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

Invoice Factoring: Cash Now, No Waiting, NO Debt? Your competitor is doing it, Are you?

What are Your costs for NOT Factoring?

Consider the time value of money and the benefits of improved cash flow to your business. By having, cash for your invoices within 24 hours are you able to pay your suppliers faster and receive better discounts. Are you able to fulfill your next order to XYZ Company and make payroll without tapping your line of credit at the bank? Can you offer longer terms to larger customers and attract more business? Can improved cash flow help your business grow or survive without incurring more debt at the bank? Can the financial benefits of improved cash flow to your business offset the fees of Factoring, and then some? Sure it can, the savings alone in taking discounts from your vendors can equal the cost of Factoring. All the other savings are in your pocket! Factoring is a smart business decision. Why are you doing it?

Is Cash needed immediately for growth or survival?

Is long billing cycles putting a strain on your business cash flow? Despite increasing sales, does the management of receivables and payables seem like a juggling act? Could your business increase sales by offering better terms to your new and larger customers? Are you spending too much time collecting from slow paying customers and not enough time building your business? Is your bank turning you down for traditional financing due to years in business, profitability, lack of assets, personal guarantees or financial strength?

Have you considered turning away new business due to slow cash flow?

These are challenges many businesses face that can be solved with Factoring.

Benefits of Factoring Receivables

Simplicity

The advanced funding you receive for your receivables and the discount fees you will pay are based solely on the financial strength and credit worthiness of your customers, not your business!

You receive Cash for your unpaid accounts receivable invoices. Usually the factoring company buys the invoice from you for an amount less than its actual face value (70-90%). When the Factor later collects the full amount of the invoice from your client, you will receive the remainder of the advance less the factoring fee (discount rate). Fees will vary depending on the total dollar amount you intend to factor on a monthly basis.

Flexibility

Need a flexible financial solution that can help your business be more competitive while improving your cash flow, credit rating, and supplier discounts? Factor as much as your want or as little as you want. You decide. No obligations. There are No minimums and No maximums in the amount you can factor. No binding contracts, if that is what you want.

Unlike traditional bank financing, factoring relies on the financial strength and credit worthiness of your customers, not you. Here?s why you should use Factoring services:

Offer Better Terms - Win More Business

With Factoring, you can attract more business by offering better terms on your invoices. Most companies negotiate on price to win business in a competitive market, but with Factoring, you can negotiate with terms instead of price.

To your customers, better terms can be more attractive than better prices.

When using attractive terms to win business, you can build the cost of factoring into your costs of good and services.

Example: A new customer may choose to do business with your company because you can offer NET 30 or NET 45 terms while your competitor (who isn't factoring) requires payment up front but has a 3% better price. If you factor the subsequent invoice at a discount of 3%, you have leveraged factoring services to win the business at no extra cost and improved your cash flow at the same time.

Improve Cash Flow * NO Additional Debt *WIN over customers

Your Business Receives:
* Get cash in 24 hours or less from your outstanding invoices! Eliminate long billing cycles.
* No new debt is created. Factoring is not a loan. This allows you to preserve your financial leverage to take on new debt. Improved credit rating.
* Purchase capital equipment to expand your business.
* Increase inventory for quicker shipments or handle seasonal inventory needs.
* Market for additional business.
* Take trade discounts. This alone can offset Factoring fees and all the other savings are gravy!
* Pay off nagging, expensive delinquent obligations.
* End payroll worries.
* Meet tax requirements on time. No more exhaustive penalty fees.
* Negotiate discount purchasing.
* Unlimited sales and profit potential.

