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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). 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. 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. 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. 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.
The Value of Business to Business Relationships
American Receivable Corporation considers it’s business relationships within the financial community to be one of its greatest assets. American Receivable’s partnerships within the banking community and with professional CPA’s spans over 39 years These relationships have been mutually beneficial to us, the bankers and CPAs as well as our factoring clients.
No matter what type of business, it is important to have good financial advisors. Commercial lenders help clients manage accounts within the bank and review projected capital requirements. A well-respected CPA will help manage taxes, cash flow, and other financial challenges.
These relationships give American Receivable the ability to match clients with the right financial professionals. Commercial lenders often send us clients that do not meet the federal banking criteria for business loans. When this happens, the lender will contact American Receivable Corporation. We work with the client to find the best solution for their cash flow needs and their specific business. In turn, we recommend they keep their accounts with the lender that sent them to us. At the point they qualify for a traditional business loan and wish to go that route, they already have a lender familiar with their business and their challenges.
CPA’s managing business accounts often call us when they see cash flow needs for their client. We work closely with the CPA and the client to ensure the best solution for their specific needs. The CPA continues to handle accounting for the growing business and catch any cash related problems early.
American Receivable is proud of our long term relationships in the industry. These relationships allow us to work together for our clients. We consider our clients based on the credibility of their customers, not on their personal credit. American Receivable is able to work around many of the criteria that are required in traditional business lending.
Our clients are always our first 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.
Welcome to Our New Website
We are excited to announce that our new and improved website is now live! Our new site has a fresh new layout for easier navigation for prospective and current clients as well as brokers. Our goal is to provide you with a quick and easy way to learn not only about our company but also the financial solutions we offer. Along with these new features, we also made it quick and easy for prospective clients to receive a free quote and apply online.
We hope you find our new website to be user-friendly and helpful for all of your financial needs.
ARC Continuing Relief Efforts
American Receivable Corporation is continuing relief efforts by offering special rates to businesses affected by Hurricane Harvey and extending those rates to those affected by Hurricane Irma. American Receivable has already aided eight Houston area small businesses in their recovery efforts in the last month with hopes to grow that number as it extends to Florida. Discounted rates start as low as .8% with up to 90% funding in 24 hours.
People helping people is what keeps America strong. Call us today and let us help Texas and Florida rebuild.
American Receivable Offering Special Rates for Houston
American Receivable Corporation is now offering special rates for Houston. American Receivable is Texas Proud and is currently offering special rates to businesses in Houston needing capital to recover from Hurricane Harvey. While there is so much that still needs to be done, some of these businesses could be of great value to that effort. Houston business owners have been extremely generous in efforts to help the citizens of Houston persevere through this catastrophe. American Receivable would like to offer these special rates for Houston businesses needing quick access to capital to rebuild or continue operations.
The world has seen what a great state Texas is and how everyone has come together. Texas has proven that whether you were born in Texas or somehow ended up here, we are all working toward the same goal. Call us today and let us help Houston recover and rebuild. Nothing is too big for Texas or American Receivable.
The Evolution of Invoice Factoring
Factoring has been around in some form or another for centuries, yet it is still a relatively untapped source of finance for many businesses. In fact, invoice factoring is typically a small part of the curriculum in many university finance departments. Let’s take a look at the history and evolution of the world of factoring.
The principal of factoring began sometime during the Mesopotamian Era around 1772 BC. It is believed that the rules for factoring or financing of trade was laid out in the Babylonian law code called The Code of Hammurabi, one of the oldest deciphered writings of significant length in the world. This alludes that factoring was used as a source of cash flow for businesses in England prior to the 1400’s.
In the early 1300’s and into the 1400’s, factoring was predominantly used by clothing merchants and traders. The “factor” would take possession of the physical good and provide cash advances to the merchant. The “factor” would then extend the financed credit to the buyers and insured the credit strength of the buyer. In the early 1600’s, factoring reached the Americas and colonist took quickly to the idea of factoring as they needed advances on the raw materials they were shipping to across the Atlantic to England. When the Industrial Revolution began, non-recourse factoring became a popular option for clients who were creditworthy. As the United States neared the early 20th century, the garment and textile industry brought factoring full circle as they utilized factoring as an avenue to continue to purchase raw materials.
Factoring continued to take shape throughout the 1900’s as small businesses who were not eligible for bank loans needed funding. In the 1940’s, banks in the United States began offering factoring services as the need for factoring had boomed in the textile and manufacturing industries. During this time, banks and “factors” were now purchasing a company’s invoices or receivables rather than taking possession of the physical goods. This idea transformed the industry into what it is referred to as today, invoice factoring or receivables factoring. The factoring industry continued to gain popularity in all business industries. When the savings & loans crisis began to heat up in the 1980’s, banks were in need of assistance with their customers and turned to factors for assistance. In the early 2000’s the U.S. economy plunged increasing the use of factoring companies as businesses were struggling to stay afloat.
