- Dealing With Cash Flow Issues for Businesses of Any Size May 26th, 2015 4:06 pm
Despite the size of your business, you may run into cash flow problems at any time. Whether the issue is a slow market or something internal, there are several ways for any business to address cash flow problems. When you can’t pay your invoices to keep your business running and you don’t want to delay your payments, you may benefit from reducing your expenses, obtaining short term business funding or moving to a receivable factoring system.
Reducing Your Expenses
The first step to meeting your cash flow needs is to reduce your expenses as much as possible. Look closely at any personal or business costs that can be cut out each month to help you meet your budgeting requirements.
Trimming the fat allows you to collect more profit and provides positive returns in the long run. One example is your marketing and advertising funds. Look closely at your strategy and campaign to determine if the money you are spending is drawing business in or if it’s being wasted. The more effective your spending is, the more profits you can collect for your business.
Look at Short Term Business Financing
If you are only dealing with a short term cash problem, you may benefit from looking into some type of short term business loan. If you are concerned about your cash flow, getting into a loan in the time frame you need may prove difficult. If you do get a loan and miss payments, you may have a harder time getting a loan in the future when the need arises.
Sell Your Invoices
Your third and easiest option is to sell your invoices to a third party company like Universal Funding. This allows you to cut out the lengthy process of applying for a loan, and also allows you to keep your current spending at a consistent level. Invoice factoring allows you to keep your cash liquid, rather than tying it up in invoices with terms that extend past 10 days. When revenues are tied up in unpaid invoices , itmakes it difficult to meet your cash needs each month.
Optimal Solutions for Businesses
If you need to free up cash for your business but don’t want to spend the time getting a loan or going over your monthly budget, visit our rate form today to learn more about how you can free up cash without missing payments and deadlines.
- Why Use a Receivable Factoring Company Instead of a Traditional Lender? May 21st, 2015 4:13 pm
Factoring receivables is getting increased attention in the business world. Articles and blogs are explaining the benefits of the factoring option for companies that need to bolster their cash flow, or that want to strengthen their working capital in order to achieve their growth targets. However, many wonder why this would be a superior option for their company, as opposed to securing a long-term bank loan or a line of credit. The following is some information to find when factoring is a good choice for a particular firm.
The Risk Factor
The main factor of determining the viability of the loan is the associated risk. The approval and the lending rate primarily depend on the lender’s assessment of the ability of the client to pay back the loan according on schedule. The chance of late payments and defaults lowers the health of a loan. For this reason, the risk environment should be the main perspective of anyone hoping to obtain a loan. Factoring companies determine the risk involved based on who is paying the invoices in the transaction. If your customers are big companies, with excellent payment history and credit, your invoices are deemed less risky to finance.
Collateral Is King
Collateral has always been the best basis for securing a loan. The closer the collateral is to actual cash, the higher the quality of the collateral. For this reason, the possibility of future growth and revenue, although very attractive to the client company, is not very impressive as collateral to a lender. Growth lending is considered a very risky proposition, particularly in today’s environment. In these situations, lenders impose their own type of guarantee on the loans they approve, often in the form of significant involvement in the company’s day-to-day operations. This is usually an unwelcome intrusion. When you use invoice factoring, the only collateral is your accounts receivable. It’s not so much used as collateral, rather an asset that receives an advance for its value.
Debt Is Unattractive
Regardless of the security and rates of debt, the debt itself is unattractive to both shareholders and potential investors. Debt counts against assets toward determining the company’s profitability. It is a basic type of risk flag for many investment stakeholders. Invoice factoring does not create any new debt. It actually allows for businesses to pay off debt faster.
Let Your Receivables Be Your Asset
Depending on the creditworthiness of your clients, your receivables can be excellent asset. For this reason, on a risk assessment only, receivable factoring may be a better choice for your company than traditional financing. Why not contact us at Universal Funding Corporation with our online rate form to see if we are a match for your financing needs today?
- Common Questions About Qualifying For Invoice Factoring May 20th, 2015 4:59 pm
Selling open invoices is a faster and less complicated funding solution than traditional lending avenues. It is an excellent alternative to a bank loan when your business needs an influx of cash before your customer payments are due. Invoices factoring also provides you with capital without incurring debt for your company. If your business is considering factoring as a way to access cash, you may have some questions specific to your company’s circumstances. Here are a few common issues that companies research when considering the factoring process.
