Factoring services: Performance analysis and measurement of clients’satisfaction – A comparitive study of SBI factors and commercial services pvt.Ltd and canbank factors Ltd.

Factoring is a complete financial package that combines working capital financing, credit risk protection, accounts receivable, book keeping and collection services. A growing number of companies offer factoring services. Factoring has become well established in developing countries, in particular in those that are highly industrialized. Factoring is now universally accepted as vital to the financial needs of small and medium- sized businesses. Factoring is simply a unique package of se

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by Benjamin Ellis

Maximize Your Credit Card Services with Small Business Loans

By: Business Local Listings

About the Author

Advanced Merchant Services
Contact Name: Roger Inman
P.O. Box 1475 Safety Harbor, FL 34691
Bus: 727-642-3606
Bus Fax: 877-413-6067
E-mail: rinman3@tampabay.rr.com
Website: www.bankcardprocess.com

Since June 15, 2009, the United States Small Business Administration has been processing deferred payment small business loans of as much as ,000 to be given out to 10,000 small businesses. This is covered by the SBA’s America’s Recovery Capital (ARC) Loan Program.

To qualify, companies should be private enterprises that are for-profit. They should have up to five hundred employees only and should be at least two years old. Furthermore, they should be able to prove financial need with a twenty percent decrease in sales, revenue or working capital. On the other hand, they should be able to prove that one of their two years in business has been profitable, and that with the infusion of cash they will be able to meet their existing and future debt obligations. This means positive cash flow projections. The ARC small business loans are intended to be used to pay outstanding debt such as payables to vendors.

For this batch of small business loans, there are no fees or costs involved, except if the borrower defaults on the loan later. In that case the SBA-approved lender can charge costs for securing and liquidating collateral.

The ARC small business loans also do not charge interest. Actually, the SBA pays the interest for the borrowers. Disbursement of the loan can take as much as six months but payment of the principal is also deferred for the next 12 months. After that, the borrower has five years to repay the loan principal.

Each small business can only avail of one ARC loan. SBA-approved lenders will offer the loans until September 30, 2010 or until available funds run out, whichever comes first.

There are, however, an estimated 30 million small businesses in the United States and only 10,000 of them can avail of the government’s small business loans. What if you do not happen to be among the 10,000 lucky recipients? How will your small business survive?

There are even doubts being raised on whether as much as 10,000 businesses can indeed avail of the ARC loans. There are fears that there may not be enough lenders willing or able to participate in the program. Lenders will have to advance the full amount of the loan, will not receive payment on principal for a full year, and will not be able to charge any fees, thereby absorbing all administrative costs. This may be too steep for many lenders. They may not be able to afford to participate at all.

This is where you as a small business owner can and should maximize your credit card services. We are not talking about your personal credit card services here. Instead, we are referring to the merchant services that enable your small business to receive credit card  and debit card payments. Surely, any business these days avails of these types of credit card services. After all, more people pay by credit card or debit card rather than cash.

Most credit card services offer small business cash advances that can be as substantial as small business loans. These small business loans do not require any collateral because they are secured by your company’s future credit card receivables. This is even more convenient for your business because repayment is also built into those receivables. Credit card services automatically deduct a percentage from your income to go toward loan repayment. For as long as you have incoming sales, you can support your loan. Interest rates are often quite affordable considering how the loan can help your business.

Small businesses should therefore look into maximizing these credit card services for small business loans. The survival of your business could hinge on this.

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Why People Use Invoice Factoring Services

By: Alistair Spark

About the Author

Bibby Financial Services can help firms improve their cash flow by providing an immediate injection of cash against the value of their outstanding invoices. Then as the client raises an invoice, we can release up to 85% of the value of that invoice within 24 hours. The remaining 15% is paid to the client, less a small service fee, once we receive payment from the client’s customer. This means our client’s business has access to an ongoing supply of cash linked to their sales. So as their business grows, so does the amount of funding available to them.
Invoice Factoring from Bibby Financial Services

Many firms get into difficulties because they do not get paid on time. They will have done the work to the correct standard and on schedule. They will have paid suppliers and bought materials. But the customer drags their feet about paying them. Many different reasons will be offered for non-payment, which the unfortunate unpaid firm will have to spend time discussing, dealing with and following up after waiting for the payment to arrive. In addition to being frustrating and demoralising, dealing with the non-payment situation will drain the unpaid firm’s resources further, slowing down the process of bringing more sales in. Many unfortunate firms go out of business this way. On paper they have enough money, but the money is not in their bank account. This is why many firms use a supplier of invoice factoring services.

