency received 98.5 percent of the face-value of each invoice).
The agency CEO 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 the agency could stay current on its payables and keep away from credit card debt.
Putting its receivables to work created a cash flow buffer through a difficult time and soon enough, business was back to usual.
Would your business benefit from having a factoring line?
The owner of InWest Printing, Inc. opened the doors for business in 2007 and learned quickly the “feast or famine” nature of cash flows in the printing industry.
Within the first year he had spent his start-up capital, but had managed to secure contracts to print all of the ER forms for many of the state’s hospitals. The future looked bright indeed, but the contract presented one glaring problem: a sudden and severe lack of cash.
As many printers know, printing carbonless quintuplicate ER admission forms is a complex and expensive process, so the company knew it 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 dropshipments and 70-day terms on 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 turned out to be $145K or so more than the company had available. Plus it wouldn’t see its first payment until 70 days after the first delivery. To keep the account, InWest needed cash and needed it fast.
When the bank declined the company’s loan application due to no collateral, no credit history, and very little time in business, 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 presses rolling.
InWest was able to fund its operations and print, store, and deliver the forms. It also was able to take on other jobs, all without having to wait for the hospitals to pay. The company had not borrowed the money, so it had no debt and no payments.
In short order, the company had a reliable cash flow and a successful future.
We’re in business to help businesses like yours grow. If you’d like to learn more about how we can help, please fill out and submit the Rate Inquiry Form on the left.
Like it or not, doing business with large companies usually means you have to offer 30-90-day terms.
Doing so offers small businesses a way to win, and retain, some potentially lucrative business contracts.
As a matter of fact, many large customers simply demand these payment terms as a condition of doing business. The problem, of course, is that waiting up to 90 days to get paid can wreak havoc on your company.
Unless you are exceptionally well capitalized, you will risk running into cash flow problems as a result of offering terms. You may risk missing supplier payments, being late on employee paychecks or missing out on marketing or growth opportunities. A few missed payments and your company can quickly go into an irreversible financial tail spin.
Even companies that are healthy on paper can enter a tailspin. The balance sheet might show plenty of money to take care of obligations, but if that money isn’t in the bank, it might as well not exist.
This is where Universal Funding can help. We can help solve this problem by factoring invoices, which significantly reduces the time it takes for you to collect your revenues. Factoring provides the working capital you need to meet current expenses, and the money you receive never has to be repaid. Also, your customers retain their payment terms and are not required to pay any faster.
Universal Funding’s invoice factoring programs can provide your company with financial stability which can be used as a platform for growth. Our factoring lines will increase with your growing sales, making them a flexible financing solution for growing companies.
There’s no reason a company should go into a financial tailspin, especially when Universal Funding is here to help.
Let’s say you own a company that has developed an all-new, incredibly cool device that combines a camera, GPS, phone and personal assistant into one super-convenient pocket-sized device.
Yes, it’s kind of like the iPhone, only better.
Your device works all the time, around the globe, without a wireless contract. It’s pure genius.