| Remarkably, factoring can provide both a short term and longer term solution to small businesses during economically challenging times like these. It's fast and efficient and unlike a loan, it does not appear on the balance sheet. Invoice factoring is simply a "use it as you need it" service today. Invoice factoring is basically a "use it as you need it" funding option, therefore every invoice purchase is a separate transaction and does not form part of a portfolio lending approach. The transaction is modeled as a buy-sell transaction, and the process includes:
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Thursday, July 29, 2010
Factoring is a Short and Long Term Solution
Monday, July 26, 2010
What You Should Do To Get Your Small Business Started
As a volunteer small business counselor I frequently get questions about what one should do to get a business started. Here is an excerpt from one of my counseling sessions. "To get your business started you should develop a business plan. Your business plan will serve as a road map to success. It is very difficult (nearly impossible) to obtain any financing without a business plan unless you have the funds yourself or have friends and family who will lend or invest in you. "
Friday, July 23, 2010
Here's How To Improve Your Credit Score
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Sunday, July 18, 2010
Top 10 Credit Reporting Agencies
Top 10 Business Credit Bureaus
The majority of us can easily identify with the three major consumer credit reporting agencies known as Equifax, Transunion, and Experian. These are privately held companies that specialize in collecting data on consumers and then compiling the data in a format known as a credit report.
Did you know that there are companies that collect data specifically on businesses? These privately held companies are known as business credit bureaus and they compile their data into a format called a business credit report. They collect data from banks, suppliers, finance companies, business owners, and look at public records such as tax liens, bankruptcies, and judgments.
It’s important for you to get your company listed because it can make the process of obtaining business credit and financing much easier but keep in mind that there is over 25 other business credit bureaus not listed here and some are even industry specific such as trucking or construction. You may want to look into some of these particular bureaus to get listed with in addition to the top 10 depending on the type of industry your business is in.
Here are my Top 10 Business Credit Bureaus you should know.
1. Dun and Bradstreet (D&B)
D&B is the primary business credit reporting agency with over 70 million businesses registered in their database. A business credit file with D&B contains information provided by the business owner and vendors of the business. D&B issues a paydex score based on payment experiences and a DUNS rating based on financials.
2. Equifax Small Business Enterprise
Equifax, one of the three primary consumer credit reporting agencies, also provides business credit evaluations for over 22,000,000 small businesses and corporations.
3. Experian SmartBusinessReportsTM
Experian is another one of the three primary consumer credit reporting agencies who provides business credit evaluations as well. Unlike D&B and Equifax, Experian’s SmartBusinessReportsTM doesn’t assign a business credit score.
4. FDInsight™
This is a company that is relatively new to the business credit market. It was originally the second largest credit reporting company in the mortgage broker field. The information on their business files is provided by the business owner or a third party and then every piece of information is verified by the staff of FDInsight™. They are known to provide the most accurate business credit report in the industry.
5. Credit.net
Credit.net is a division of InfoUSA® that generates credit reports on approximately 15,000,000 businesses. The credit analysis provided by Credit.net relies on four criteria: years in business, number of employees, public records, and stability within the industry. Its business credit score is a grading system from A through C (70-100) and is awarded as an evaluation of the company’s credit history.
6. AccurintTMBusiness
This is a new business that is a combination of forces between The Better Business Bureau (BBB) and LexisNexis. Accurint Business is like Experian in that they provide public and business profile information, including credit history based on payment patterns of small, medium, and large companies.
7. ClientChecker
This is a credit reporting bureau that started in 2003 and specifically targets small businesses, freelance professionals, and contractors searching for information to help them determine which other businesses they should do business with. Rather than providing a fixed business credit score, ClientChecker compiles information based on feedback from its members.
8. Paynet
Paynet collects real-time loan information from more than 200 leading U.S. lenders. The company’s database has a collection of commercial loans and leases. It’s the largest proprietary database of long-term debt over a period of ten years.
9. Cortera
Cortera provides credit information on businesses large and small but then combines it with ratings from a community of small business owners, who provide feedback both good and bad on these businesses.
