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02 Apr
America Receivable Business Value, Cash Flow,
Avoid Diminishing Your Business Value with These 10 Tips

You may have no intention of selling your small business now. However, you have to accept that your small business will change hands one day. You might pass it down to the next generation, sell it, or, unfortunately you may need to close it down. Even if a change in ownership won’t happen until well into the future, it is always a good idea to plan for an inevitable transition and benefit your business value in the present. You may not plan on selling your business anytime soon, however, following these tips now will keep you from diminishing your business value when you are ready to make a change.

    1. Make sure that someone else knows how to do your job. It is important that your business has the capability to succeed in your absence. Train your team members to handle operations. Prospective buyers will have more interest in a business that continues to thrive and maintain its business value  Share your techniques for maintaining cash flow.  Invoice factoring is a great way to keep cash flow positive.
    2. Develop procedures for all of your business’s operations. Having a go-to guide or manual will establish consistency and accuracy for all of the tasks managed in your small business will add business value to you currently, and to any future buyers.
    3. Give your employees job security. Employee retention will help your cash flow. The process of hiring and training is time-consuming and can be costly. When you are ready to sell, retaining seasoned employees will appeal to buyers and add to your business value.
    4. Keep accurate and up to date financial records, and a financial reporting process. Having a clear picture of your cash flow, revenues, profits, and costs will help you see where improvements can be made to increase your business value. When you are looking to sell, prospective buyers will want to see organized and accurate financial statements and tax returns.
    5. Do not neglect accounts receivables. Your small business will have a diminished business value if you have a large amount of uncollected accounts receivable. This will hurt your cash flow and your bottom line. If you have challenges with past due receivables and need to improve your cash flow consider invoice factoring from American Receivable. Prospective buyers will want to see a solid procedure for collecting from customers.
    6. Diversification guards against changing tastes and economic recessions. You may be making great profits on your current products or services, but diversifying will help improve your cash flow and business value by putting less dependence on just one or two primary products and/or services your company offers. Also, consider diversifying your client base. If you depend on just a few large clients, your business value—and cash flow—will greatly reduce if you lose just one of them.
    7. Strive to increase cash flow each year. Consider invoice factoring and other non-traditional small business financing to improve your cash flow. Your business value will rise if your cash flow trends upward each year instead of remaining level.
    8. Define your competitive advantage. Why are you better than your competitors? Figure out your competitive advantage, and promote it. Having a competitive advantage will increase your small business value to potential buyers.
    9. Have a clear growth plan, including how to finance the growth. Project the cash flow needed to cover the costs of growth. Educated yourself business financing, such as business loans, and non-traditional financing, such as invoice factoring. Having a plan already in place will add to your business value.
    10. Try to remove the emotion. You undoubtedly worked hard to make your business successful. It may be hard to let go.  Keep the emotion out of it.  Prospective buyers are only interested in the value of the business in the future.

Whether you are selling a business now, or not for many years, it is important to consider your business value in the daily operations of your small business. When you do plan to sell, you will get top dollar for your hard work and dedication. Plus, circumstances may change at any time, and you may not have time to plan ahead for a needed sale. However, if you follow these tips and avoid diminishing your business value, you will be attractive to buyers at any time.

Help the business value and growth of your small business by increasing your cash flow with invoice factoring. American Receivable has been providing small businesses with financial resources for almost 40 years. With no up-front fees, hidden costs, nor long-term contracts, American Receivable is the national #1 leader in factoring.  Call for a FREE Quote Today: 1-800-297-6652 or complete an application for factoring online.

27 Mar
American Receivables - Financing vs Funding
Financing vs Funding for Small Business

Financing a business can be a challenge.  The old tradition of walking into the bank to get a loan has become more complicated.  You can no longer get a loan on a handshake.  As a small business owner, you may find that you do not qualify for a bank loan.  Banks require good credit and personal guarantees, which put you at risk if your business fails.   Banks usually require a proven track record of up to 3 years or more.   These criteria are impossible to meet when starting a new business.   This can be discouraging, because financing is crucial to any business.

Cash flow is the life blood to a business.  Operating expenses such as payroll, rent, office equipment, inventory, marketing, and the list can go on, require a business to have cash on hand to cover these expenses.  How you finance your business and the cost of the financing affects your bottom line and your ability to grow your business.

