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Business owners know that happiness is a positive cash flow!
But, every now and then entrepreneurs are caught in a cash crunch. The long-term solution to this is a detailed examination of every expense, an analysis of pricing and investigating bringing on outside capital. The process takes time and won’t help meet payroll by Friday, or other operational costs. Every business owner knows this drill – drop everything and start dialing for dollars! In a frantic effort to get money into the bank, the owner starts calling customers to coax them to quickly pay their invoices. Since this is an emergency, calls are made to the customers with the best relationships and those most likely to respond to a plea for a quick payment. And while this may be one way to get cash in to meet the immediate expenses, the owner’s best customers are wondering about the strength of the business and the slowest paying customers may have gotten overlooked entirely.
Business owners finding themselves in a cash flow deficit...
...being looking for additional capital to meet these needs, overlooking the fact that they never established a collection policy for delinquent accounts. Following a few easy steps with each invoice issued, the owner will experience timely payments eliminate those desperate cash shortages just before payroll.
The first step is in the details
Even if you are providing service to a company down the block, verify where invoices are to be sent, who needs to be copied, and who approves your invoice for payment. Get the contact information for accounts payable, e-mail and phone numbers. An invoice sent to the wrong address is rarely forwarded. Follow-up on your invoices and get confirmation that the invoice is approved for payment. Also, confirm the customer understands the payment terms on the purchase order, and ask if you can offer a discount for early pay.
You know when your invoice is due...
...have someone from your company call several days before payment is due to verify that the invoice is in line for payment on that day. A little follow through will keep you up to date and help avoid problems that your customer may have with your invoice. The customer will also know that you are on keeping up with your business and that you will be verifying invoices and staying on top of them to pay. This takes time away from promoting your business but is necessary unless you find another solution.
When customers do not accept discounts for quick pay or are just slow, there are other options. One of these is invoice factoring, a simple solution to shortages and immediate cash for your business.
Cash flow is one of the most crucial factors to success in your business...
Funding your business through invoice factoring works like this:
The business owner sells his completed invoices to the factoring company. The factoring company verifies the invoices and funds the business owner with a percentage of the total, usually 85-95%, When the factoring company receives payment on the purchased invoices, they return the balance or “reserve”, less the agreed upon fees. The factoring company will stay up on when the invoices are due and allow you more freedom to promote your business.
The business owner has consistent cash without waiting for his customers to pay, and by using his own assets, does not incur debt for his business as he or she would with a traditional bank loan.
A few simple steps will keep your business on track, your cash available for running your business and peace of mind for you, the business owner.
Call American Receivable today and let us show you how we can give you peace of mind...
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Why Should Your Business Consider Hiring Veterans?
It can be challenging for veterans to transition back to civilian life, especially when it comes to finding a job. Many of the tasks performed and skills acquired during military service don’t translate to the skills listed in a more traditional resume. However, with some understanding of how military skills can be utilized in the corporate workspace, employers will find that there is a great advantage in hiring veterans.
Top 5 Reasons for Hiring Veterans
1. Trained for Leadership
First of all, veterans excel at working in and leading teams. Military training includes putting the greater good ahead of personal interests. Trained in collaboration and cooperation, veterans look out for the goals of the team and not just personal gain. This develops trust among the team and helps it to succeed and achieve their objectives. In the military, veterans learn leadership skills and also gain valuable experience working with both subordinates and superiors. Plus, as most men and women join the military as young adults, they have developed and honed their leadership qualities for a longer period of time than most corporate workers.
2. Quick Learning
Veterans were constantly learning to meet the expectations and master the skills necessary to fulfill their duties in the military. Through personal development, formal schooling, or in unit training, veterans started learning from the moment they joined the military. They develop a growth mentality and continue to seek out new knowledge and training. Military personnel is expected to learn quickly and efficiently, retain the information, and shift to something else.
3. Adaptability and Flexibility
Another asset of military training is adaptability. When hiring veterans, you gain an employee is quick thinking and can switch gears as needed. In the military, one never knows what the day might bring, what obstacles may be encountered and what tasks need to be accomplished. A veteran will be able to adapt to new environments, hurdles, and changing goals.
4. Performance under Stress
Hiring veterans will give you an employee that handles stress well. They will not be shaken in stressful situations and won’t buckle under pressure. In the military, mistakes and bad decisions can permanently affect lives, so veterans are trained to take their jobs seriously and avoid rash decisions. They analyze information, work through the problem, and trust their intuition.
5. Open to Direction
In addition, veterans can take constructive criticism well. They are used to debriefing and reviewing after tasks and actions. They know how to gain insight and identify areas that need improvement. When your company hires a veteran, you get the benefit of his or her experience with analyzing situations for missed opportunities and/or blind spots. Plus, you can be assured that any fixes and corrections will be applied without hurt feelings. Veterans will continually seek growth and improvement.