A Lender Already Has the Rights to My Company’s Accounts Receivable
Your business may already have an agreement with a financial institution or another factoring company. You may believe that you cannot sell invoices if the institution holds the rights to your accounts receivable as collateral. However, this does not necessarily disqualify your company from selling open invoices:
- The factoring company will need to hold the rights of the asset they are purchasing from you—your invoices.
- The financial institution that has the rights to your receivables will be contacted by the factoring company to arrange a subordination agreement or negotiate the release of any liens.
- If an arrangement can be made, the factoring process will proceed as usual, with the application and approval period usually taking only a few days.
- If a buyout is necessary Universal Funding will make the arrangements
My Business Has Tax Issues
You can qualify for invoice factoring even when you are experiencing issues with the IRS or other government agencies. Approval will depend on the amount of the lien in relation to your monthly volume, as well as the specifics of the agreement you have entered with the agency.
I Have a New Business With Little or No Credit History
Factoring companies are more concerned with the credit standing of your customers since they will be responsible for payments. It is possible to sell invoices without a solid credit history.
Learn More About Factoring
Universal Funding can answer your specific questions about invoice factoring. Fill out our online rate form to request a no-cost consultation today.
- Is Invoice Factoring Right for Your Company? May 19th, 2015 11:36 pm
When high-growth firms experience cash flow problems, their ability to expand can stall dead in its tracks. Traditional forms of bolstering cash flow come with their own set of problems, including:
- Short term loans increase debt-to-equity ratio, lowering the attractiveness of the firm.
- Long-term loans often come with the involvement of the lender in company operations.
- Unsecured loans based on growth potential often have a low approval rate.
- How To Choose The Right One From All The Purchase Order Financing Companies May 18th, 2015 12:30 pm
Filling large orders is difficult for many companies, especially for small companies and startup companies, because there is rarely enough capital available to purchase the raw materials to fulfill the order. However, there is a way for businesses to secure the cash they need to deliver on the orders. This is known as purchase order financing. Here’s how it works: Companies use purchase orders to record orders from their customers. These purchase orders, in essence, create a contract between a company and their customer. It means that the customer promises to pay after the products are delivered. Because this arrangement creates a contract, it makes the purchase order valuable to companies known as factors. A factor can fund a purchase order from a company and provide them with the cash they need to produce and fulfill their order.
PO Financing For Sales Growth
PO financing is an often overlooked way to get the cash you need to grow your business. A PO, or purchase order, is a contract between your business and your customer. It signifies a promise to pay and can be used to obtain the cash you need to fulfill your orders. By financing your POs with a PO financing company, you will have the cash to fill new orders. This is why PO financing for sales growth is a great option for many startup companies and small businesses.
- Advantages of Selling Accounts Receivable May 18th, 2015 12:20 pm
When a company offers customers a credit term, they agree to provide the goods or services today in exchange for payment in the future. Because the company agrees to postpone the payment, they receive a premium, known as interest, from the customer at a future date. This process allows businesses to keep their prices competitive while offering customers a convenient way to pay for their purchases over time. Unfortunately, situations arise that prevent customers from paying for their goods and services on time. By missing payments, they prevent a company from accessing the cash from the sale to produce more goods and services, putting them in a bad financial position. By selling accounts receivables to an invoice factoring company, businesses can get the cash they are owed quickly and conveniently without the need to hassle customers for cash. Most small to midsized businesses don’t have an established collections department, and the best factoring companies will provide the collection service at no cost.
Why Sell Accounts Receivable?
When it comes to raising the cash you need for your b+B4+B4:H4+A4:H4
Contact us today at 1-800-405-6035 to speak with one of our factoring specialists or get started with your risk free quote.
- Factoring Receivables Companies May 18th, 2015 12:15 pm
Receivable factoring companies offer businesses an alternative to traditional commercial financing. Receivable factoring companies purchase open invoices and provide a large advance, giving these businesses the opportunity to secure the funding they need to expand their businesses, purchase additional raw materials, simply cover day to day operating expenses. Because this is not a loan, there is no repayment obligation nor is there any debt to record in the financial statements. Here’s how it works: Companies in need of funds contact accounts receivable factoring companies and offer open invoices in their A/R portfolio for sale. The receivable factoring company makes an offer for the advance rate and the factoring rate, if accepted, the transaction closes with the invoices being transferred to the receivable factoring company and the funds being transferred to the business. The process can take as little as 48 hours to complete, much faster than traditional bank loans and other financing products.
Factoring of Receivables
Factoring of receivables refers to the process of selling your open invoices for cash. Accounts receivable financing companies, otherwise known as factors, evaluate your invoices and assign them a value based on the creditworthiness of your customers, not your business. They will make you an offer and, if you accept, will close the transaction and forward you the money in days rather than the weeks it takes to undergo a loan approval process.
