How Cable Installers Can Benefit From Factoring Receivables

The cable installation business can be very profitable ? if managed properly. Most cable installers operate as subcontractors for large telecommunications or cable companies, such as AT&T, Adelphia or Comcast. This can be a great business model that makes a tidy profit for the cable installer. These companies make great customers and provide constant work and reliable payments.

Although working for large companies can be a great source of revenue, business owners need to get used to the fact that they pay their invoices 30 to 60 days after the work is completed. That means that as an owner, you must cover all payroll and all other business expenses while waiting to be paid. This can be tough, especially for new or growing businesses.

When faced with a cash flow challenge, most installers go to their bank hoping to get some business financing. However, they soon learn that getting a business loan is very hard. As a matter of fact, few loans are ever granted to cable installers. Fortunately, business loans are not always the best solution to this problem. In fact, there is a solution that works better than a loan. It is called factoring.

Factoring receivables can provide you with a reliable and predictable cash flow. It provides you with a substantial advance on your invoices, ensuring that you have funds to pay employees and suppliers. Receivables factoring works as follows:

1. You perform the work and send an invoice to the Cable or Telecommunications company

2. You send a copy of the invoice to the factoring company. The company provides you with an immediate advance. The advance will be between 75% and 85%

3. Once your client pays the invoice, the factoring company will give you with a second advance (the remaining 15% to 25%), less a small service fee

The fee will vary based on how much you invoice per month and can range from 1.5% to 3% per month.

One of the most attractive features of factoring invoices is that it is easy to obtain. Most cable installers will qualify provided that they do business with good customers (such as large cable companies) and are free of problems. Factoring invoices is an ideal solution for both established and new companies and can help propel your business to the next level.

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Construction Factoring

Perhaps no other major industry is better suited to factoring than the building and construction industry. For many years, the peaks and valleys of construction seasons and cycles have troubled subcontractors and general contractors alike. Now factoring offers a cost effective and simple solution that can benefit both the contractor and the factoring company. Many factoring companies have even gone for far as to specialize in factoring for the construction industry, learning the unique language and needs of subcontractors.

Generally, banks and construction subcontractors don't get along with each other. Construction is a risky business and banks are only interested in safe, reliable clients. If the contractor is new and growing, or does not have several years of positive cash flow, banks won't even let the contractor in the door let alone give them a business loan.

There are many reasons why construction is so financially volatile, but one of the main reasons is the time delays and cost overruns; that are almost a given in construction. You almost never ever hear of a building being completed on time and under budget. The architect and client inevitably change the plans along the way, causing increased costs and construction delays. If you are the plumbing subcontractor for the new town school and the local school board decides to change the plans after it is started, you truly have no idea when you will get paid. In the mean time, the plumbers that work for you are expecting to be paid weekly - and you are expected to order and have on hand all plumbing materials needed for the school. The bank won't help the plumber, but factoring companies are perfectly suited to this situation. By purchasing the plumbing subcontractors accounts receivable, for a small factoring fee, the subcontractor can continue on with their business. Both the construction subcontractor and the factoring company benefit.

Another problem with the construction industry is the scope and number of projects that can be handled at one time. Building a building is a big deal. A contractor simple can't take on more than a small hand full of projects at a time. And buildings are expensive. Contractors don't have the resources to take on more than a couple projects at a time. Most other industries don't have this problem. For example, a company that builds and sells vacuum cleaners can make thousands of vacuums every day, with only a small amount of the companies' resources and capitol invested in each individual vacuum. After a while, cash flow evens out and business is relatively steady. Construction companies can't do that. If problems with a project get to be too much for the poor plumbing company, they may have to go out of business. On the other hand if Mrs. Jones has trouble with her vacuum cleaner, the vacuum company can easily replace it without having to go out of business. Again, the bank won't help the plumbing company but factoring companies are designed to handle just this type of ebb and flow in construction.

Factoring companies can't change the nature of construction. Construction will always be subject to massive peaks and valleys and each project will be a huge investment of resources and capitol for contractors. Because of this, the factoring fees tend to be a little higher than with other industries - for example 3 or 4 percent versus 1 or 2 percent. And the amount withheld to cover disputes is usually closer to 25 percent rather than 15 percent. But for the construction subcontractor, this is usually a small price to pay for the peace of mind of knowing they won't have to file for bankruptcy.

Michael Russell Your Independent guide to Factoring

Factoring Services

Factoring services means managing the financial operations of an organization to achieve the objective of the enterprise. The basic financial operations are investment, which deals with acquisition of fixed assets; financing, which deals with the raising of required funds from various sources; and profit appropriation, which deals with appropriating the profit earned by the enterprise among the suppliers of funds.

Regarding investment, assets/projects are to be selected only by considering their net returns. Regarding financing it is to be ensured that the firm gets the required finance at the lowest possible cost. Similarly, regarding profit appropriation it is to be seen that sufficient fund is provided for the developmental activities of the enterprise without impairing the interest of the suppliers. In a firm where these operations are planned and controlled properly it can be said that there exists efficient factoring services.