You Receive:
*Cash stability
*Simple to start and use
*You keep control
* Reduce stress, improve planning, focus on what is critical to make money.
Customer Credit Services:
*Reduce bad debt expense, work with experts at collecting.
* Streamline credit approvals for new customers.
* Improve decision-making on new business.
* Reduce administration costs: long distance calls for collection and credit investigation, postage, staff, monthly statements and more.
* Larger customer credit lines and better terms, which increase sales.
* As you grow, your payroll budget for credit and collection department is minimal.
Accounts Receivable Management:
* Reduce administrative costs. Factor will post invoices and apply cash applications.
* Improve customer relationships. You are no longer the bad guy looking for payment.
* Improve receivable turns. Fact: Customers pay Factors before independent businesses.
* Improve accounting performance; timely reports, online access and more.
* Redirect your critical resources to marketing and production

If you are looking to receive an increase in cash flow and increase your bottom line profits, you need to factor your invoices now!


Please feel free to reprint this article as long as it is left intact and all links are hyperlinked.

www.brtfinancial.com/arecfac.htm

BRT Financial specializes in Invoice Factoring; it gets you the cash you need now! Factor as many invoices as you need! Invoice Factoring will provide the cash flow you need to increase your bottom line profits! www.brtfinancial.com/arecfac.htm www.brtfinancial.com

Increase Cash Flow With Invoice Factoring

Invoice factoring is one of the quickest, easiest ways for business owners to increase their cash flow. If your business produces invoices, then invoice factoring is an option for you.

The process of invoice factoring works in just a few simple steps. When an invoice is created, you sell it to the ?factor? at a discounted rate ? usually about 3 to 5 percent off of the invoice total. Factoring means you do not have to wait for the customer to pay to start collecting money from the invoice.

First you, the business owner, notify the factor that the invoice has been created. Usually this can be done electronically. You provide the customer?s contact information to the factor, and the factor will confirm the invoice with your customer.

Typically, invoices are confirmed with a simple letter or phone call. Usually the factor appears to your customer to be a billing processor or department, confirming the invoice on your behalf. This way, the customer does not realize you have sold your invoice to a third party.

Some invoice factoring companies are willing to remain completely invisible to your customers. And after you have established a relationship with your factor, and they are more familiar with your business and your customer base, they will likely stop confirming every single invoice.

After the invoice has been confirmed, the factor pays your business what is known as the ?advance rate.? This is a percentage of the invoice total, typically around 70 to 85 percent.

The factor then collects the total amount of the invoice from your customer. They keep their 3 to 5 percent, and forward the rest of the total to you.


Invoices factoring increases your business? working capitol and helps improve the credit rating of your business. And, when factoring your invoices, you are in control. You decide which invoices to factor and which ones to collect yourself, based on your relationship with your customer base.

Have you just recently started up your business? Are you finding it difficult to build enough working capitol to run your business day to day? Invoice factoring can work as a bridge to get you over the rough waters after start-up until your business is able to run smoothly.

And, if your business has poor or no credit history, invoice factoring is an option to consider if loans or liens won?t work for you, or if you consider them too risky.

A steady, reliable cash flow is necessary for any business to operate smoothly. Worrying about your cash flow also causes business owners more stress than almost any other aspect of their business. Invoice factoring allows you to stop worrying. It is the simple, fast way to increase cash flow now.

Robert Michael is a writer for MZ Factoring which is an excellent place to find factoring links, resources and articles. For more information go to: http://www.mzfactoring.com"

Can Medical Factoring Help Finance Your Fast Growing Office?

Regardless of what industry pundits say, opening a medical practice can be both very rewarding and very lucrative. Of course, as with any business, medical offices have their own specific financial challenges. One of the biggest challenges for medical practices of all sizes is adjusting to the long payment cycles of private insurance providers and Medicare/Medicaid. It is not uncommon for bills to insurance companies to take up to 120 days to pay. This slow payment cycle wreaks havoc in the office?s cash flow, forcing the medical office to carry the costs of doing business ? paying rent, equipment leases and office staff ? while waiting to get paid. This can be prohibitively expensive and prevent the office from growing and hiring additional staff. At its worst, it can threaten the very existence of the medical practice.