10. ChexSystems
The tenth reporting agency is extremely important as it has to do with your ability to open up a business checking account with a financial institution. Banks use a reporting agency known as ChexSystems which is a network comprised of member Financial Institutions that regularly contribute information on mishandled checking and savings accounts to a central location.
These business credit bureaus allow your business to establish its own credit profile, scores, and payment history. As a business owner you should know who the major business credit bureaus are and what type of data they collect on your business. Knowing this will give you greater insight into getting listed and established in the business credit industry.
Good News for Factoring Companies: June Small Business Economic Confidence Report
| According to a Discover Financial Services (DFS) report that was published today small business owners' economic confidence slid this People are very concerned over temporary cash flow issues these days. The survey polls 750 small business owners, and this month the index dipped to 86.1 percent in June from 87.4 percent in May after a two month rise. There was a some improvement in the way small business owners see the climate for their own businesses. Even as last month business owners increased their spending, payroll, mounting bills and operating costs are causing many business owners stress, indicating that cash flow is still an issue. This is good news for factoring companies like ACD Financial Services who is handling accounts receivable factoring for small to medium-sized businesses. In June, 29 percent of small business owners said they believe the overall economy is getting better, falling from 35 percent in May. 51 percent said the economy is getting worse, steady from the previous month, and 16 percent see the economy as the same, which is up from 12 percent for May. As for negative impacts on their businesses, Discover reports that a majority of small business owners attributed it to the stock market and the Gulf Coast oil spill. 30 percent of business owners polled said the oil spill was having a negative effect, while 40 percent believed there was negative impact from the debt crisis in Europe. These kinds of reports show that in these times of troubles, cash flow is critical to saying in business and growing. Factoring is a tool that many businesses have used throughout the years to manage cash better, and grow. It provides quick turn-around, and ACD Financial Services provides innovation solutions by offering short-term working capital to growing businesses. Many businesses do not get paid right away for delivered products/services, and every business needs some cash on hand in order to sustain and grow. So what happens if you do not get paid for a few months, and you do not have time to seek alternative financing through banks or venture capitalists? Spot Factoring is the answer to your troubles. Factoring is an extremely fast way to turn your receivables into cash. In an ordinary scenario you might have to wait 30, 60, or sometimes even 90 days for invoices to be paid; AFS looks at your customers' credit (not yours) and can pay you the majority of what's owed to you within as little as 24 hours. Courtesy of IFG Network. |
Businesses Use Factoring - Awaiting Small Business Job Bill
| There is a new bill under consideration in the U.S. Senate called the Small Business Job bill -- with some temporary as well as permanent changes to government programs, loan program enhancements and tax relief-provisions. With many small businesses surviving via alternative financing methods such as invoice factoring, there is much focus to helping small businesses get back on their feet. This bill temporarily increases the capital gains exclusion for stock issued by some small businesses to 100 percent from the time the bill is enacted through the end of the year. The gain is limited to 10 times the original investment or $10 million. It also would permit self-employed business owners to deduct their family's health insurance expenses from their self-employment tax income in 2010. Businesses with less than $50 million in gross receipts would be able to carry back general business credits to offset tax liabilities for five years. Currently it is only one year; and first-year write-offs would temporarily increase for business equipment from $250,000 to $500,000 and raise the cap on eligible expenditures that triggers a phase-out of the incentive from $800,000 to $2 million. If a company converts from a C to an S corporation, it must retain its assets for at least 10 years or pay a 35 percent tax on the built-in gains that occurred before the company made the conversion, and this bill would reduce the period to five years for an asset sold in the 2011 tax year. Although these provisions expire after 2011, the bill would expand Section 179 to cover some real property improvements. There's also a really generous 50 percent