All the operations and resources in a business organization are managed with the same broad objective, i.e., to attain the objective of the enterprise. So each resource or area should be managed in such a way to contribute to the fulfillment of the objective for each functional area. According to the objective of profit maximization the ultimate goal of a business enterprise is to maximize its profits. All the efforts of the organization are to be directed to achieve this goal.

Business is for earning profit. When profit earning is the aim of the business, profit maximization should be the obvious objective. Profitability is an indicator to the efficiency with which the firm is managed. The higher the profit, the better the efficiency. For growth and expansion, profit is the main source of finance. To meet unforeseen contingencies reserves are necessary which is possible only if there is enough profit. However the term profit is vague. It may assume different meanings in different contexts. It may be short-term vs. long-term, or profit to the equity shareholders vs. total profit. It may be profit before tax or profit after tax. It may be absolute profit or profit in relation to investment.

Factoring provides detailed information on factoring, credit card factoring, loan factoring, invoice factoring and more. Factoring is affliated with Invoice Factoring Discounting

What Is Invoice Factoring And Invoice Discounting

The Romans were the first civilization to sell promissory notes at a discount, beginning the industry of factoring. America was built largely on the possibilities of factoring, when colonial businesses were factored by Europeans willing to invest cash in exchange for the promise of large returns, and government bonds also use the same principles applied by businesses when they engage in invoice factoring.

Invoice factoring is, at its simplest, the sale of the right to collect cash owed on your outstanding invoices. Most businesses engage in invoice factoring when they need cash up front quickly, or when they have customers that are slow to pay and don't have the resources to build an accounts collections department. Though some companies are large and established enough to get accounts receivable financing through a regular bank, it can be handy to have access to invoice factoring companies as well.

Most businesses use invoice factoring to get fast cash. In the intense and fast paced business environment of today, ready cash can be invaluable. With the sale of your invoice futures, you can get the cash today you need to capture customers that will move your business forward.

Invoice factoring is not a loan; rather, it's an outright sale of an asset. Another way of looking at it is as a cash advance: you give up a certain portion of the money you expect to receive in the future in exchange for ready cash today. While some businesses purchase invoices outright, others give you a down payment toward the invoice, paying you the balance less their fee when they receive payment from the customer. One of the best things about invoice factoring is that your credit has no bearing on whether you are approved; instead, your customer's credit qualifies the invoice for factoring.

Many different industries take advantage of invoice factoring, including:

* Transportation
* Manufacturers
* Distributors
* Wholesalers
* Staffing and consulting firms
* Telecommunications companies
* Service providers

Because ready cash is so important in their business, industries that are heavily vested in human services and need to be able to meet payroll are among the best able to leverage invoice factoring. However, any business that generates at least ten thousand dollars in accounts receivable should be able to use invoice factoring, provided they've acquired creditworthy customers.

Other situations that might make invoice factoring a wise choice for you include:

* A young company with creditworthy customers, but not sufficient credit history for your own business to be considered creditworthy by banks
* A company with the necessity of taking advantage of new, time-limited sales and profit opportunities, but inadequate cash flow currently to do so
* Companies with income, credit, or tax problems
* Companies that have filed for bankruptcy, but that stand to turn a profit
* Companies that are growing too rapidly for ready capital to keep up with business needs
* Companies poised to grow very soon but do not want to incur debt
* Companies that are growing rapidly, but do not have good enough credit to take out bank loans.
* Start-up companies with no capital base currently
* Companies with seasonal sales patterns or uneven sales patternsHenry Byers, Invoice Factoring advisor - focusing on Accounts Receivable Factoring and Factoring Financial Services

Invoice Factoring Specialists

Invoice factoring specialists provides an asset based financing alternative for those business that needs working capital to enhance cash flow or improve upon their present business structure. It works on a simple format. A company sells goods or provides service to a customer. The invoice submitted by the customer is provided to invoice factoring specialists and they provide funds and service based on the invoice. This fund is used by the company to raise capital for its various needs. The customer pays for the invoice not to the company but to the factoring specialists. Companies can also raise additional funds from invoice factoring specialists.

Most companies often have a sizeable amount of money as mere invoices and this often leads to cash crunch. Credit history of a company’s customer is the only criteria that most invoice factoring specialists demand. The advantage with factoring specialists is that companies can spend their energy on concentrating in their business rather than running after money that needs to be collected.

The services of invoice factoring specialists are ideal for companies in all types of industry. Those companies with excellent growth but needs smooth cash flow, those with financial crunch due to insufficient financial flow, and those companies that need to meet deadlines of loans can make us of factoring. Today, invoice factoring specialists comes to the aid of companies during a host of critical situations.

The services of invoice factorings specialists might look costly when compared to the other existing financing options. However, there are several advantages. The discounts that companies gives to the customers for early payment can be avoided. Time spend on chasing cash receivable can be used for other purposes. This also saves work force. Stable cash flow allows companies to deal more profitably with vendors.

While selecting an invoice factoring specialist make sure that they do not harass your customers. A good invoice factoring specialists will never tamper with the reputation of your company while collecting funds.

Invoice Factoring provides detailed information on Invoice Factoring, Invoice Factoring Companies, Invoice Factoring Discounting, Invoice Factoring Rates and more. Invoice Factoring is affiliated with Loan Factoring.