However, there is a light at the end of the tunnel. There is a financing tool that lets you capitalize on your slow paying insurance companies and turn their slow payments into immediate payments. The solution is to factor your medical receivables.

How does medical receivables factoring work?

Medical receivables factoring (or medical factoring for short) is a financing tool that allows you to turn slow paying invoices into actual cash, by selling them to a medical factoring company. The medical factoring company pays you for them and waits to be paid by the insurance companies. It eliminates the slow payment cycle, reducing the payment time from 90 days to two days. This provides the medical office with the necessary funds to meet expenses, such as paying rent and staff. It also frees up capital to grow the business into new areas.

The medical factoring process is fairly simple. Once a factoring arrangement is established, your office sends its weekly receivables to the factoring company for immediate financing. The factoring company will calculate the actual amount paid by insurance companies (called the net collectibles) and advance you up to 80% of that amount. The remaining 20% is called the reserve, and is used to settle billing discrepancies. Once the insurance company pays the medical bill, the remaining 20% is rebated, less the financing fee. The financing fee varies based on how long the invoices were financed.

Although qualifying for factoring is relatively simple, most financing companies will only work with medical offices that have net collectibles of at least $50,000. Terms usually get better as the practice grows. Medical practices, testing centers and medical supply companies that have over $200,000 a month in net collectibles are in the best position to get the best terms. This is because insurance payment processing can be very complex and there are a number of efficiencies that can be realized with high volumes.

Advantages of medical office factoring

Medical office factoring has some advantages over other financial products. The most important is that the financing is recurring and happens every time you invoice an insurance company. This makes it a cash on demand product. As opposed to loans and lines of credit, the factoring line has flexible limits. As a matter of fact, the limits are based on your ability to invoice, making it an ideal growth tool. Lastly, doctor office factoring is easy to qualify for and the personal credit of the practice owners is usually not involved in the financing decision.

Invoice Factoring Group can provide you with a medical factoring or medical receivables factoring quote for free at http://factoring.qlfs.com/html/medical_offices.html Marco Terry, the president, can be reached at 1-866-730-1922. Copyright? 2006 ? All rights reserved. Article may be reprinted provided it isn't modified

How to use freight bill factoring to finance your trucking company

There are few businesses that are as cash flow intensive as a trucking company. The list of ongoing expenses can be endless and can easily overwhelm small and medium size trucking companies. There are fuel expenses, truck repairs, rentals and salaries. Although most trucking companies are very profitable, few can afford to wait the usual 30 to 60 days it takes to get paid for their freight bills.

Unless the trucking company has a significant cash cushion in the bank, waiting 30 to 60 days to get paid can cause serious problems. It can jeopardize existing operations and furthermore, it can prevent you from growing your business. The only way to get out of the cash flow rut is to find a way to capitalize on your slow paying invoices. The best tool to do this for a trucking company is called freight bill factoring.

Freight bill factoring enables the trucking company to get paid for their freight bills within a day of invoicing, eliminating the usual 30 to 60 day wait. With a factoring agreement in place, you can stabilize your company's cash flow and eliminate the stress of not knowing when you'll be paid. Since freight bill factoring eliminates the worries of waiting for your payment, you will be free to focus on what you do best: running your business.

Who qualifies for freight bill factoring?

Most small and mid size trucking and transportation companies should qualify for factoring. There are two main requirements to qualify. First, your company must do business with reputable clients or freight brokers. Second, your company must be free of tax problems. If you meet these two criteria, more often than not you will qualify. Most factoring companies are comfortable working with new businesses, so you should be able to qualify even if your company is a start up. Best of all, you can get a financing agreement in place within a few days.

What services does a factoring company provide?

The main benefit of working with a freight bill factor is that this will provide you with advanced funds on your freight bills. That means you can get paid very quickly after invoicing. However, most factors will also provide you with collections and credit protection as part of their services. This enables you to focus your energies and your staff on growing your company rather than on expensive and time consuming back office work.