Family and friends are one source for getting cash and are a popular strategy for start-ups. You should present them with a strong business plan in place, as well as some incentive for them to take the risk.    Consider if it will be a loan, or if you will offer equity in the company.  It is also important to provide solid projections to indicate when they might get their investment back. However, if you run into problems with cash flow, or needing more capital, you may have to find new options.  The downside is that however you work it out, if the business fails, you may lose or damage the relationships.

Using a business credit card to finance your business can be helpful in emergency situations when you need cash, but using it for full time capital can be dangerous.  The interest rates are usually very high and if you only make minimum payments you will never be out of debt.   Falling behind on a credit card payment will put the business further behind and will damage the credit score of the owner. You can use it in temporary situations when your cash flow is problematic, but it will still be costly.

These are just a few of the options available in today’s market.  As a business owner, consider “funding” your business rather than financing your business.     Factoring or invoice factoring, has become more popular over the decades.  This method of funding allows you to use your receivables to fund your business and better manage cash flow.   Factoring is not a loan.  You, the business owner, sell your receivables (invoices) to the factoring company.  They in turn, give you a percentage usually within 24 hours and they wait for your customers to pay.  This is especially helpful with slow-paying customers. The factoring company waits for the payment and then returns the balance to you, less fees previously agreed upon.  Selling your invoices for cash, allows you to keep a positive cash flow for the needs of your business. Not all factoring companies are the same, do your homework. There are good companies in the marketplace, however some require long-term contracts and may require you to sell them all of your receivables.

American Receivable has been helping small business owners with funding and cash flow for 40 years. We work individually with each business owner to find the right solutions for their specific industry and needs.  American Receivable is ranked #1 Nationally among factoring companies by multiple ranking agencies.  We pride ourselves on excellent customer service, tenured and experienced account managers, and value our clients as our greatest assets.  We are owned and managed by the original managing partners.  Call American Receivable today and find out how we can benefit your business and save you time to manage and grow your business without the worry of cash flow and funding.

 

Factoring is not the same as invoice discounting (which is called an assignment of accounts receivable in American accounting – as propagated by FASB within GAAP).[8][1] Factoring is the sale of receivables, whereas invoice discounting (“assignment of accounts receivable” in American accounting) is a borrowing that involves the use of the accounts receivable assets as collateral for the loan.[1] However, in some other markets, such as the UK, invoice discounting is considered to be a form of factoring, involving the “assignment of receivables”, that is included in official factoring statistics.[9] It is therefore also not considered to be borrowing in the UK. In the UK the arrangement is usually confidential in that the debtor is not notified of the assignment of the receivable and the seller of the receivable collects the debt on behalf of the factor. In the UK, the main difference between factoring and invoice discounting is confidentiality.[10] Scottish law differs from that of the rest of the UK, in that notification to the account debtor is required for the assignment to take place. The Scottish Law Commission is[when?]reviewing this position and seeks to propose reform by the end of 2017.[11]

19 Mar
Use Your Business Corporate Culture to Improve Employee Retention
Group of business partners explaining ideas at meeting in office

Use Your Business Corporate Culture to Improve Employee Retention

In today’s business world, it can be challenging to attract talented and qualified employees. Even more difficult is employee retention: keeping team members happy, productive and engaged. When employees are not happy with the company work environment, and other jobs are available, they are likely to leave for greener pastures. Losing employees costs a small business time and affects cash flow, so finding ways to retain qualified workers is preferable to turnover. This article discusses how a positive corporate culture can help a small business retain employees and keep the team motivated.

What is Corporate Culture?

Corporate culture encapsulates the rules, values and behaviors that outline how employees behave and are expected to act in a workplace. For example, is the culture in your company to work overtime every day or have a work-life balance? How do managers approach conflict and disputes? Do employees work independently or collaboratively? Are upper-level employees approachable by all? Do you offer fair benefits or any extra perks? What is the expected attire? Does your business have employee retention programs in place?

Positive Corporate Culture = Employee Retention

Positive corporate cultures are sought after by talent. You will likely achieve higher employee retention if your business reflects the workplace values of your employees. It is important that the behaviors, rules and values on paper are reflected in actual practice. If you say that your culture is to encourage creativity through down time and respite, but then you don’t approve any requested vacation time, you are sending the wrong message and can alienate employees. It is best to lead by example and display the values and behaviors you want to be reflected as part of your culture.