To find out how you can gain access to this fast cash flow solution call us at 1-800-405-6035 or click here to submit a rate form and one of our Business Development professionals will follow-up with you.
- Financing Receivables May 18th, 2015 12:02 pm
When it comes to finding the perfect solution for dealing with cash flow shortfalls, businesses have few options. In some cases, businesses will apply for and obtain a commercial loan, however this process is lengthy and complicated, often requiring companies to have been in business for many years and have well established credit in order to qualify. Many different industries simply don’t qualify at all due to the nature of their business. Those who do qualify must submit a large number of documents including a business plan, company and sometimes personal financials, and guarantees. The underwriting process can take weeks before the loan is approved and the company is funded. Receivables financing offers companies an easy way to raise the capital they need to cover day to day expenses, large orders, purchasing new equipment or other financing needs. There are no restrictions on the funds, which means that the company can use the money for anything. Since this isn’t a loan, there is no need to repay the advance, leaving future cash flows intact.
Factoring invoices offers a different, but useful, way to deal with the problems of cash flow when companies need it the most. The primary goal is to allow money to remain liquid, rather than have it tied up in a variety of purchases and debts. This useful financial solution is ideal for companies of all sizes in a range of industries who don’t want to acquire debt and have exhausted traditional lending methods.
Each factoring plan for accounts receivable financing is designed to meet the needs of a particular business. While a one-model-fits-all approach may be standard for other factoring companies, it’s not our personal philosophy at Universal Funding. We look to the climate of your industry, your particular customers, and anticipated growth to lock in high advance rates that put the majority of the funds back in your hands and set low factoring rates that reduces your overall coast for the transaction. This way we provide the maximum benefit to your company and ensure a steady flow of revenue.
When businesses need to turn their receipts into cash, accounts receivable financing is the optimal solution. If you would like to learn more about this financial solution, fill out a rate form today! One of our Business Development Associates will review your rate request and give you call to discuss your options.
- Account Receivables Financing May 18th, 2015 11:14 am
Account receivable financing refers to the process whereby companies sell their invoices to a third party factoring company in exchange for a large advance. These transactions offer businesses the opportunity to secure fast cash that can be used for any reason, quickly and without complicated qualifications like those required by traditional commercial loans. Account receivable financing is a simple sales transaction that allows companies to get extra capital they need to fund an expensive equipment purchase, the purchase of additional raw materials to cover a large order, or to simply cover payroll and other day to day operating expenses when cash is running short. Account receivable financing is also a great way to manage cash flow without having to jeopardize customer relationships. Account receivable financing can be a great alternative to traditional financing for many businesses who need money faster than a bank can provide.
Account receivables financing is a fast lending alternative when you need to increase your cash flow. It provides you the opportunity to have money in the bank to cover payroll, invest in upgraded technology, pay off vendors, and prepare to take on large projects without incurring debt. Through a process known as invoice factoring, Universal Funding will advance you a large percentage of the value of invoices in your A/R.
Not every business is run the same way with the same goals or motivations, so it follows that not every business benefits equally from all financing options. The balance of pros and cons for factoring your invoices is different for every circumstance, but there are certainly a lot of companies who find the benefits of invoice factoring to be vital in their continued growth and success.
Small and upstart businesses often have trouble obtaining capital through traditional bank loans, especially in the current economic climate. Larger companies with lower credit ratings may be labeled high risk and quickly dismissed. This is where account receivables financing can come into play; providing a lending solution without inflated fees.
When More Banks Are Saying NO or Lowering Limits – We Can Say YES
We recognize that many companies would actually be very successful if they had access to consistent cash flows. Invoice factoring is very beneficial for businesses that must wait 30, 60, or 90 days for their customers to pay. These delayed cash flows may be interrupting daily operations like the purchase of materials, paying employees, paying rent or any number of other expenses which limit production or even bring business to a grinding halt
Simply put, banks won’t lend money to a company that has bills piling up and zero inventory. Factoring is different because instead of evaluating your company’s ability to repay a loan, a factor focuses on the debt already owed to you. Once the invoices have been validated, cash is typically available in 1-2 days and business can go on as usual
If your business shows signs of struggle because operating capital is tied up in accounts receivable then factoring with Universal Funding may be a viable option for maintaining predictable cash flows.
Let us quote you a rate,and then we’d be happy to discuss how our account receivables financing option can you.