first-year depreciation for some kinds of property; an increase, for 2010, the deduction for start-up expenditures to $10,000, from $5,000; and the bill raises the cap on expenditures that triggers a phase-out of the deduction to $60,000, from $50,000. There is a penalty for failing to report on a tax return a transaction - set at 75 percent of the tax benefit and capped at $200,000 for corporations and $100,000 for individuals. A more detailed summary of the bill and the legislative text are posted at the Senate Finance Committee Web site. These laws, if the bill is passed, will still take some time to put in place, and many businesses are still struggling. Factoring can be an excellent alternate financing program, to meet bill, pay employees and survive until such time as the economy turns around. Original post blogged on b2evolution. Courtesy of IFG Network. |
Accounts Payables and Accounts Receivables Factoring Tips
| It can be of tremendous benefit to your company if you follow best-of-practice accounts payables rules, because when managed well, you'll improve the working capital in your business. When you reduce the amount of working capital financing that you need. Here are some tips: Try to obtain business credit from new and potential suppliers in advance of when you need it; never run out of essential supplies; get price and volume discounts and volume discounts when you can demonstrate a track record of a well managed account. This will help you obtain an advantage over your competitors, to move towards better returns on investment (ROI); document your procedures well documented so that no one is unclear about what needs to be done. This reduces the time wasted by management and your business will be more efficient; make sure you set clear expenditure mandates which will improve net profit by reducing unneccessary expenditures; when things get tight, consider accounts recievables financing. One of the oldest and most widely used forms of funding, standard invoice factoring has been used for thousands of years. But there is a newer form of factoring called single invoice factoirng, or spot factoring, which allows the factoring of one invoice at a time. Your business can receive an advance of 90 percent against invoices. For more information about invoice factoring, go acdfinancial.com. Original post blogged on b2evolution. Courtesy of IFG Network. |
Small Business Recovery is than Slower Past Recessions
| Over the last three decades of recessions in the United States, it has been small businesses with fewer than 100 employees who pulled the country out of each recession - via hiring. But it is not so this time. Worse than in previous downturns, unemployment levels are at 10 percent. There are many reasons that are keeping small businesses owners from hiring again including: little demand for goods and services by cnsumers; a fall of in small business start ups; the devastation of the real estate market; overall uncertainty about the economic outlook; concerns about the economies abroad. Many analysts believe that these are the reasons why the economic recovery is so slow. According to Census Bureau data, during the three previous economic recoveries, small business employers accounted for the vast majority of new jobs. Most of these companies had fewer than 20 workers. Owners cannot hire whent here is little or no growth in sales. What's worse, businesses need cash flow on hand to grow, and many businesses have none. However, some companies have discovered that invoice factoring is their salvation to keep things going. Factoring is the way to get paid early on invoices that are now being stretched out to 60 or 90 days. Many service companies simply cannot wait that long to get paid for services rendered. They need the funds to pay employees, bills, or buy supplies for production on new clients' work, and when they use accounts receivable factoring , they get the funds in as little as 24 to 48 hours. Original post blogged on b2evolution. Courtesy of IFG Network. |
The Federal Reserve Urges Banks to Aid Small Businesses
| Today news for small businesses that was posted in the Wall Street Journal featured Ben Bernanke, Federal Reserve Chairman urging banks and regulators to seek out ways to ensure that small businesses get the credit they need to create jobs. He said that making credit accessible to sound small businesses is crucial to our economic recovery. He also believes that not enough is being done to ensure that loans can be obtained by deserving, sound small businesses who depend on access to credit critically. He also cited outstanding loans to small businesses have declined to less than $670 billion in Q1 of 2010 from about $710 billion in Q2 of 2008. Small business has long been thought of as the key to unemployment, which is still high, even as the jobless rate edged down to 9.5 percent in June from 9.7 percent in May. The Fed has been on a fact-finding mission, to identify how to improve credit access for