2012 Necessities for Small Businesses

Posted on 01/23/2012 by admin

Regardless of the resolutions that may have been made for 2012, there are several items, often overlooked or ignored, that are necessities for small business and are critical to small business success.

1. Business Plan – too many businesses operate by the seat-of-the-pants with little or no planning. Having a plan helps keep the business focused and the major benefit to you is the value the comes from the thought process one goes through when developing a plan. Establish goals and develop a plan to meet the goals. Update the plan as least quarterly making adjustments where necessary.

2. Accounting and Financial Statements – Accurate accounting is a necessity for every business to help manage the business, for taxes and for banks and other that need to understand the business. It is very important to be able to track revenues and expenses and to know what products or services are generating a profit. Having good accounting and financial statements are of the highest importance for any business.

3. Marketing – incorporated in the business plan should be the Marketing Plan for the business. Are you effectively marketing the business? What metrics are being used and measured? What is not working and what is?

4. Customer Service – do you understand and know who your customers are? Are you focused on providing the highest level of customer service? What is your customer satisfaction level and how is it being measured? Excellent customer service can increase sales but today, news of bad service can reach thousands of individuals in minutes.

5. Cash Flow – positive cash flow is the life blood of a business. When businesses are cash flow constrained it is important to have sources for cash when it is needed. Invoice factoring can provide cash quickly when required without hampering the business and is used by thousands of small businesses to help with cash flow.

Jan J. Cunningham
The Interface Financial Group

Factoring Transportation Receivables

Posted on 12/12/2011 by admin

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

Small Business and the IRS

Posted on 06/03/2011 by admin

The Wall Street Journal recently reported the following, “The Internal Revenue Service, moving aggressively to collect more taxes from small businesses, is telling companies being audited to turn over exact copies of the electronic records kept in their business-software programs, according to a letter from an agency official to the American Institute of CPAs.”

It is always important to keep good financial records in order to understand how your business is doing but it looks like it may become much more important if the IRS is requesting files from automated accounting software. Banks, factoring companies and now the IRS will want to see financial statements. Well kept accounts make it easier to provide the requested information. IFG’s invoice factoring service will always require financial statements as a part of the initial requests for information as will other financial institutions.

Maintaining good financial records is important and can save you considerable time when applying for money or working with the IRS.

Jan J. Cunningham

The Interface Financial Group

US Small Business and the Economy

Posted on 05/28/2011 by admin

A recent quote in a Stansberry publication stated, “We own a small [business]… 15 employees. We cannot raise prices because of market pricing competition. Our cost of goods have gone up… rent etc. we are being squeezed on profits which have been [negative] for 2 years. Small business which is the largest employer in the country is having a difficult time adjusting.”

This is not unfamiliar, many companies are facing the same issues and continue to work hard to overcome the problems. The economy as it relates to small business continues to be a mixed bag. The April Discover Small Business Watch states that, “April results show a surge in the number of small business owners who say economic conditions for their own businesses are getting better: 30 percent of them say the climate will improve in the next six months, compared to only 20 percent in March. Of the remaining respondents; 48 percent say the climate is getting worse, but that number is down from 53 percent in March.”

There may be some downward revisions in the next survey as several economic indicators are showing a possible slow down in economic growth which could have a big impact on small businesses. Those businesses that are growing can benefit from invoice factoring to assist with cash flow. Funds can be obtained in 24 or 48 hours when required and there are no contracts, it is a “use it and you need it” service.

Jan J. Cunningham

The Interface Financial Group

Diving Deeper

Posted on 05/23/2011 by admin

An important part of Due Diligence is the Site Visit, site visits must be taken seriously when performing Due Diligence for invoice factoring transactions. The site visit is an opportunity to ask questions that may not have been covered in the original telephone inquiry or application for invoice factoring and to look at the operation and determine if it is being effectively managed. It is also an opportunity to dig deeper for information and to evaluate the character of the individual(s). Any “red flags” identified in initial discovery or during the site visit, need to be considered and questions asked in order to eliminate the flag.

The site visit is an important aspect of Due Diligence. It must be taken seriously and performed well. This is an opportunity to discover what may not be identified during other aspects of Due Diligence. When funding a client on a repeat basis a periodic follow-up visit to the company is recommended.

Customer refuses to sign Notification…Now what?

Posted on 03/18/2011 by admin

You finally sign on with a factoring company, you are almost ready to get funded. Usually, the last step in the process is for your customers to sign a Notification of Sale (also known as a NOS), which then allows you to factor the invoices for that customer. The catch – sometimes customers refuse to accept or acknowledge the notification of sale. This can be a problem because factoring companies will not fund your invoices until your client signs/acknowledges the Notification of Sale. Stated simply: your company’s cash flow could be affected if an important customer refuses to acknowledge the NOS.

