Invoice Factoring

Link: http://www.ifgnetwork.com/solution

Confidence in the economy among small business owners is at its lowest point in 18 months, according to a new monthly survey by Discover Financial Services. The August survey of 750 small business owners nationwide revealed that 62 percent believe the economy is getting worse, and 55 percent economic conditions for their business to be unfavorable in the next six months. Discover said these factors caused its Small Business Watch index to drop 10 points between July and August, its largest month-on-month decline since November 2009. You can review the survey at the following link: Discover Small Business Survey.

The Intuit monthly survey shows a net gain in small business employment but it is a weak number .1% or 1.2% annual. The Intuit Small Business Employment Index is based on aggregate and anonymous online employment data from approximately 57,000 small business employers each with fewer than 20 employees.

While the surveys provide information, taking data from one month or two months does not provide an overall trend. Many businesses are doing well but the numbers are few and while credit remain tight there are ways to obtain working capital for a business through invoice factoring. This is a valuable "use it as you need it" service that can provide cash quickly when it is required.

Jan J. Cunningham

The Interface Financial Group

Link: https://ifgnetwork.com/solution.php

The Wall Street Journal reports, "Small-business legislation pending in the Senate would aid some profitable firms with tax breaks, but opinions are mixed on the extent to which it would help get credit flowing again. The Senate bill would inject up to $30 billion into community banks through purchases of preferred stock. Banks, which would have to volunteer to participate in the scheme, could get a lower repayment rate if they increased lending to small businesses.

Some owners of small firms are skeptical the lending provisions will bear fruit, saying that most businesses are just too leveraged to take on more debt."

As we have stated before, there is a need for some credit in the small business marketplace but taking on additional debt without having sales does not make sense. If this bill passes, will it really help small businesses. Existing businesses even with some credit problems, can obtain cash through a simple system of invoice factoring. Obtaining cash immediately for operational needs.

Jan J. Cunningham

The Interface Financial Group

Link: https://ifgnetwork.com/solution.php

A bill to aid small business is working its way through Congress. The Senate bill would create a $20-30 billion government fund to help community banks increase lending to small businesses. The Senate passed the bill last week over objections of many regarding how the bill will be paid for.  Once the Senate version was passed, the leader of the House of Representatives called legislators back over the weekend away from vacations and campaigning, to vote on the bill. It will most likely pass and will be sent to the President by the end of the week.

Politicians say banks should be able to use the lending fund to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets. The fund would be available to banks with less than $10 billion in assets.

As we have stated before in prior blog posts the issue is not so much about availability of credit, which can be a problem, as it is getting the economy moving so that small businesses can start growing. If you do not have business and are not growing you probably do not need nor should you want a loan.

Using invoice factoring, many businesses can get cash today based on current receivables. It is not a loan but can help turn the business into cash on delivery rather than having to wait for payment from customers who may also be experiencing cash flow issues. This may be a better option for businesses that are waiting for the economy to improve.

Video on Invoice Factoring

Jan J. Cunningham

The Interface Financial Group

Link: https://ifgnetwork.com/solution.php

The SBA Office of Advocacy has just released a new study examining small businesses’ use of credit and the use of bank credit (loans) and supplier credit (trade credit). Stating, "While there is a wide and growing literature on bank credit, trade credit has received less attention. As the new study documents, trade credit is almost as pervasive as bank credit in both incidence and volume. In this time of tightened credit, small businesses are looking not only to financial institutions, but also to their suppliers, as sources of funds.

While policymakers have focused on how to get banks to increase lending to small firms, they should also address the equally important trade credit channel of funding. In conducting their normal operations, businesses of all sizes extend credit to one another in the form of “accounts receivable.” For instance, a firm might submit an invoice with the “terms of trade” being “2/10 net 30.”  This means that a 2 percent discount is given for payments made within 10 days or the full amount is due in 30 days. This practice is referred to as “trade credit”—an instrumental tool for business financing.

Through an alternative form of financing, a company can turn those receivables into cash. While providing credit to customers through receivables is helpful in the business process, it can also be damaging to the business providing the credit."

Invoice factoring allows a company to provide credit to its customers while at the same time obtaining cash for important business operations and expansion.

Jan J. Cunningham

The Interface Financial Group

Link: https://ifgnetwork.com/solution.php

Following on the Discover Card Small Business Survey for July, is the National Federation of Independent Business July Survey.  Almost all of the survey responses have turned negative for the second consecutive month. This is a disturbing trend.

Regarding the Optimism Index the NFIB Survey reports the following, "The Index of Small Business Optimism lost 3.2 points in June after posting modest gains for several months. The persistence of Index readings below 90 is unprecedented in survey history. The performance of the economy is mediocre at best, given the extent of the decline over the past two years. The small business sector is not on a positive trajectory and with this half of the private sector “missing in action”, the poor growth performance is no surprise." (The entire survey can be viewed by clicking on this link Survey. Other small business surveys are indicating the same general trends.

Invoice factoring, sometime referred to as "spot factoring", allows a company to sell specific invoices at a discount providing immediate cash for business operations. This valuable alternative funding service is fast and requires no contract. It is a "use it as you need it" service that can provide immediate cash when required by the business. For additional information about this service click to view a video on Invoice Factoring.

Jan J. Cunningham

The Interface Financial Group