Common Characteristics of Veteran Employees
When hiring veterans, you also gain an employee with a vast array of additional experience and qualities:
- Technical experience and training
- Organizational skills
- Problem-solving skills,
- Keen decision makers
- Isn’t afraid of hard work
- Takes responsibility seriously
- Initiative and drive
- International familiarity, which can be a great asset in our global economy.
If you aren’t already convinced that hiring veterans is a wise business decision, you will be excited to learn that there are some available incentives and tax benefits. To learn more, visit the Veterans Affairs website.
Are you looking for other ways to help your business? Do you need money to finance payroll, inventory, and other expenses? American Receivable has over 100 years of combined financial service experience. Since 1979, our outstanding professionals have been dedicated to each client and their specific needs. There are no up-front fees, hidden costs, or long-term contracts, which are common with our competitors. Call for a FREE Quote Today: 1-800-297-6652 or complete an application for factoring online.
Bank Said No? Top 5 Alternative Financing Options for Your Small Business
Madeline owns a small printing business and needs additional capital to purchase new equipment and to hire an extra sales representative. She approached her local bank for a traditional small business loan and was declined. Devastated, Madeline doesn’t understand why her successful business can’t secure a traditional bank loan. Unfortunately, this happens more than you would think. Small businesses are often unable to secure traditional loans to fund growth and get needed cash for expenses. That’s where alternative financing can greatly benefit small business owners like Madeline. With so many alternative financing options available, your small business can find the capital you need to grow, fund research and development, increase inventory and pay your expenses.
Here are the top 5 alternative financing sources for your small business:
1. Invoice Factoring
This is one of the best options for small businesses with money tied up in accounts receivable. An invoice factoring company, such as American Receivable, will purchase your current, outstanding invoices and give you a percentage of the value. When American Receivable collects payment on the invoice from your client, you receive the remaining amount due on the invoice, less a small factoring fee. Invoice factoring gets you the cash you need right away! A true advantage of this alternative financing option is that your eligibility is based on your client’s ability to pay, not your company’s credit rating.
Call 1-800-297-6652 for a free quote from American Receivable.
2. Personal Loans
These allow you to use your personal credit score and household income to get money for your business. A personal loan will be smaller than a business loan but can give you some alternative financing for your new small business.
3. SBA Loans
Loans from the SBA are guaranteed in part by the Small Business Administration. SBA loans are originated by traditional loan producers, but a portion is guaranteed by the SBA if you default. It allows a small business who otherwise would not qualify for a loan to get needed funds. The downside is that an SBA loan can have a lengthy application process, and it can be difficult to qualify.
4. Business Credit Cards
These accounts allow you to pay for business expenses without applying for a loan. You can even earn rewards and build your business credit score. It’s a bonus if you can find a card offering an introductory 0% APR for the first year. The downside is keeping a running balance for the long term can add up to higher costs owed if you are not careful.
5. Business Grants
These are the most difficult form of alternative financing to come by, but if you find your business qualifies for a business grant, you get free money to fund your business. Many business grants are government funded and geared towards veteran and minority-owned businesses.
Good News for This Small Business Owner
Madeline contacted American Receivable and was able to get the cash she needed to fund payroll and new equipment. With the increased sales from the new sales representative, she was also able to apply for a line of credit. Alternative financing options worked for Madeline’s small business. Which one will work for yours?
American Receivable has been helping small businesses with alternative financing since 1979 and is ranked #1 among the nation’s factoring companies. Find out how invoice factoring can be a solution to your business’s cash flow needs.
Call for a FREE Quote Today: 1-800-297-6652 or complete an application for factoring online.
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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!
What You Need to Know About an Income Statement
Let’s face it, many business owners who are busy with the daily routines of running the company, struggle with taking the time to fully understand accounting principles and terminology. Yet, there are important concepts to comprehend if we are going to run a profitable and successful small business. In this article, we share a layperson’s explanation of an income statement.
The financial statements of a business provide a representation of the company’s current performance to owners and investors. The most important financial statement for the majority of companies is likely to be the income statement, since it reveals the ability of a business to generate a profit. This financial report is not only used by management within a company, but also by outside creditors and investors to evaluate performance, profitability and assessment of risk for a creditor or investor.
Income statements do not just report the income your company makes, i.e. the cash coming in. Rather, an income statement reports the revenues earned by your company during a specific period of time (month, year, etc.). Also, it shows the expenses incurred by your company during the same time period. The income statement is valued because of its indication of profitability, timely reporting and classification of revenues and expenses. You can use this report to track revenues and expenses and determine the operating performance of your business over a period of time.
Understand the Parts of an Income Statement
Simply, an income sheet will add up all of the sales/revenues and subtract all of the expenses. Hopefully, the total will be a positive number, or profit. A negative remainder would be a loss. But what goes into the sales and revenues? What goes into the expenses?
Income is the money your company receives (or will receive) for selling your product or service for the given time period. It does not include assets.