- Invoice Factoring Companies May 18th, 2015 10:59 am
Businesses generate cash by making sales. In order to make a sale, a business has to create a demand, create a product or service, find a customer and then convince them to make a purchase. In many cases, the purchase a customer makes includes the ability to make payment at a future time, which is commonly known as a credit term. And while offering credit terms to customers is a great way to entice them to make purchases, it severely restricts the amount of cash a business has access to in order to repeat the cycle. That’s where invoice factoring companies come into play. When a company decides to sell invoices, to generate cash flow, they will want to work with a reputable and established factor. The invoices to be sold should be fairly current invoices, but with terms that are 10-90 days out. The factoring company will negotiate an advance rate, 70-90% is typical, and a factoring rate. Invoice factoring companies play a vital role in assisting companies with the cash flow they need to smoothly run their business.
Invoice factoring companies specialize in bridging the gap of extraneous invoice terms that extend well past 30 days. The invoice is the asset that is promised or sold to the factoring company. The business gets a large percent of the value of the invoices up front. Businesses who take advantage of working with a factoring company get an instant flow of money, and can use that capital immediately to build the business instead of waiting for payments.
Working with an invoice factoring company is an excellent way to maintain a steady and reliable flow of cash. Sometimes there is a bare patch while you are waiting on accounts to come due, and expansion may be possible in those times if you have access to capital and can bid on new jobs. You don’t want to pass on growth and expansion simply because your accounts receivable take time to pay.
Dealing with a factoring company can eliminate that scenario. If you have a steady stream of invoices but your operating cash seesaws back and forth, consider factoring those invoices.
For more information please call 1-800-405-6035 or click here, and one of our factoring specialists will follow-up with you.
- Factoring Company May 18th, 2015 10:40 am
A factoring company is a company that offers an alternative, yet vital source of commercial funding to businesses in need of cash flow solutions. They began to gain popularity over the past few years due to the recession and were sought out over traditional loans to fund business equipment purchases, new facilities purchases, raw equipment purchases and more. Rather than offering loans, a factoring company offers funding through a different source: buying open invoices. A factoring company will pay for a company’s open invoicesand purchase them, providing a large cash advance and helping companies get the cash flow they need in as few as 24 hours. Many companies have come to rely on this service not only to find additional capital when they need it, but to also manage defaulted invoices rather than try to collect them themselves. This process allows businesses to focus on what’s important: running their businesses, rather than focusing on collecting receivables.
There are many benefits of selling your invoices to an accounts receivable factoring company. More businesses these days are selling their invoices to maintain cash flow and finance growth. Most small businesses have experienced a lack of cash flow from time to time and will need to explore other methods to settle payments for their own expenses.
Financial strains usually occur because some customers do not make their payments on time. The delay can adversely affect the flow of business. By selling their invoices to an accounts receivable factoring company, they can solve their cash flow problems. This means that they will receive the cash upfront rather than having to wait for small incremental payments from their clients who may not even make their next payment on time.
When your business has multiple unpaid invoices, you can fall short on your own obligations like paying vendors, taxes, and payroll. This means you will have to scale back on other areas of expenses, such as marketing and recruiting new employees. This could seriously hurt the business that you and your team have tried so hard to build. By selling those invoices to an accounts receivable factoring company, you receive a whole new stream of cash flow. There is no more worrying on your end about clients missing their due payment dates.
For more information on Universal Funding and the financial assistance that we can provide your business, give us a call today at 1-800-405-6035 or submit a rate form for a free consult on your financing options.
- Accounts Receivable Factoring Company May 18th, 2015 10:34 am
Accounts receivable financing companies offer businesses large and small a great way to secure the capital they need to fund any one of many business needs without the hassle and obligation of taking out a traditional bank loan or selling off assets. A reputable receivables company will be able to provide most businesses a cash flow solution in exchange for open invoices on the company’s books. A receivables finance company will be able to do this without a lengthy application and underwriting process and without any credit requirements whatsoever because this is a not a loan. There is no repayment obligation and no debt is recorded on the balance sheet, making this a great way to raise capital and address whatever need the business might have. There is no restriction on the way the business uses the cash.
An accounts receivable factoring company is a company that purchases invoices in exchange for a lump sum of cash. When companies sell goods or services on credit, it can take 30, 45 or 60 days to get paid. Rather than wait for the money, these companies can engage an accounts receivable factoring company and sell those invoices in exchange for a lump sum of cash. The process is quick and doesn’t require the same stringent qualification process as a traditional loan.
Why Choose Universal Funding As Your Account Receivables Company?
