Reverse Factoring 101

According to The Global Trade review article Supply Chain Finance, the process known as supply chain finance (SCF), or reverse factoring, is the next logical step for factors. The article points out that factoring companies can build on their own receivable offerings and supply this in-demand service to their customers, though some factors are hesitant due to the high cost of implementation. There is a distinct lack of knowledge about this sector, so this post will attempt to enlighten readers on how SCF works.

The SCF process involved the same three parties as the regular factoring process: the factor, the supplier, and the ordering party. In regular factoring, the supplier initiates the process in order to get cash for their receivables. In reverse factoring, the ordering party initiates factoring by choosing which invoices they will allow to be factored. The supplier then chooses which need paid. The end result is the same: the supplier gets advanced funds from receivables.

Reverse factoring is beneficial to suppliers because they get better terms than they would otherwise. It usually works best for small suppliers and big companies as the ordering party. A factor benefits because they are working with companies that have a good, mutually beneficial business relationships and therefore lessening risks of non-payment.

Reverse factoring seems like a logical step for factors. Whether they get on board or stick to what they know best remains to be seen.

What Does Obamacare Mean for Small Business?

While the brunt of the Affordable Care Act doesn’t come into effect until next January, now is the time for small businesses to get informed and make plans for the future. Although companies with fewer than 50 full-time equivalent employees will not be penalized for not offering healthcare, there are several things that they must keep in mind.

Disclosure: At the very least, small businesses are required to inform their employees in writing about the new law and health exchanges. The deadline to do so was originally March 1st, but now information about exchanges should be avaialble to employerts starting in October. If they do offer healthcare, then they also must make sure it complies with the ACA.

Exchanges: Starting in 2014, state health insurance exchanges will be established that allow small businesses to shop for affordable coverage. Businesses with 100 or fewer employees are eligible for the Small Business Health Options Program (SHOP), although some states may opt to lower the requirement to 50 employees or less until 2016. Companies can also choose to shop on the traditional insurance market, and private third party exchanges will be set up as well.

Costs: The question on small business owners’ minds is what healthcare reform is going to cost their business. According to an Urban Institute analysis last year, small business costs might actually be reduced by the new law. Costs per person would only be higher for mid-sized businesses, and large business costs will likely stay the same.

Now is the time to get informed about what Obamacare means for small business, while there is still time to prepare. Know the requirements now so you don’t get blindsided by unforeseen costs in the future.

For the full article, see Obamacare 101

Tips to Avoid Lumpy Money

Cash flow issues are a constant source of worry for some industries, such as start-ups or seasonal businesses. This “lumpy money” syndrome, where cash from customers is intermittent and slow, affects many companies but luckily can be mitigated by following a few simple tips.

Cash Up Front: Instead of waiting for payment, ask for a down payment or retainer at the beginning of a large order. Due to the down economy, it is no longer taboo to ask for payment early on in the order process.

Credit Cards are Your Friend: Don’t worry about credit card processing fees. Sometimes, even just a percentage up front can be better than waiting months for cash. You can run your business while the bank does its thing.

Customer Credentials: You have to know who you are doing business with, and in the online age it is easy to do background research. If the research fails to yield anything, ask for references.

Factoring: In certain industries, selling your accounts receivable at a discount is an effective way to get cash up front. Some expenses like payroll have to be paid every month, and factoring can help even out cash flow.

These are just a few tips to bettering your company’s cash flow. Do what is right for your industry and eventually you will smooth out those lumps.

For the full article, see 5 Tips for a Better Cash Flow

Not Supporting Small Business is Bad for the Economy

In the wake of the fiscal cliff debates, some are worried that big government is overlooking the little guy. According to Yahoo! Small Business, several leading business observers are criticizing the Obama administration’s treatment of small business.

Lloyd Chapman, President of the American Small Business League, recently posited that the government’s plan to fold the Small Business Administration (SBA) into the Commerce Department to try and save money is a folly. He is of the opinion that the merger would ultimately hurt small businesses and redirect money towards large corporations. He suggests instead that the SBA be strengthened and federal programs be directed towards the nation’s leading jobs creator.

Jim Clifton, CEO and Chairman of Gallup research, says that the continuing recession is the fault of elected officials who are not focused on creating wealth. He argues that they do not understand how important small business is, nor how crucial support is for small business success.

Small business is crucial to a functioning economy- but just how crucial remains to be seen. In the coming months and year, we will see more than ever the wide ranging effects of supporting or hindering small business success.

For the full article, see Not supporting small business is economic suicide, observers of economy say

US Family Businesses Optimistic About Growth

Even in hard times, you can count on family to keep things on the bright side– family businesses, that is. According to the ABF Journal, US family-run businesses are more optimistic about growth prospects compared to their overseas counterparts. 93% of US businesses compared to 81% of global peers are confident that new opportunities will arise and that they will be able to capitalize on them.