A positive corporate culture will have employees feeling that they are an asset to the company. They will feel respected, cared about, and an important part of the team. The office atmosphere will be energized and encouraging. Happier employees will work harder and tend to be more productive, which is always good for the growth, profits and cash flow of a business.

Negative Corporate Culture = Losing Employees

If your small business has a negative corporate culture, you risk losing talented workers who want to seek greater job satisfaction, ultimately hurting your bottom line and cash flow. If you are losing a lot of employees, or you see that employees are not working well together, it is an indication that your corporate culture needs some reviewing. What behaviors do you want to see and how can they be achieved? For example, does management dictate a “yes, sir/yes, ma’am” attitude or do you want team members to be able to voice opinions and concerns? Be honest with your corporate culture’s faults and brainstorm ways to improve morale.

Employee retention starts even before the hiring process. How is your company thought of in the industry? Does your business’s reputation reflect having a positive corporate culture or do you have bad press?  Are your company values conveyed to the public accurately? Do you have a lot of negative or questionable reviews? In other words, are highly-qualified employees going to apply for open positions considering your reputation?

During the hiring process, it is important to make sure candidates will fit in with your corporate culture and be productive and satisfied once they encounter the day to day routines and behaviors. Ask pointed questions during the interview and make sure you have a match. This will save having to go through the hiring process again later, which will cost your company money and reduce its cash flow.

Job Satisfaction Improves Bottom Line

In today’s society, employees are putting value on quality of life in both personal lifestyle and in the workplace. A high salary is no longer the greatest incentive when choosing an employer. Employees are looking for companies that share their values, one that will bring job satisfaction, and offer a corporate culture that makes the workday something to look forward to. While most small businesses with smaller cash flow can’t afford catered lunches and weekly massages, there are still a lot of ways your company culture can be a positive one. This will keep your employees happy and productive, and keep you happy by helping your bottom line. Here are a few ideas:

20 Low-Cost Employee Retention Tactics to Try

  1. Give each employee positive feedback on an ongoing basis
  2. Offer a relaxed dress code and special dress-up theme days
  3. Provide continual training for workers, allowing them the opportunity to grow
  4. Determine which employees are looking for more to do, and give them added responsibility periodically
  5. Give your staff extra creative time to brainstorm ideas or work on side projects that interest them
  6. Express your appreciation regularly, even for the little things
  7. Get to know employees better and schedule one-on-one time with them
  8. Have open-ended conversations with employees, welcoming them to discuss what’s on their mind
  9. Evaluate how your work schedule promotes work-life balance
  10. Avoid or minimize sudden changes in the workplace
  11. Arrange for team lunches, dinners and/or social outings
  12. Ask your employees to offer feedback on important projects
  13. Keep the workplace organized, uncluttered, and low-risk from danger or accidents
  14. Empower employees by providing tools to complete their work faster or more effectively
  15. Allow employees to decorate their own work spaces and/or have an office decorating contest
  16. Provide adequate and regular rest periods throughout the day for your employees
  17. Create a comfortable relaxation zone or separate room where staff can re-energize
  18. Arrange for employee discounts at related entities
  19. Offer telecommuting “work from home” day options
  20. Encourage your team to thank one another and/or create a peer-to-peer recognition program

 

American Receivable, with offices in Dallas and Austin, can improve your bottom line and cash flow. We are ranked No. 1 nationally among small-business factoring companies and have a high satisfaction with our long-time staff. We provide small businesses with the financial resources and accounts receivable management strategies they need to improve cash flow, grow, increase inventory, make payroll on time, and effectively compete in the marketplace. American Receivable, helping small businesses since 1979, is the best choice for factoring and accounts receivable management. Call us for a FREE quote today at 1-800-297-6652, or complete the quick quote form below.

19 Dec
Get a Fresh Start in the New Year

A Fresh Start:  Keeping Your Employees Healthy and More Productive

A tidy and sanitary office is crucial for quality work.  Distraction lowers productivity, even on a subconscious level.  Studies have also shown that business offices are a breeding ground for germs causing illness, which takes employees away from work, lowering productivity and work quality.

A clean desk has shown to increase productivity.  Stacks of papers and files and other items cause clutter, which also clutters your mind.  It is recommended that after a task is completed, it is filed in the proper place.  How many times have you thought, “where is that file, or paper”? It is estimated that workers spend over 4 hours a week looking for misplaced items and correcting mistakes. If someone else needs the file, it will be easily found if it is returned to the proper place.  Productivity goes down and anxiety goes up when you are not able to locate what you need to complete the next task.  Filing things and putting supplies and other items away will create a more open workspace which will result in less mistakes being made.  Mistakes lessen productivity requiring a task to be done over.  A clean work area, uncluttered the mind as well and also makes things easily accessible.