small firms which account for about 60 percent of job creation, since February. Forty meetings have taken place around the United States with small businesses, community leaders and bankers. All have tried to identify obstacles that have prevented lending as needed. These facts are all that much more reason for small businesses to seriously think about invoice factoring. Companies like The Interface Financial Group (IFG) has long been providing financial resources such as factoring to businesses in need, whether it is their entire accounts receivables factoring or single invoice factoring, also known as spot factoring, when cash is needed during a time of stress. Go to www.acdfinancial.com for more information about factoring. Original post blogged on b2evolution. Courtesy of IFG Network. |
Invoice Factoring Comes in Handy for Businesses in the Senior Market
| The U.S. Bureau of Labor Statistics says the aging-services industry, elderly and disabled services, also known as home healthcare and community care facilities for the elderly, make up three of the top ten fast employment growth industries. Gerontology one of the hottest academic fields for the future, says the Chronicle of Higher Education. Gerontology is now a major at schools like the University of Southern California (USC), where students are tracking the trends and creating businesses that fulfill needs after they graduate to serve the more than 37 million seniors today. What's more, in around 20 years, seniors will comprise nearly 20 percent of the U.S. population. Analysts say they also have cash and a calculated spending that exceeds $1 trillion. It's these entrepreneurs catering to seniors that will have to keep their businesses running during a tough economy, so accounts receivable factoring might help them through the early stages of their new companies. Some of the businesses cater to baby boomers and older Gen Xers who must find care for their parents at senior adult day-care centers where these seniors can socialize and participate in activities in a supervised environment. Informal social centers are more prevalent, catering to those with higher levels of functioning, whereas a medical day-care facility provides a more complex level of care incouding one or more registered nurses on staff. Given the ups and downs in patient occupancies, and supply costs, starting one of these businesses requries cash flow, so when cash is low at the end of the month, many owners use invoice factoring to meet their monthly supply needs, pay employees, and pay bills. The bigger their business grows, the more workers they will have, and the more time they'll have to spend managing them instead of doing the actual work. Original post blogged on b2evolution. Courtesy of IFG Network. |
May CPI Declined 0.2 percent
| According to the U.S. Bureau of Labor Statistics in May of 2010 the Consumer Price Index (CPI) for all urban consumers declined 0.2 percent on a seasonally adjusted basis. The CPI is a measure that estimates the average price of consumer goods and services purchased by households. CPIs are based on prices of food, clothing, shelter, fuels, transportation fares, as well as doctors' and dentists' services, drugs, and other goods and services that people purchase. Prices are collected each month in 87 urban areas across the country from about 4,000 housing units and approximately 25,000 service establishments. The index increased 2.0 percent over the last 12 months - before seasonal adjustment. For the second month in a row a decline in the energy index accounted for the seasonally adjusted decrease in the all items index. The index for energy decreased 2.9 percent in May and more than offset a slight increase in the index for all items less food and energy. The food index was unchanged. Although all the major energy indexes declined, the gasoline index accounted for most of the decrease. The index for all items less food and energy increased 0.1 percent in May. This meant posting a monthly increase for only the second time this year. Increases in a number of indexes including shelter, used cars and trucks, tobacco, apparel, and medical care contributed to the May rise. Overall, the CPI has increased 0.9 percent over the last 12 months. The economy is still suffering and many small to medium-sized businesses simply cannot keep up with the cost of doing business. Invoice Factoring during challenging times like these can help pay the bills. Most factoring companies will pay within 24 to 48 hours. |
Courtesy of IFG Network.
Working capital is available for small businesses that know where to find it.
The current economic crisis has severely impacted small businesses with no end in sight. Traditional bank loans have basically dried up leaving them with no place to turn. Many small businesses still think that the traditional bank loan is their only source of capital. They are wrong. Alternative financing providers are providing working capital to small businesses every day.