While challenges still exist and are of concern to family businesses, confidence is at a two year high and concerns about economic challenges have waned. According to the article, this suggests that these businesses are adapting to changing market conditions and are accepting volatility and uncertainty as the “new normal.” They are willing to take risks and are now actively seeking growth opportunities whereas before they were content to sit back and watch what happened.

With renewed interest in growth, family businesses are going to have to consider extra funding for their ventures. For companies that have trouble securing bank loans, factoring is an option as long as they have invoices and their customers meet the criteria. Factoring could be a way for everyone to benefit, and to continue the optimism of US family-run companies.

For the full article, click here

Modern Challenges to Factoring

The way we do business is constantly changing and companies either have to evolve and adapt, or die out—and factoring companies are no exception. In a recent interview with Dash Point Financial President Jeff Callender, he points out several modern changes to the factoring industry.

More Small Factors: Factoring for companies with under $10K per month in receivables used to be a niche, but now there are more and more companies joining the fray. This increases competition, but with more awareness there is also a bigger customer pool.

Sketchy Clients: Because most factoring companies tout that a client’s personal credit history doesn’t matter, Callendar has noticed a trend of “less desirable” clients applying as an alternative to a bank loan. While credit history doesn’t technically matter, factoring companies have to consider the character of a potential client when considering whether to take their business.

More Awareness: The public is more aware of factoring than ever before, and this means they’ll be doing independent research. Often they waste everyone’s time if the factor they research does not suit their needs.

A broker can be the best option, because they have the resources to perfectly match client and factor. Factor Finders is one such broker, and we are experienced in saving clients time and money by eliminating the search process and meeting client’s needs every time.

For the full article, click here

Making 2013 the Best Financial Year Yet

New year, new chance to start things off right. According to a recent article on called How to Change the Financial Future of Your Business, there are certain simple steps you can take at the beginning of the year as a business owner  to improve your financial health. Here are a few examples:

Review the last year: Find out what strategies were successful and which flopped, and use the lessons you learned to help you move forward.

Use metrics: If you were tracking statistics last year, review them and find trends. If not, choose three important stats and start.

Cut costs: Easier said than done, but look for ways to find the best price on everything, including borrowing.

Cash flow plan: Cash is king in most industries, and you must have a budget or a plan in place in case of hard times.

In some industries, even a cash reserve isn’t enough and expenses must be paid. Invoice factoring is one option for businesses seeking to optimize cash flow and get back on track in the new year.

Top Strategists Predict 2013 Stock Market Growth

The Mayans may have been wrong about 2012, but Wall Street equity strategists are hoping their 2013 prediction comes true. According to a survey conducted by Barron’s , they project that the Standard & Poor’s 500 is likely to grow by 10% next year, based on a stronger economy, foreign sales, and technology and energy shares. However, they all concede that the market could suffer greatly if no plan is set in place to avoid the fiscal cliff, and even if it is avoided it will be a “bumpy ride” for stock prices.

The industries most likely do well in 2013 are industrial outfits, technology, and energy. Companies with foreign exposure are also likely to do better in comparison with their domestic-focused counterparts. On the other hand, underperforming sectors are likely to be consumer staples, telecoms, and utilities.

Overall, the outlook for 2013 market is positive. There are some obstacles to overcome, but even with all the dangers market analysts are optimistic- which is good news for the rest of us.

For the full article see Outlook 2013

The Best Way to Start-Up

There are many paths to every destination. For start-ups this is especially true; there is no one right way to success for an untested venture. However, according to entrepreneur Scott Weiss, there are certain steps that a young entrepreneur can take to have a better chance at growing their business. Speaking from his own experience Weiss suggests that rather than going to school or starting your own company right away, actually working at a start-up will give you the most valuable experience. He offers several tips to getting started:

Prepare to Move: Weiss suggests moving to a hub or hotspot for your industry. In the case of tech start-ups, he suggests moving to Silicon Valley. While friends may have a job lined up right out of school, you have to prepare to be unemployed for a while or get a part time job in the mean time.

Research the Options: You want to work at a legitimate start-up, so Weiss suggests looking at venture capital surveys and see which companies have been backed.

Focus: Research and focus on roles you want to play within a start-up. If you are knowledgeable about the differences, it will give you more credibility when you start networking.

Narrow it Down: Narrow your choice down to 20 or 30 companies and make a web of all possible connections. The best way to get an in is to build a referral network, so network with anyone you can think might be of help.

Weiss says that persistence and preparation are the two most important aspects to getting hired by a start-up, and networking with potential referrals is key.

For the full article, see The Path to Starting a Start-Up