Invoice factoring sorts out the cash flow problem and converts the on-paper money into real money. Straight away, the invoice factoring supplier will provide a welcome cash payment to the unpaid firm against the value of their unpaid invoices. This is how it works. When the client firm raises an invoice for work it has done, the invoice factoring company will pay their client something like 85 percent of what the invoice is asking for. And they usually pay it within one day. So the risk of not being paid, and the problems caused by not being paid, are taken away. The invoice factoring company will then ask their client’s customer for the payment, and pay the remaining 15 percent, minus a modest fee for the service they provide, when they have got the payment from their client’s customer.

So the invoice factoring company becomes a marvellous ally for their client, giving them a flow of ready money in direct proportion to their sales. This enables their client to grow, unencumbered by the unfair stress and debts caused by customers who avail themselves of goods and services without paying for them. Many owners of small firms are good at what they do but are not skilled in bringing money in from recalcitrant customers. Invoice factoring firms are expert at this, preparing and sending out financial statements, phoning up non-paying customers, keeping thorough records and bringing in the much-needed and hard-earned money. They will have heard all the excuses before and know how to respond, firmly and professionally.

Having an effective invoice factoring company on their team, taking care of these kinds of financial issues, means that cash flow is improved. This provides a valuable benefit in terms of customer relations, and money matters do not cause friction and resentment which can damage the relationship with their clients. Having more money in the bank means that firms can purchase bigger qualities of materials and so benefit from discounts offered by wholesalers for large volume purchases. Having a healthy cash flow also means they can keep their suppliers happy by paying them on time. The most important benefit all this is that the client can concentrate on what they do for their customers, and so continue to thrive and grow their business.

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How Factoring Services Can Help You Take Advantage of Discounts

By: Tracy Eden

About the Author

Tracy Eden is the National Marketing Director for Commercial Finance Group in Atlanta, Ga. CFG provides factoring and A/R financing to companies nationwide with annual revenues between 0,000 and million. Contact him at tdeden@cfgroup.net or visit www.cfgroup.net to learn more.

(ArticlesBase SC #944416)

Article Source: http://www.articlesbase.com/ – How Factoring Services Can Help You Take Advantage of Discounts

In many industries, an important cash flow strategy is to take advantage of what are often referred to as early pay discounts, or “2/10, net-30 discounts.” Such discounts allow companies to subtract 2 percent (and sometimes more) from the invoice amount if it is paid within 10 days instead of the normal 30.

These discounts can really add up, especially for companies with thin profit margins. The challenge for many companies, however, is managing their cash flow system in a way that enables them to take advantage of these discounts on a regular basis.

Meeting the Cash Flow Challenge

The president of a California company discovered the benefits of taking discounts when he started his business seven years ago. Unfortunately, it didn’t take him long to discover the huge cash flow challenges inherent in paying vendors early in a manufacturing business like his.

His business manufactures custom covers for restaurant menus, hotel entertainment directories, movie studio press kits and similar applications, primarily for customers in Las Vegas and Hawaii. “I have always tried to take advantage of any discounts offered to me,” he explains. “It is has become very important to my profitability.”

His solution to the cash flow challenges inherent in taking discounts was factoring. In fact, the owner says he’s been using receivables factoring services since he started the company. Doing so enables him to get paid within 24 hours, instead of up to 60 days or longer. “I work the cost of factoring service into the price I charge my customers, so I’m not losing any money,” he says.

“Factoring is so well integrated into my business model that it’s seamless,” he continues. “It gives me much more flexibility and predictability. I can’t imagine going back to a system where I have to wait for accounts receivable to come in the mail.”

The owner keeps his overhead to a minimum and manages his finances on a week-to-week basis. “This is the easiest way for me to control cash flow management and make sure we stay profitable,” he says. The company generates about .2 million in annual accounts receivable, with a fluctuating number of employees based on the volume of work at any given time.

More Than a Bridge

While many business people view factoring services simply as a “bridge” to help them through a temporary cash flow crunch, this company illustrates that it can also be used to build strong relationships with suppliers. After all, this is a short term loan with no interest, no collateral and no personal guarantees. It also ensures a high level of response and service from the suppliers. What could be better than that?

In short, businesses should think of factoring services as a multi-faceted cash flow funding tool—not just a one-time quick fix.