The bottom line is that a healthy and productive workplace is not just keeping things in their place and immediately replacing files and other important papers. it is important to keep things like your computer, keyboard and other equipment clean and free of clutter.  10 sticky notes on your computer is cluttered are likely to fall to the floor.  Having too many personal items on your desk is also detrimental.  Put one personal item and find a shelf for other items you feel you need in your office. Employers should also require cleaning of electronic equipment, not only for health reasons, but for the maintenance and longevity of the equipment.  A printer full of dust is going to break down.  A keyboard with grime and bacteria will also stop working and will grow bacteria causing illness.  You touch multiple files and papers, pens and other things in an office. Imagine the germs lurking from everyone that has touched these things. Keep hand sanitizer in the office as well.  Healthy and organized employees are always more productive.

A sanitary and clear workspace makes for a clear mind and healthy body that can focus on tasks at hand.  If you have to go through stacks of paper looking for that one thing you cannot find, you will become anxious and frustrated, likely ending in a mistake. And, if there is bacteria on your desk and computer and throughout the office, illness is eminent, which will impede productivity.

Take some time before the new year and get everyone to spend some time cleaning and organizing the office.  It will make for a fresh, productive start to the new year.

Spend some time at the end of the year discussing this with your employees and involve them in cleaning the office.  Cleaning companies do basics and will not make your office sanitary.   It will make for a fresh, more productive office and healthy employees who are at work and able to do their job.   Start the new year off right!

05 Dec
Improve Your Business Cash Flow

Improve Your Business Cash Flow

Did you know that even if your income statement shows that your business is making a profit, your business can still not succeed? Just because you are profitable on paper, you still might not have a positive business cash flow. And, without cash, your business simply runs out of money and has to shut down. Cash flow problems are one of the biggest reasons small businesses fail.
Business Cash Flow

What is Business Cash Flow?

The definition of business cash flow is pretty simple. It’s the movement of cash flowing in and out of your business. Cash comes in to your business when clients or customers pay for your products and services. Cash goes out when your business pays for expenses such as inventory and rent. When cash flow in is greater than cash flow out, you have a positive cash flow. When more cash is going out of the business than is coming in, the cash flow is negative.

There are some times when a business can expect their cash flow to be negative. It’s important to plan for those times by keeping more cash in reserves. If you are just starting up, you may have many one-time expenses to get your business off the ground—such as equipment and advertising—before you get any paying customers. Also, if you are a seasonal business and experience fluctuations in orders based on the time of year, it is important to manage your business cash flow wisely.

How to Manage Business Cash Flow

Keeping track of your business cash flow will help you see where any issues may be. A cash flow statement will compare accounts payable to accounts receivable. It will also help answer questions such as:

• How much is your company owed by clients?
• How many invoices are still overdue?
• How long does it take to get paid by clients after paying suppliers?

If more items are payable than receivable, you may have a potential cash flow problem in your future. The sooner you fix a cash flow issue, the better off your business will be. If you avoid the issue, you risk getting further and further behind, resulting in the possible loss of your business.

How can you make changes to move business cash flow back into the positive? Here are some ideas:

• Short-term financing can help bridge a short-term business cash flow gap
• Long-term loans help spread large asset costs over time
• Invoice factoring
• Sell assets no longer helping with profits, such as older equipment, to liquidate cash
• Reduce business expenses
• Find strategies to increase sales
• Implement procedures for receivables to come in faster, such as twice monthly invoicing, shorter payment terms, deposits on large orders, and more
• Wait to pay bills as long as possible without consequences of late fees and spoiled relationships

Financial advisors often recommend keeping 3-6 months of expenses in cash reserves for emergencies and unforeseeable situations. This advice carries over to business accounts, as well. Having cash in your back pocket for a rainy day may save your business in times of struggle.

Small business owners must learn and maintain smart cash flow management in order to succeed and stay afloat. By applying some simple cash management strategies, you can keep your business thriving. Both your business outlook—and your business cash flow—will be positive.

Factoring: A Business Cash Flow Solution

If business cash flow problems are creating concerns for your small business, invoice factoring may be a solution.  Put your trust in the best and call American Receivable to learn how our flexible factoring solutions help businesses like yours.

