Factoring Transportation Receivables

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Running a transportation company properly and professionally can grow beyond your expectations. At the same time, this type of business also presents a cash flow challenge for the owner. Transportation is a cash intensive business with many expenses that can’t wait. There are drivers, fuel and repairs that must be paid for. However, clients can take a long as 60 days to pay their freight bills.

Waiting up to 60 days to get paid is nearly impossible for most small to mid sized transportation companies, especially when they’re new or rapidly growing. Few have the required cash reserves to cope with the increasing expenses of growing a venture. The ideal form of financing in the above scenario would be factoring receivables.

Factoring receivables such as freight bills provides carriers and logistics companies with immediate liquidity and enables them to meet business expenses on time. It eliminates the juggling act of managing client payments and business expenses, greatly streamlining business operations. Basically, when used properly, factoring receivables provides an effective platform for growth.

Factoring receivables works by providing an advance of up to 90% on your invoices. The advance is provided immediately upon invoicing. You get the balance (the remaining 10%), less the factoring fee, once your client pays for the invoice in full.

The Interface Financial Group provides an easy and efficient way for factoring receivables (invoice factoring), within a much shorter time frame than traditional factoring companies. As the only Spot factor in the world, and operating in 7 countries, Interface financial has the experience and the resources to get your business back on track by factoring your receivables and getting you the cash you need to build your business on your terms.

Sabeen Ahmed
The Interface Financial Group

Good News?

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Though the stock market has been down during October and November there are signs of improvement in small business confidence, consumer confidence, home sales, construction and employment. Is this news to cheer about?

As we have stated in prior posts, the economy will go through fits and starts on its way to recovery. One month there will be good news and everyone will be cheering, the next month will be bad news and confidence indicators will drop. The economy continues in this mode but it does appear without doubt that the trend is upwards.

New businesses are being started, businesses that survived over the past three years and have re-invented themselves are growing, some banks are providing capital to select small businesses and overall the signs are positive. So, what happens now?

As businesses are started or are growing again, there is going to be a need for capital. For most, it will not be coming from there local bank. These businesses can strategically use invoice factoring to provide capital to the business when required. No fees and no contracts, just cash as needed and when needed.

Re-building Construction Companies

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The collapse of the housing market and subsequent downturn in the economy severely affected the construction industry and especially sub-contractors. Although it may be sometime before the housing industry recovers, there are construction projects springing up all over the country.

Many in the construction industry have had to re-invent themselves and are now beginning to re-build their businesses around new opportunities in the marketplace. These companies, as they begin to grow again and take on new work, may need capital to assist in buying materials, hiring additional labor or meeting other expenses.

Invoice factoring can help significantly in getting cash to the business owner when he needs it. The owner can sell quality invoices and obtain cash quickly once an account is established. There are no contracts, no application fees and is a “use it as you need it” service.

Jan J. Cunningham
The Interface Financial Group

Cooperating With Due Diligence

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While securing factoring companies that would process your accounts receivable invoices, just know that it is a relatively simple process. The factoring services company will have a due diligence process that it needs to complete before funds can be transferred to you. They will look at a couple of things: mainly your customers and their credit.

An invoice factoring company will use public databases to research your company looking for priority liens on its assets. If your company has liens from other finance companies or banks, federal and state tax liens or lawsuits and judgments against it, this may affect your ability to factor your invoices as these liens can garnish income your company receives.

The factoring company will then review your customer’s credit using the major credit reporting bureaus just to make sure that they can take a credit risk on them. This is one of the benefits of factoring, as it is the customers whose credit is run, not your credit.

But factoring companies will also focus on you, the owner of the company. Most of this research is to check whether you have any criminal activity in your past and the amount of expertise you have in your respective business or industry.

You should be as cooperative with your factoring company as possible during this process of due diligence and verification. As long as your factoring company receives favorable results from its research, your application will proceed smoothly and quickly. As the client of a factoring company, you should be comfortable with the fact that your factor will have contact with your customers. This is a normal part of the process that provides you access to quick financing.

Kristin Gabriel

2012 Construction Forecast

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“A fifth straight year of decline is how 2011 will go into the record books, with no growth likely next year.” That’s the forecast from McGraw-Hill Construction.

“In light of the sluggish economy, construction spending continues to limp along in a depressed state with few limited signs of hope on the horizon. McGraw-Hill Construction estimates that 2011 will close out with a 4% drop in total construction starts to $410 billion, marking the fifth year in a row of decline. Analysts forecast that 2012 will see essentially flat activity with an estimated $412 billion in starts.”

This is a sobering report. Single family starts were expected to rise this year but did not and it does not appear that it will change in 2012. It is now expected that a housing recovery will not start to take place until 2013/2014. Stimulus money that had bumped up infrastructure and government projects is winding down and there is currently no expectation that more money will become available. The good news in construction has been multi-family projects which have seen an increase and will continue for 2012.

