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How Factoring and Invoice Finance can help your Business

It goes by a few different names — invoice financing, accounts receivables financing, business factoring, or just factoring — but what factoring services do is provide a much-needed injection of cash for business owners in a financial pinch. While loans and lines of credit can be difficult for some businesses to obtain, invoice financing is an option available to just about any business that invoices their customers for goods or services provided.

While factors, or companies that provide factoring services, are far from charities, they do provide an affordable alternative to costly merchant cash advances, and still provide the same end-result services as credit card cash advances do — fast access to funding for your business.

Now, while invoice financing does provide quick access to money for your business, that is not the only benefit of using these funding services. Because of the way that invoice financing works, namely, that you essentially ‘sell’ your unpaid invoices to a factoring company, you can alleviate the headaches and employee payroll associated with collecting on, and managing, your unpaid invoices. In fact, some business owners prefer to outsource their accounts receivables management through factors. While factoring companies do charge a fee, or a discount rate, for each invoice that they process and collect on, at an average of 3%-5% per invoice, for some business owners, these small costs are well-worth the investment for accounting purposes alone.

Invoice financing is a good option for business owners who need cash quickly, and for those who want to outsource their invoice-collection tasks. While factoring certainly is not a no-cost business service, it is one of the most affordable options available to those who need access to business funding and do not have the option to take out a business loan or have established business credit.

Is an LLC Your Best Option?

Entrepreneurs must already choose the legal structure of their business even before they start such venture, if only to make sure that they now the risks and the advantages involved in starting that kind of business. Business owners can choose to put up a sole or single proprietorship, enter into a partnership or form a corporation.

Each of the three legal structures has its own advantages and disadvantages. A sole proprietorship is the easiest type of business to put up and operate because only one person is responsible for decision making and for running the business. However, being alone in business means you are solely responsible for whatever happens to you business and you only have to rely on your own capital and resources.

A partnership is better considering that two or more heads are always better than one. A partnership offers more possibility in terms of capital base and of brain power. However, partnerships do not always work due to conflicting business decisions.

The next if not the best option is to form a corporation which would be composed of incorporators who will put up the seed capital for the business. A corporation can provide more sources of funds and the owners are only liable to as much as the money they have invested in the business. Provided of course that the corporation does not indulge in illegalities or does things in bad faith. Doing so would necessitate the application of the principle of piercing the veil of corporate fiction. This means that the owners can be made accountable even beyond the amount of their investments if they are found to be in bad faith in certain transactions.

While the corporation has proven to be the best option for business owner, there is apparently another option called the Limited Liability Company which offers the characteristics of both partnership and corporation. Members of a Limited Liability Company can enjoy the limited liability enjoyed by corporations unless a personal guarantee has been signed. This legal structure also offers tax benefits much like the benefits available to corporations.

A Limited Liability Company does not however require the bureaucracy of a corporation in terms of the taking of minutes. And unlike in a partnership where the partners can only participate in decision-making depending on their partnership status, members of a Limited liability Company can take part in decision making without losing their limited liability protection.

However, while a corporation can last for 50 years renewable for another period, a Limited Liability Company can be easily disbanded particularly when a member dies or becomes bankrupt. It is also more feasible to form a corporation if there are plans to do a public offering.

Despite the disadvantages of forming a Limited Liability Company, it is still the best choice for business start ups that are still testing the waters but already want to give their business a legal structure.

Learn When it is Important to Use Payday Loans

Have you ever found yourself without money in the middle of the month, and your paycheck is nowhere in sight? You are not alone; many people have had emergency situations come up with no way to pay for it. Your only option is to take out a payday loan. A cash loan is a temporary solution to emergency debts and should be used accordingly. Someone with more debt than income should not use a cash loan, as the debt load will only increase and repayment of the loan will be nearly impossible.

The interest rates and fees on cash loans can be very high, so it is important to read over the terms and conditions of the loan before you sign on the dotted line for your quick cash. Do a search of various lenders and compare their terms and rates before you decide who to do business with. Find a loan company that will be honest about their fees, interest rates and any penalties and fees. Approval is quick and lenders just need to verify your income before they will give you a loan. Once you are approved for a loan, the lender will directly deposit the money into your checking account in a short amount of time.

You can check out a lender online by going to the Better Business Bureau. Since you will be providing your personal, job and checking account information to a lender, you will want to make sure that you choose a reputable and legitimate lender who will not take your money or details and run. A lender will use your checking account to deposit the money rather than give you a paper check.

While payday loans can help in a financial emergency, it is best to try to put away a few dollars from each paycheck so that you don’t have to pay extra fees and interest rates on a cash loan. Having an emergency cash fund will allow you to pay for any unexpected expenses. If you are unable to start an emergency fund, you may have to find a second job or somehow cut your monthly expenses. Maybe you can find unneeded household items and hold a garage sale or sell items on eBay. You might want to make a list of items you can’t live without, and make a list of items you can do without for awhile. It is sometimes difficult to prune nonessential items from your monthly budget, but keep in mind that you can learn to live without things so that when an emergency financial situation does arrive, you can afford to pay for it without having to take out a payday loan. If it is absolutely essential that you work with a loan company, then make sure that the lender has a pristine reputation before you give him your business.

Improve Business Productivity

Improving productivity and reducing costs are now a priority for all companies to remain competitive. This priority should not mean an indiscriminate cutting of resources within a company, but approach it from a strategy to improve competitiveness and productivity, not worsen the quality of their products or services. Generally, one of the most frequent actions in determining the cost reduction is the dismissal of staff. However, this is not always a good measure because it has a series of negative effects: disagreement in the working environment, reduction in productivity and quality, higher staff turnover, disruption of the learning curve and potential costs for contract of new employees as necessary.

Cost reduction should be approached from a systemic approach, including the intimate interplay between the various components of both manufacturing processes and the organizational structure. The reduced cost means to detect, prevent and eliminate the excessive use of resources. Decisions and actions taken by the owners and managers of a company must be first and fundamental objective to achieve the greatest net present value of the future stream of income for the organization. This involves the pursuit of sustained yield in the medium and long term as opposed to the search for revenue in the short term.

There are several methods to reduce costs and improve productivity, but we can take into account some considerations that can be implemented:
Improve the quality, it generates as a result of fewer errors, defective products and repetition of work, thus shortening the total cycle time and reducing resource consumption and the cost of operation. The quality of products and services generate greater customer satisfaction and thus greater fidelity to the company. This can translate into increased sales and a better image of the company, which in turn helps increase the brand value of products and the ability to generate future revenue.

If You Can't Beat Them, Why Not Buy Them?

How can you tell if buying the competition is a good idea?

?        First, know where you stand. Take a good, hard look at your company’s bottom line. Make sure your company is financially sound enough to tie up that much capital.

?        Make sure your people have the skills and expertise to blend the two companies together.

?        Figure out why the competitor is struggling…and make sure you can overcome those issues after the acquisition.

?        Do your due diligence: research the company’s relationships with customers and suppliers. Check out the balance sheet and assets. Figure out the corporate culture. Kick the tires.

?        Figure out a step-by-step plan to merge the two companies.

Mergers and acquisitions can inject new blood, new customers, new capabilities and new ideas into a company—as long as the process is managed well.

Due diligence can go a long way in determining your course of action.

«Buy» for now,

P.S. If your due diligence says «yes, yes, yes!» but your bank balance says, «NO way!» call us at 954-510-0328. You may be surprised to discover how fast, convenient and affordable business financing from Shavit Funding can be.