When it comes to selling your open invoices, choosing the right company makes all the difference in the world. So, why choose Universal Funding As Your Account Receivables Company? Universal Funding Corporation has been in the accounts receivable financing business for many years. They have the experience necessary to ensure that you receive the best service for your needs. Universal Funding understands the needs of many different businesses and can help you make the best choice for your unique situation.
- Factoring Invoices May 18th, 2015 10:30 am
A Cost-Benefit Scenario for Factoring Invoices
There are many variables to consider when calculating the cost of factoring invoices. One of the benefits of factoring invoices is having access to your profits more quickly, thus increasing your production and profits. Here’s our scenario:
Mike’s Custom Golf Carts (Manufacturer)
It costs $7,000 to produce one golf cart in 15 days. A customer wants a golf cart and is willing to pay $10,000 for the cart, but needs net 30 terms. Mike will wait 45 days in order to recoup cost, thus slowing down the process of building a second cart.
It takes another $7,000 and 15 days to produce the second cart and another 30 days to get paid.
Now 90 days have passed and only two golf carts have been built and sold. Mike’s profit is now $6,000; still not enough to build two carts at once to get ahead. This process only allows Mike to produce nine golf carts per year, yielding $27,000 in profit.
What if you could get paid as soon as you deliver?
If Mike worked with a factoring company he could build a golf cart every 15 days, equaling 24 per year; thus leaving Mike a profit of $72,000 a year. The difference between $27,000 and $72,000($45,000!!!) is what it costs to NOT factor when your customers take net 30 terms to pay on invoices.
What about the actual cost of factoring?
Let’s continue with the example above, but now Mike is producing ten golf carts per month (thanks to factoring).
Golf World has agreed to buy ten carts every month with net 30 terms. Mike has terms with the factoring company of 1.5% for net 30 with an advance rate of 85%*.
Mike decides to factor Golf World’s invoices totaling $100,000 each month, allowing further growth. Upon Golf World’s invoice verification, the factoring company wires $85,000 into Mike’s account. Thirty days later, Golf World pays the factor $100,000. The factor deducts $1,500 (1.5%** for the factoring services) and pays Mike his remaining balance of $13,500.
Another cost saving activity to consider…
If you were to factor your invoices, you would also be able to pay your vendors sooner and take advantage of the typical 1% to 2% discount vendor’s give for payment received within 10 days. In the end you will save more money, build credibility with your vendors, and have the capital to grow your business.
Get on the golf course!
Now that you’ve made the best financing decision for your company, it’s time to think spring and reward yourself with some serious recreation!
*advance rates may vary
** factor rates may vary
- Factoring May 18th, 2015 9:43 am
Many small and medium sized businesses may not be familiar with the term ‘factoring’. Big business has been using this little known financial instrument for decades, but only recently have some financial institutions begun to offer Invoice Factoring to small and medium businesses.
Basically, a financial entity like Universal Funding Corporation funds your accounts receivable for a pre-determined rate. This is not a loan, and no debt is entered on your company’s balance sheet. The credit of your customers is the primary concern of the factoring company.
Factoring solutions, including receivables factoring is a fairly new phenomena in small and medium sized businesses. They are just not used to the idea of AR funding. This type of system allows your cash flow to be much more fluid; instead of waiting 30 – 90 days for invoices to be paid, with accounts receivable factoring you get your money up front.
The rates are determined through a diverse set of variables; this will depend on volume of sales, the invoiced customer’s credit history and payment schedule with you. There are other factors involved with account factoring as well, but term rates are generally low. Factoring also allows companies to take advantage of early-pay discounts often offsetting the cost of factoring in full while still allowing for a company to increase sales and grow.
For custom factoring solutions, factoring help and understanding how this tool can work to grow your company through accounts receivable funding, please go to our get rate page.
- Personal Service May 18th, 2015 7:40 am
By using a tailored invoice factoring solution from Universal Funding Corporation, you can easily turn your accounts receivables into cash.
Personalized Factoring Solutions to help boost your cash flow:
We have helped thousands of businesses boost their cash flow, using custom financing solutions. We believe in open communication among our staff, executives and clients which is why our company’s principals work on-site with our managers and account representatives.
Along with all the benefits of having cash on hand, as our client you will receive:
- A dedicated individual to handle your account
- Electronic invoice submittal
- On demand, updated reports
- 24/7 client service
Need cash for your business? Why not make wise use of those receivables and get some cash?
Often many businesses fail to realize the relevance of invoices. You can generate immediate cash for your business by turning your receivables into cash. UFC’s receivable factoring will help you raise up to 95% of the value of your invoices.