Saturday, July 17, 2010
Invoice Financing (Factoring)
Invoice financing (factoring) helps companies that:
1. Need funding but can't qualify for a bank loan due to personal credit
2. Have invoices as their main collateral
3. Are start-ups or have been in business for less than 3 years
4. Qualify for bank financing but need some of the flexibility of factoring
It’s the Little Loans That Matter Most By Elise Tosun, ACCION USA Loan Consultant
| By Elise Tosun, ACCION USA Loan Consultant Have you ever had a day at work when it feels like everything falls apart, all at once? Recently, I began the day working with three potential loan applicants. Here at ACCION USA, our performance as loan consultants is partly measured by how many of these applicants get a loan. As the day progressed, I kept uncovering problems that each of these businesses had that I knew would stand in the way of them getting approved. Though I generally feel that my work at AUSA is
The author with Sarahi and her newborn baby very meaningful, by 5 p.m., I was feeling pretty purposeless and frustrated. What did I deserve to be paid for, if my work was not translating to actual money in the hands of small business owners? Shortly after my mini-breakdown, my client Sarahi came in to the office to get her loan for $1,500. This is one of the smallest loan sizes we give, and Sarahi was using it to start her own Green Cart business. Green Carts were developed by the City of New York to sell fresh fruits and vegetables in areas of the city where access to these kinds of foods is very limited. Sarahi's loan would give her the initial investment she needed to buy a cart for her fruit so she could start selling in the Bronx. As a loan consultant it is easy to put emphasis on the bigger loans (AUSA's average is around $7,000) that help us reach our monthly lending goals. But the smaller loans are just as important. As my supervisor Wanda has repeated to me many times: every penny counts. That is exactly the right mentality that microfinance loan consultants need to have. When Sarahi came to our office at 5 p.m. on Thursday with her husband and her newborn baby girl, I was reminded that their loan really counted, even though it was smaller than the other ones I had been working on all day. Sarahi, while pregnant, had trekked from her home in Queens to Manhattan to attend evening workshops on managing her food business and to work with me on her application. She was one of the most hard-working, ambitious clients I've lent to yet. Spending the end of the day with her last week reminded me why I do what I do. Sometimes I need my clients' help as much as they need mine! |
How Important is Customer Service by Greg Manus, Richmond SCORE
| A lot of time and effort is spent on selling products and services. But, one of the easiest and most effective ways of growing your small business is through referrals from your existing customers. In fact, a focus on customer service is key to your long-term success. After experiencing extremely poor customer service from a firm that provides email marketer software, I realized how important it is to connect with your customers, respond to the customer's needs and address his or her concerns in a timely manner. The company in question not only lost our future business but they also lost a source of referrals while creating another source of dissatisfaction that is shared openly on the Internet about their company. Don't repeat this mistake; get a handle on customer service from the beginning and make it a priority for your company. Here are a few things to consider:
Tell us about your experience with customer service management. Any suggestions? Greg Magnus, Richmond SCORE Follow me on Twitter – @gregmagnus, or check out my blog
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My Five Tenets for U.S. Microfinance by Jameson Lee
| By Jameson Lee
Growing up in Orange County, California as a seventeen-year-old high school student, I have been fortunate enough to avoid the extreme cases of debt, lack of food, water or shelter that affect a large percentage of the world today. Introduced to microfinance by a teacher at my school, I soon recognized the potential that such a system holds to combat poverty. While I do believe that helping business owners in developing nations will help to balance the financial inequality felt throughout the world, U.S. microfinance deserves equal attention, with the current economic times making it harder than ever for businesses to qualify for loans. Motivated to make a difference, I hope to reach out to my fellow teenagers to help spread the word about the power of microfinance. I've read everything about microfinance that I can get my hands on, and came across Muhammad Yunus's "16 Decisions." I found them to be powerful messages for entrepreneurs in developing countries to move towards better social environments. Yet I believe that in an environment where concerns such as access to technology, transportation, education and safety are less significant, business owners in developed nations must have their own personalized guidelines. I gave some thought to the "16 decisions" of Muhammad Yunus and felt inspired to think about a few that would be well-suited for U.S. microfinance. Here are my "5 tenets" for U.S. entrepreneurs.
Exposed to the change enacted by ACCION USA, I found such an MFI to be the logical organization to contact in my search for ways to influence my own community. While the need for microfinance in Orange County, California where I live may be less prevalent than other communities, by working alongside such an organization like ACCION USA, I hope to directly influence the lives of others in order to help business owners help themselves. As an advocate for microfinance, I look forward to the chance that it can give to local entrepreneurs, and to the entire world. Jameson Lee is a teen blogger interested in microfinance, social business, entrepreneurship and helping small business owners to help themselves. His work focuses on explaining the fundamentals of Microfinance, while also questioning the basics foundations for a circumferential understanding of the system. You can follow his work at www.TheRevelationist.com or follow him on twitter @TRevelationist |
How Important is Customer Service?