Expenses are the costs incurred in order to sell the products and services. This can be separated into Costs of Goods Sold and Overhead Costs. Costs of Goods sold are variable expenses, such as commissions and shipping charges. Overhead costs are fixed and include items such as rent and salaries. These two types of expenses are often separate line items on an income sheet, allowing one to determine margins.
Components of an Income Statement
• Cost of Goods Sold
• Gross Profit
• Operating Expenses
• Operating Income
• Other Income/Expenses
The most accurate income sheets are based on accrual basis. This means that income and expenses are recorded for months they actually occur, not just when money changes hand. For example, if you sell 50 widgets for $500 to Buyer 1 on October 15, but Buyer 1 doesn’t pay the invoice until November, the $500 revenue would show on your October income statement. Additionally, if your employee sold the widgets and earns a $50 commission, but doesn’t receive that pay until November 8, the expense (Cost of Goods) will still go in October’s statement, as well.
When accounting is done on an accrual basis, revenues earned are tied to the related expenses incurred in achieving those revenues. This is called the matching principle. This helps when determining profitability on the income sheet for the given time period. Getting this more accurate view helps small business owners make more specific decisions to improve profitability, by seeing the direct correlation between revenues and expenses.
A cash basis income statement only contains revenues for which cash has been received from customers, and expenses for which cash purchases have been made. In other words, under the cash basis of accounting revenues are reported on the income statement in the period in which the payment is received from customers. Expenses are reported on the income statement when expenses are paid out.
Cash basis accounting is simpler than accrual because it recognizes only two kinds of transactions: cash inflows and outflows. The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method is a more immediate recognition of revenue and expenses while the accrual method focuses on anticipated revenue and expenses.
Make Informed Financial Decisions for Your Business
Once you understand an income statement, you can get a true picture of your business’s overall health. Are your margins poor? Are your costs of goods sold too high in relation to the revenues they earn? Are your overhead costs also too high, or can you afford the nicer offices you’ve had your eye on? Can you afford more sales staff? Do you need to look for a supplier with lower costs? Looking at your company’s profits and losses accurately will help you make these decisions, and more.
American Receivable can help bridge gaps in your income statements. Our commitment to providing our clients with responsive customer service and the most competitive rates in the industry has made us the go-to source for factoring in Texas and throughout the nation. The success of our clients is the success of American Receivable.
With offices in Dallas and Austin, American Receivable 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. We can provide funding within as little as 24 hours in some cases. Call us for a FREE quote today at 1-800-297-6652, or complete the quick quote form below.
By: Sierra Stieber
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Choosing the Right Factoring Company for Your Business
Choosing the right factoring company is an important decision for you and your business. The right factoring company will help you maintain cash flow and grow your business while the wrong choice can leave you with a bigger financial gap than when you started.
Factoring has been around for centuries but has really only come to light as a legitimate source of cash flow for businesses in the last couple of decades. While bank loans are the most common form of financing for businesses, not every business qualifies for a loan large enough to cover their overhead. With invoice factoring, companies are able to maintain a steady cash flow without waiting the extended time for payment. Sounds great, right? But how do you know which company is the right fit for you and your business?
With factoring becoming a popular means of cash flow, there are many companies to choose from. Websites like Top Ten Reviews allow you to search for companies specifically in your industry. So, you’ve found a few that sound like what you need, what’s next?
The most important part of choosing the right company is understanding what they are offering and how their services will benefit you. In the age of technology, most companies have online chat services on their website for quick information, but to receive the quickest quotes and to get a more comprehensive understanding of the business and the employees there, it is always best to call. It’s critical that you are not only boosting your cash flow but are also comfortable with the staff to ensure a strong relationship.
Here are some questions to ask when speaking with factoring companies. Remember, you are interviewing them just as they are interviewing you.
What is the factoring companies application process?
Typically, most companies will have an online application form for you to fill in your information and attach any documents requested. Most common types of information required are: name and age of business, owner information, amount of receivables to be factored, Articles of Incorporation, accounts receivable and payables agings, and profit and loss statements.
As my business grows, does the factoring company have the resources to grow with us?
The purpose factoring your invoices is to allow your business to have the cash to continue to grow. It’s important to find an established factoring company that has the means to support your current and future funding needs.
What are your advance rates and fees?
Depending on your industry, advance rates and fees can vary among factors. Factoring companies make their money off of fees which is a percentage of the face value of the invoice. These fees can range from 0.8%-3.0%. The advance rate is the percentage of the invoice that the factoring company gives you upfront as they await payment from your customer. These advances can range from 75%-90%. It’s important to understand and compare across factoring companies specializing in your industry and the services they offer.
Are there any hidden fees?
Some factoring companies may charge a small fee for an array of different services. Hidden fees to look for include but are not limited to: application and due diligence fees, origination fee, annual fee, chargeback and wire fees and early termination fee. Be sure to also discuss if there is a monthly minimum amount you must factor and if so, is there a fee associated with not meeting that minimum.
Understanding the factoring industry and asking the right questions can lead you in the right direction to finding the right company for your factoring needs and ensuring success and growth for you and your business.