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Factoring is a financial transaction whereby a business sells its accounts receivable (ie, invoices) to a third party (called a factor) at a discount in exchange for immediate money with which to finance continued business. Factoring differs from a bank loan in three main ways. First, the emphasis is on the value of the receivables (essentially a financial asset)[1], not the firm’s credit worthiness. Secondly, factoring is not a loan — it is the purchase of a financial asset (the receivable). Finally, a bank loan involves two parties whereas factoring involves three.
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Factoring Company: Different Types Of Factoring Services Offered

Are you looking for a factoring company that can help you with the process of invoice factoring? It is recommended that you choose a firm that offers different types of factoring services. For this, it is important that you understand the types of factoring and their features.

Basic Factoring

This is one of the most basic types of factoring services offered by factoring companies. In basic factoring, the company receives an advance payment, around 85 percent, of the account receivables. The main benefit of basic factoring is – firms do not have to wait for 50 to 60 days for payment. The borrower then receives the remaining percentage, minus the fees and interest charges. Therefore, basic factoring is better than a bank loan as the people do not have to wait for the payment.

Full Service

Usually small-scale firms form a steady relationship with the factoring company which provides them with the required funds and debt administration services. The factoring company also provides risk coverage. Factoring firms will however consider many factors before offering Full Service to the company. For instance, the firms will assess the credit history of the company before arriving at a decision.

Recourse Factoring

Many factoring firms do not provide full service to their customers. They instead focus more on recourse factoring. Factoring firms also provide financing to their clients and manage the sale invoice processing as well. They also handle all the collection related activities.

Invoice Discounting

Invoice discounting is currently popular among the people. Many companies do not require any debt administration services or additional risk coverage. They instead require confidential factoring along with invoice discounting. In invoice discounting, the firm hands over the ownership of the invoices to the factoring company.

Thus, you should choose a factoring company in Texas that offers all these different services.

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Answers to Common Questions about Truck Factoring Services

In this article we offer answers and advice to both, the trucker and the factoring company, on how truck factoring services could benefit them.

At the outset, for someone who has a trucking business, it is not always a smooth ride. It is quite a tough business to run and risky too, sometimes. And then if they have to approach a factoring company, then there are questions raised. Every person wants to know the risks involved before they jump into an agreement with a stranger. It is only natural to want be sure before you decide on the best factoring company for you. Factoring means that the company gives you credit by purchasing your invoices or receivables and taking the said payment from the customer directly.

Chasing invoices is a tiresome and lengthy process for any trucker, so they taking care of it, it works well for you. The only thing that is important is that the customer you have should meet their credit standards. There is also the agreement factor. Normally, it is made for a year and then renewed. But it is better if you opt for the short term contracts. So that in case you are unhappy with the way they function, it is easier for you to opt out of this professional arrangement and look for a new factoring company.

The factoring fee could be anything from 5% to 7%. But it is still lower than what a bank would charge you. If you have a larger volume of load, there are factoring companies that give a discount or reduce the rate of interest, if it is a recurring benefit to them. The other option is that the interest remains the same, but on the overall amount you get a rebate or the extra money is credited to you. It could really work very well for you.

Secondly, if you want to get into truck factoring, it is a brilliant idea and also could be a very financially beneficial to you. It is not difficult to get into factoring. You just need to do a little advertising so you could find the loads that you are looking for. Meet the right sources and ask around, it could help. Also, online a lot of professionals have instruction manuals and kits to help you set up the business.

Please remember that a trucker will only come to you if he is assured that he will have a constant flow of cash against his invoices, to meet with his expenses. You need to guarantee that. And that means you need to be financially sound and stable if you want to get into this business. Since it is difficult to get loans from the banks because of the credit line problems, it is easier for them to come to you. You must check out whether their freight customers are credible or not. That is important for you. After all you are in the business for the money, so ensure you do not take any unwanted risks.

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PRN Funding, a healthcare factoring company, provides financial resources for suppliers of services and products to healthcare institutions.

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Getting the most from Factoring Services

Most Factoring services charge fees that are anywhere from 3-5% of the original invoice value. Since your goal in hiring a factoring company is to get back as much of your investment as possible, then obviously the less that a factoring service charges, the better the deal for your company. Here are some ways to avoid higher fees and to get as much out of using factoring services as you can.

Use Non-Progressive Billing:

When your business decides to outsource to a factoring service, the type of delinquent account that you are trying to collect will determine how easy it is for them to make a collection. Progressive billing involves ongoing accounts that are billed as the products or services are still being sent or carried out – this can make the bill collecting process difficult because the specific total amount due has yet to be finalized.