| A lot of time and effort is spent on selling products and services. But, one of the easiest and most effective ways of growing your small business is through referrals from your existing customers. In fact, a focus on customer service is key to your long-term success. After experiencing extremely poor customer service from a firm that provides email marketer software, I realized how important it is to connect with your customers, respond to the customer's needs and address his or her concerns in a timely manner. The company in question not only lost our future business but they also lost a source of referrals while creating another source of dissatisfaction that is shared openly on the Internet about their company. Don't repeat this mistake; get a handle on customer service from the beginning and make it a priority for your company. Here are a few things to consider:
Tell us about your experience with customer service management. Any suggestions? Greg Magnus, Richmond SCORE Follow me on Twitter – @gregmagnus, or check out my blog |
It’s the Little Loans That Matter Most
| By Elise Tosun, ACCION USA Loan Consultant Have you ever had a day at work when it feels like everything falls apart, all at once? Recently, I began the day working with three potential loan applicants. Here at ACCION USA, our performance as loan consultants is partly measured by how many of these applicants get a loan. As the day progressed, I kept uncovering problems that each of these businesses had that I knew would stand in the way of them getting approved. Though I generally feel that my work at AUSA is
The author with Sarahi and her newborn baby very meaningful, by 5 p.m., I was feeling pretty purposeless and frustrated. What did I deserve to be paid for, if my work was not translating to actual money in the hands of small business owners? Shortly after my mini-breakdown, my client Sarahi came in to the office to get her loan for $1,500. This is one of the smallest loan sizes we give, and Sarahi was using it to start her own Green Cart business. Green Carts were developed by the City of New York to sell fresh fruits and vegetables in areas of the city where access to these kinds of foods is very limited. Sarahi's loan would give her the initial investment she needed to buy a cart for her fruit so she could start selling in the Bronx. As a loan consultant it is easy to put emphasis on the bigger loans (AUSA's average is around $7,000) that help us reach our monthly lending goals. But the smaller loans are just as important. As my supervisor Wanda has repeated to me many times: every penny counts. That is exactly the right mentality that microfinance loan consultants need to have. When Sarahi came to our office at 5 p.m. on Thursday with her husband and her newborn baby girl, I was reminded that their loan really counted, even though it was smaller than the other ones I had been working on all day. Sarahi, while pregnant, had trekked from her home in Queens to Manhattan to attend evening workshops on managing her food business and to work with me on her application. She was one of the most hard-working, ambitious clients I've lent to yet. Spending the end of the day with her last week reminded me why I do what I do. Sometimes I need my clients' help as much as they need mine! |
New Services from ACCION USA: Credit Coaching Sessions
New Service from ACCION USA: Credit Coaching Sessions Make a commitment to improve your financial future! We are now taking appointments for our personalized credit coaching sessions. ACCION USA’s experienced personal credit coaches will work one-on-one to help you: • Learn strategies for building, managing or repairing your credit.
WHEN AND HOW? An ACCION USA loan consultant will work with you one-on-one over the phone at a time that is convenient for you.
Email Benjamin at bhimmelfarb@accionusa.org or call 305-548-3360 ext. 1829. Tell a friend or family member about this service to get your credit on track! |
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Invoice Financing (Factoring)
Invoice financing (factoring) helps companies that:
1. Need funding but can't qualify for a bank loan due to personal credit
2. Have invoices as their main collateral
3. Are start-ups or have been in business for less than 3 years
4. Qualify for bank financing but need some of the flexibility of factoring
Tip of the Month: Free Online Credit Course Available NOW!
UPCOMING WORKSHOPS
July 6, 2010, 12-1 PM EST: Preparing for a Loan: Live with an ACCION USA Loan Consultant >>LEARN MORE Join this FREE online workshop and learn from an ACCION USA loan consultant about our loan requirements and get key tips about how to prepare your business to access financing. >>REGISTER NOW July 20, 2010 12-1 PM EST: Business Survival Strategies Workshop: Managing Credit Today >>LEARN MORE IN-PERSON July 16, 2010 9 AM to 4 PM EST: Ask a CPA Day, Boston, MA >>LEARN MORE | |
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