Over many centuries, invoice factoring has been a means of financing for many businesses. As the economy continues to grow and new businesses emerge, the factoring industry will continue to be a source of financial support for centuries to come.
It is a pleasure to write this testimonial for American Receivable. I’ve been associated with the company for over 20 years. They assisted me in the initial start-up of Systems Source, Inc. in 1995 and have stood by me the entire time I’ve been in business, both the good times and the bad. Jack and Brad have truly been business partners.
The true test of a partner comes when there is a crisis and you are fighting your way back. When other lenders would discontinue service, Jack and Brad listen, understand and assist you in working through the problem. They are with you all the way.
American Receivable is not just a lender, they are your partner. If other companies seem to offer a better deal, believe me, it’s not. You are not just an account with Jack and Brad. You have access to the decision makers, who are interested in your success.
Philip Eichelberger, President Systems Source, Inc.
Meet Jack Stieber and Brad Gurney, President and Vice President of American Receivable Corporation
Since 1979, Jack Stieber and Brad Gurney have been pioneers in the factoring industry. I sat down with them to get an in-depth look at where they started and what it takes to become #1.
First question that starts it all, how did you two meet?
Brad: I was interning with Jack’s dad, John Stieber Sr., my economics professor from SMU. He wanted to start a factoring company as he saw a real opportunity for one at the time. He sent me out to meet Jack to try and get him to factor with us as one of our first clients.
Jack: At the time, I owned a computer company, and my father asked me to meet with Brad and sell him one of my invoices. He was really having me vet Brad to see how well he did on the sales side of the business. A couple months later, my dad and his business partner decided to take a step back and that’s when I decided to come onboard and join Brad.
What was the factoring industry like at the time and how did that impact your first year of business?
Jack: To be truthful, I really didn’t know much about factoring when I decided to join Brad. My only knowledge about it was what I had learned from my father. At the time that we started American Receivable, there were roughly six other factoring companies in the DFW area.
Brad: Our first office also doubled as my living room. We had $40,000 and went right to work marketing. Luckily, the living room office didn’t last long and we were able to move into a converted storage closet “office.”
Jack: Our main focus those first couple of months was to get our name out there and promote factoring. Because it was a relatively new industry, people were unaware as to what invoice factoring was, and it became our job to not only educate them but to also sell them on the idea. With a lot of hard work, we were able to sign our first client within the first 2 months bringing in $20k of invoices.
Advertising and marketing was so different in the early 80’s than it is today. With such limited resources, what avenues did you pursue to drive business?
Brad: We spent a great deal of time putting together mailers to send to businesses in the area. I remember being in our tiny office stuffing envelopes and typing addresses until 2 or 3 in the morning. We also used the cold calling tactic as we tried to educate companies on our services.
Jack: I think our greatest success in marketing was when we realized that we needed to partner with banks. We were the first factoring company to partner with bankers in the metroplex. We developed relationships with many different bankers, some of whom have become bank Presidents. Today, relationships with bankers is one of the most important aspects of the factoring industry. With our marketing efforts and the advancements in technology, we now have over 1500 relationships in the DFW area.
Brad: Those relationships allowed us to shift our marketing skills from mass marketing to direct marketing of businesses with factoring potential.
Factoring is now a main source of cash flow for many businesses. When did the industry begin to boom?
Brad: Factoring really started to take flight at the end of the 80’s as the Savings & Loans crisis started to heat up. Essentially, we were in the right place at the right time. Because we had established relationships with bankers, they called us to help them with their customers. All of our efforts came to fruition in the 90’s as business began to explode. We had already expanded American Receivable to Austin and San Antonio in the 80’s, and in the 90’s, we were able to expand nationally.
With this amount of growth, how did business change?
Jack: With all the growth that happened, we were able to get out of our storage closet office and put down a real home base as well as hire our first employee. In 1996, we signed our first account to factor $1 million a month. This was huge for American Receivable as the factoring industry had really taken off and now we had multiple competitors. When the market crashed in the early 2000’s, business once again exploded, this time nationwide. American Receivable was doubling business every 3-4 years, increasing our presence in the finance industry.
What would be your selling point to someone interested in factoring and considering American Receivable?
Brad: American Receivable has been owned and operated by Jack and I for the last 38 years. We have a dedicated staff who is there to help you every step of the way. We offer some of the lowest rates in the nation starting at .08% and up to 90% funding within 48 hours with no start-up fees or hidden costs. We have also been ranked #1 by Top Ten Reviews for 3 consecutive years.
Jack: Our goal is to help small businesses succeed. In today’s time, cash flow is a big obstacle for smaller businesses. If we can play a part in helping someone be successful in a field they are passionate about, then we have done our job. It’s a rewarding feeling knowing American Receivable can be a part of their success.
American Receivable is a Dallas factoring company that provides services for businesses nationwide. American receivable has been in business for 38 years and has been ranked the #1 Factoring Company in America by Top 10 Reviews for three consecutive years.