As factoring services prefer the least labor-intensive transactions, non-progressive accounts may be a better choice in terms of cost-efficiency for them. Non-progressive accounts are billed after the services and products have been delivered so the final amount due has already been settled. The easier and smoother the collection, the cheaper the factoring cost will be.

Factor Largest Invoices Only:

Small business factoring involves allowing a third party company to take over on a past-due invoice – this can be difficult if the invoice is spread out over several smaller billing cycles than if they only needed to collect on a single amount. In addition, large invoices offer factoring companies the largest payout because they charge on a commission like percentage. They will be more likely to take on more profitable collections for both them as well as your company.

Choose Creditworthy Customers:

Factoring accounts are accepted the same way any business evaluates potential loan customers – the more creditworthy the party, the more likely payment will be received. Reputable companies that offer better chances of payment will be more likely to have lower factoring fees, which should be a concern if your business is looking to save money as well.

Related Factoring Service Articles

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Your Guide to Truck Factoring Services

In this article we look at how there are so many services available to guide you on how to go about truck factoring.

Truck factoring is a great arrangement, especially for the owner of the vehicle. It is a relaxing arrangement and reduces the amount of stress and tension that normally would leave any trucker worried. The flow of money is constant as long as they have assured business. For any person who runs his own business, finance is always the most strained factor to content with. There are bills, and bills and bills. So truck factoring companies are more beneficial that banks and even their interest rates are on the lower side compared to banks or other financial institutions. It increases your ability to haul additional load because of the credit facility offered by them to customers. Most customers are very happy with the arrangement, where in they do not have to make the payment upfront.

There are some considerations that can guide you in making the right decision. Always find the right kind of load that meets the credit standards of the factoring company. Even the customer or client you choose should be credible. There are many customers who are bad paymasters and hence this affects your relationship with the factoring company. Ensure that they are listed with the factoring company and if not, then it would take a few hours to get them listed. Most factoring companies require your original invoices or bills. And there are two methods of payment. One is card and the other is cash. It is better to use the card as you can keep a track of the expenses and control the outflow to a certain extent.

This is one of the best options when it comes to maintaining a steady cash flow and also having time on your hands to attend to more important matters, like the maintenance of the fleet of vehicles. And if you also drive your own trucks then you need a break as you can get physically exhausted. Spare yourself the agony and give the company the headache of going after payments. Factoring companies are a boon to truck and freight companies as they were started with a reason and that reason is very valid. Even their interest rates are better compared to banks. Depending on the credibility of the customer, it could be anything from 1.5 to 5%. Their quick disbursement and no need for guarantors is another crowd puller, oops truck puller.

Please ensure that before you decide to do business with a factoring company, you should conduct a little background check on them. You should consult friends or other freight owners, so that you do not go into a loss and get cheated. Also do not go in for a long term contracts, so that if you are unhappy, you can leave anytime. Never get cornered with anything. Always remember, as much as you need them, they need you too. It sure works both ways. Be smart and build up your cash balance so that some day you won’t need the factoring service anymore.

Related Factoring Service Articles

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Are you selling goods or services to commercial customers or to the government? If so, you are probably used to the idea of having to wait up to 60 days to get your invoices paid. However, waiting to get paid can be challenging, especially if you have business expenses that can’t wait. That is where a factoring company can help you.

Factoring companies can provide you with financing, based on your slow paying invoices. They eliminate the 60 day payment waiting period and provide you with the necessary liquidity to meet payroll, pay rent and meet business obligations. Here is how factoring works in a nutshell:

1. You invoice your customers and send a copy of the invoice to the factoring company

2. The factoring company advances you up to 90% of your invoices

3. You get immediate use of the funds. The factoring company waits to be paid

4. Once the factoring company is paid by the customer, the transaction is settled

Although many business owners will go to a factoring company to get financing, factoring companies also provide other important services. Most notably, factoring companies can act as your business credit department. They can review existing clients and new prospects and advise you of their payment habits. And since they manage your accounts receivable, factors can also provide you with important financial reports and financial analysis.

More importantly, a factoring company can help you grow your business. By turning your slow paying invoices into cash, they give you the financing and the flexibility to take on new opportunities. And, factoring financing lines don’t have arbitrary limits like business loans. They grow in relation to your sales. The more you sell, the more financing you get.

Because of these benefits, factoring companies can be great business partners and help finance your business growth.

Author: Marco Terry

Commercial Capital LLC

Need a factoring company? We can provide you with a factoring and invoice factoring quote. Call Marco Terry at (866) 730 1922 for more information.

Article Source: http://EzineArticles.com/?expert=Marco_Terry

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