American Receivable, with offices in Dallas and Austin, is ranked No. 1 nationally among small-business factoring companies. Since 1979, we have provided small businesses with the financial resources and accounts receivable management strategies they need to grow, increase inventory, make payroll on time, and effectively compete in the marketplace. Simply put, we are your source for factoring and accounts receivable management.

Our clients are our priority. At American Receivable, we pride ourselves on our exceptional customer service and dedicated and tenured account managers. We can provide funding within as little as 24 hours in some cases. The success of our clients is the success of American Receivable. Call us for a FREE quote today at 1-800-297-6652, or complete the quick quote form below.

13 Nov
Thanksgiving Through the Years

Thanksgiving Through the Years

The first Thanksgiving in Plymouth Colony which is now Massachusetts was in 1621.  The last Thursday in November was declared a national day of thanksgiving by Abraham Lincoln  200 years later.  In 1941 Congress made Thanksgiving an official national holiday. A day of “thanks” and “giving”.

Thanksgiving has traditionally been a day of family and friends getting together for a meal and fellowship.  A day to stop and reflect on all of the blessings we share.  In 1876, football was introduced as a tradition.  Yale and Princeton played the first American Football game on Thanksgiving day.  People were off from work and were able to go see football. It was not until 1934 that the first football game was broadcast.  The Detroit Lions played the Chicago Bears at University of Detroit Stadium and a new tradition, which later became a television broadcast.

Thanksgiving has changed over the years.  While many of the original traditions remain, new ones were born.  Black Friday became a big tradition for many families.  Getting up at early hours to go Christmas shopping for the best deals.  The idea came from retailers showing losses seeing a surge in sales on discounted merchandise on  Black Friday, often bringing their revenues back in the black.  Retailers started opening early on Black Friday and advertising big sales.  In the last decade, lit has become a Thanksgiving evening tradition with stores opening on Thanksgiving evening and staying open 24 hours. People have made their own traditions as well.  Many take vacations and skip the big meal and the shopping, although most still incorporate a game of football in the plans.

Thanksgiving is celebrated in many ways.  However you celebrate, remember to give “thanks” and “give” to those in need.

American Receivable is thankful for our customers and our relationships in the financial industry.  We wish everyone a safe and happy holiday.

In the words of the late Erma Bombeck:

“It takes 18 hours to prepare a Thanksgiving meal,

 It takes 12 minutes to eat it.  Half-times are 12 minutes.

 This is not a coincidence.” 

31 Oct
The Cash Flow Struggle

cash flow problemsThe Cash Flow Struggle

Cash flow is essential to any growing business.  When cash flow slows down, it can cause the business to drop revenues or completely fail.  In order to keep from failing, business owners have to look at their business practices and figure out what is causing the cash deficit.  There are many possible reasons for the shortage of cash flow as well as simple ways to eliminate the problem.

New streams of revenue may be a possible answer. Can you diversify your business to include other services that would bring in regular cash flow?  Adding the right services to your current business can help fill in the cash flow gaps.

Don’t overestimate when forecasting cash flow.  Bee conservative and consider worst-case scenarios when forecasting for the future.  Planning ahead will help your business stay afloat and reduce risks in the event of an unexpected cash flow shortage.  Consider prior years when forecasting your upcoming year.   Late payments from customers or large unexpected business expenses can lead a business into a cash flow crisis.

Collecting from customers can be a constant struggle.  Look at your current collection practices and look for ways to make them more efficient and effective. Implementing software that can flag overdue accounts and send reminders to customers should be utilized.  Follow-up phone calls or emails may be required, however, the software will give you the assurance that reminders are being sent and your accounting division is aware of any problem accounts.

Evaluate the time management and resources of your employees.  Are they using time effectively?  Are your employees using resources too quickly that could be used more conservatively? Are they spending too much time in one area and too little time on something more crucial like collections or verifications?  Efficiency in your business will be a helpful tool for cash flow management. 

Business expenses and operating costs.  Know how much revenue is being spent on office supplies and other expenses.  Businesses often order supplies that are not really essential for daily operations that could be purchased on an as-needed basis. Look at your supplies and order only what is necessary.  A smart business owner will always be on top of revenue coming in and going out.

Cash flow is the most important asset for a business.  Make sure your business is utilizing your cash effectively for growth and longevity.

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