There are some approaches that can help minimize the chance of this problem occurring. The best way is to be straight forward about the value factoring brings to your customer. Basically, why should your customer sign the NOS? What is in it for them? Why would they care if you get factoring? The only answer that I have been able to come up with is that by having an invoice factoring line, you will be able to offer them flexible payment terms. You also won’t (or shouldn’t) be calling them asking for quick payments. So, you are offering them financing in the form for flexible payment terms in exchange for their cooperation with your factoring company.

It’s good to remember that customers love to get net 30 to net 60 payment terms. It’s free financing and it allows them to better manage their own cash flow, usually at your expense. So in my view, the argument that factoring allows you to offer them good payment terms is a solid one.

No approach is guaranteed to work – but showing a customer how something benefits them (rather than how it benefits you) is a good place to start.

Sabeen Ahmed

The Interface Financial Group

Clear Cut Financial Statements Required

Posted on 02/14/2011 by admin

Most in the industry know that factoring companies tend to have more business during downturns. And now that the economy is in a credit crunch, small business owners are flocking to invoice factoring companies. But for some reason, a number of these new prospects are missing the boat and not getting their financing.

Why? A number of them are neglecting to present their applications with care. And many are just turning in awful financial statements. And by awful, I mean: Items are mislabeled, Amounts are incorrect, Items don’t make sense, Listing personal expenses as business expenses and the list goes on.

To be frank, it’s no wonder they got turned away by a bank and could not qualify for a business loan. But unless they are a bit more careful, invoice factoring will not be an option either.

So, if you are looking for business financing, invest a little money and have a professional (e.g. CPA) prepare your financial statements.

Sabeen Ahmed

The Interface Financial Group

Construction on the Rise?

Posted on 01/25/2011 by admin

“Permit issuance for construction of new homes and apartments rose 16.7 percent in December to a rate of 635,000 units, the strongest pace since March of 2010. Building permits, which can be an indicator of future building activity, rose 16.7 percent in December on gains in both the single- and multifamily sectors. Permits rose by substantial margins in three out of four regions in December, with gains of 80.6 percent, 3.3 percent, and 43.9 percent recorded in the Northeast, Midwest and West, respectively. The South was the only region to post a decline in building permits, of 7.6 percent” as reported by the National Association of Home Builders.

“The latest government report indicates that builders are preparing for an anticipated improvement in buyer demand in the spring buying season by pulling more permits in hopes of soon replenishing the very tight inventory of new homes for sale,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “That said, it remains to be seen if the availability of financing for new construction and existing viable projects will improve in order to make building feasible and facilitate a housing and economic recovery.”

This is encouraging news for the construction industry. New permits will provide for more jobs as construction begins. As growth slowly returns, construction sub-trades will need capital to cover expenses. Banks are not going to be willing to rush back into construction lending but sub contractors can obtain funding through an invoice factoring facility, providing needed capital to pay employees, other sub contractors and suppliers.

Jan J. Cunningham

The Interface Financial Group

Small Business and the Economy

Posted on 01/20/2011 by admin

The U.S. economy looks to be in better shape, but a full recovery will only be achieved once small firms begin to prosper, Federal Reserve Chairman Ben Bernanke said Thursday. Mr. Bernanke said the economy should expand at a healthy pace of between 3% and 4% this year, but that still won’t be enough to cut a high unemployment rate. ”We do want businesses that are viable and have good business plans and lots of experience backing them up to get loans,” Mr. Bernanke told a small-business forum.

The Fed is pushing banks to lend again but the lending will only be going to established companies with strong business plans. Where does that leave the rest? The new businesses that have started, those that were damaged over the past three years or companies that may have had credit problems as a result of the economic downturn? The banks are not open for these companies but there are alternative funding sources available. Small business can use their assets (accounts receivable) to needed capital. Invoice factoring allows a business to sell select invoices and receive the cash needed to grow and expand as the economy again begins to grow.

Jan J. Cunningham

The Interface Financial Group

Small Business Blog Posts

Posted on 01/06/2011 by admin

Over the past two years, we have published a number of blog posts. These posts were about small business, the economy, small business surveys, due diligence, risk management and many other topics. As the new year begins, we thought it would be of value to review past blog posts and republish some that bear repeating updating information where appropriate.

Some will be a look back, others will contain information that is relevant every day to small businesses. We hope you enjoy the information and will find it informative and useful to your business.

For more information on invoice factoring (click) or visit our website at IFGNetwork.com.

Jan J. Cunningham

The Interface Financial Group