There are many projects in process and others that will come on-line over the next several months. For sub-contractors needing capital for these projects they can turn to invoicefactoring.php to obtain cash quickly and as needed.

Jan J. Cunningham
The Interface Financial Group

Green Shoots for Some Small Business

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There is no doubt that small business continues to suffer even though the recession was officially over two years ago. Small business confidence indicators are down and the most current surveys paint a bleak picture through the remainder of the year.

There is one area that appears to be improving and that is the construction industry. There is an uptick in construction projects related to infrastructure along with municipal, state and federal governments.

Most construction contractors suffered serious declines in capital over the past three years and are unable to obtain traditional financing when taking on new projects to pay for supplies and wages.

Invoice factoring of construction receivables can provide the needed working capital to cover cost through a project. The service is fast, there are no contracts and can be used when needed. This valuable service can help construction businesses through the rough spots and allow the businesses to continue taking on new projects knowing that there is cash available when needed.

Lack of Sales Continues to Plague Small Businesses

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It is the beginning of the last quarter of 2011 and the National Federation of Small Business reports, “Sales remain the largest problem for small firms—a full quarter identifying “poor sales” as their top business problem. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months lost 1 percentage point, falling to a net negative 9%, with more firms with sales trending down than up. Not seasonally-adjusted, 27% of all owners reported higher sales (last three months compared to prior three months), down 2 points from the prior month, while 28% reported lower sales (unchanged). Expectations for future sales are also in decline, with the net percent of owners expecting higher real sales falling 10 points in August, to a net negative 12% of all owners (seasonally adjusted), 25 points below January’s reading. Not seasonally adjusted, 21% expect improvement over the next 3 months (down 6 points) and 34% expect declines (up 7 points). Owners appear to have lost confidence in the economy and the government’s ability to assist the recovery.”

Few firms reported that obtaining credit is a problem, the result of lackluster sales. When companies are not growing there is not much need for expanded capital. The lack of sales continues to be a problem for small businesses. We expect this to be a continuing problem until confidence is restored.

Small business that are seeing growth have financing options available through invoice factoring. A service where receivables are sold at a discount providing immediate cash to the business. The service is fast and personal. New clients can be funded in as little at 24-48 hours and for repeat transactions, in as little as 2-4 hours. This “use it as you need it” service can help those companies that are growing or have short term cash flow needs.

Jan J. Cunningham
The Interface Financial Group

Small Business Confidence Wanes

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(Reuters) – “Small business confidence fell to a two-year low in the third quarter on increased economic uncertainty that could keep growth on a slow path and unemployment elevated through 2012. Vistage International said on Tuesday its confidence index dropped to 83.5 from a reading of 92.9 in the second quarter. The index is compiled from a survey of more than 1,700 small business chief executives.”

Once again we see small business confidence falling. In prior posts, we commented on the fact that this recovery will be slow and will go through periods of two steps forward and one back. It appears that currently it is one back based on the small business confidence indicators for the past quarter.

IFG experienced an increase in business through the summer months with a large increase in new clients searching for funding sources. These new clients sold receivables to generate cash for expanding business. Using IFG’s invoice factoring solution helped these businesses continue to grow during a difficult recovery.

Invoice factoring allows businesses to obtain cash quickly and easily. Once a client is setup, repeat fundings can occur in as little as 2-6 hours providing cash when needed. It is a “use it as you need it” service with no contract and no additional fees.

Jan J. Cunningham
The Interface Financial Group

Money for Small Business

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The government is providing funds to banks around the country to be used for small businesses. It is difficult to ascertain what the selection process is. Not all banks are receiving these funds and the amount provided ranges considerably from one bank to another.

What we do know is that many small businesses will never see this money. The funds will be loans and lines of credit for small businesses that have excellent credit. The banks will not be lending to the majority of small businesses.

There are options available though through various types of alternative financing for those businesses that will not qualify for traditional lending. Invoice factoring is one option that provides for fast and efficient receipt of funds based on a companies receivables. This service is available to any B2B business that has current receivables and needs working capital to help with cash flow restraints caused by growth in the business.

While the banks are not going to be lending to most small businesses it does appear that funds are getting to select banks and in the future may become available to less qualified companies.

Two Steps Forward and One Back

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The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, gained 13 percent in July from a year earlier, PayNet said on Wednesday. That followed a revised 22 percent gain in June, and a 27 percent gain in May.

As measured from a month earlier, the index declined 7 percent, and is now just above the level reached in April. “It’s two steps forward, one step back,” Phelan said in an interview. “It’s really an indication of the slow growth of activity.”

As we have seen recently, business lending is improving for many businesses but for some like construction, new businesses or business with no credit it will be impossible to obtain bank financing. Invoice factoring provides a workable solution for business that are unable to qualify for traditional financing. The service is fast and efficient and can get capital into the hands of the business owner for use in helping to grow the business.

Jan J. Cunningham
The Interface Financial Group