Factoring for growth

Although many truck operators initially obtain factoring financing to avert the problems of dealing with slow payers, eventually most owners realize that factoring can help them grow their business. It eliminates their biggest worry by ensuring that invoices get paid immediately, freeing up cash and enabling the owner to grow the business.

About Invoice Factoring Group

Invoice Factoring Group (http://factoring.qlfs.com) can provide you with a free trucking company / freight bill factoring quote. Marco Terry, its president, can be reached at (866) 730 1922.

Factoring Financial Services - The Basics

There are several aspects of an existing business that are taken into consideration when getting approved for factoring financial services. The information that is required from any factoring financial servicing company will revolve around average invoice size. This is a huge contributing factor as well as whether the invoices are domestic or international. This means that the company seeking factoring services sells their service or goods outside the boundaries of the home country. The payment terms that were implemented for the invoices will also be considered in assessing the risk factor. The final aspect that any factoring financial services company will consider is the credit worthiness of the clientele base. All of these points together will give the company the opportunity to assess the risk associated with financing the invoices for any existing business.

There are basically two different types applications that are applied by factoring services companies. These are called the discount method and the prime plus method. Many companies use both of these methods of determining the cost that is charged to the client. Each financial situation is unique and most factoring financial services companies accommodate each business client according to their specific situation. With that said, in terms of very general speak, the prime plus method is usually the choice that produces lower rates than the discount method. This is an incredibly important step when finding a company that offers factoring services because many have hidden fees that are not mentioned initially. Find out exactly how each factoring financial services company regulates their factoring fees so there are no surprise fees added on at a later date.

To effectively understand the different methods used by factoring services companies, it is best to individually research each one. Let's start with the prime plus method to determine factoring financial services fees. The prime plus method has only two fees within its structure. The first part of the fee schedule is a one-time fee that is applied to every invoice. This is generally called the factoring fee. The factoring fees are assessed depending upon the gross amount of the invoice and applied accordingly. The second part of the prime plus method is the interest charge on the financial advance that the factoring services firm is providing. The day that the finances are made available to the business is the day that the interest begins. The interest rate is calculated by a pre-determined amount by the firm and the client before any financial advances are made.

The discount method that is applied to invoices by the factoring financial services firm's is based on a percentage per number of days. For example, if the discount method were 3% for the first 30 days, it would be calculated accordingly. It isn't hard to ascertain that the prime plus method is likely the better choice for any potential factoring services customer.

Troy Degarnham is the author and webmaster of http://www.accounts-receivable-financing.info an informative website about Invoice Factoring.

Extensive help and tips on factoring companies, assets, small business, medical factoring, non recourse and other factoring financial services.

Factoring- Accounts Receivable, Cash Flow and Factoring Invoice

If you own a flourishing business, you are probably aware of the importance of factoring invoices. The expression ‘factoring invoices’ sounds ubiquitous but what exactly does it mean and is it useful? These questions frequently cause confusion, but factoring invoices is easy to understand.

Factoring is the exchange of a company's commercial invoices or accounts receivable into immediate cash. This is done by selling those accounts at a discount. With invoice factoring, you can easily get 70 to 80% of an invoice's face value wired to your account within 24 to 48 hours of the invoice being issued and approved. It’s an easy way to get ready cash.

There is a misconception that invoice factoring is a kind of loan. This is absolutely wrong, as with factoring you pay neither interest nor principal. Invoice factoring is not a loan. The main benefit of invoice factoring is that no liability will appear on a company's balance sheet due to factoring; furthermore, it financially revitalizes the business.

In invoice factoring, a company sells one of its assets or accounts receivable for an agreed-upon ‘fee’ to obtain a more liquid asset, cash. In short, it is a kind of self-financing, having its own growth with debt-free funding; it is like selling your vehicle to someone- the two of you agree on a price and the transaction is finalized.

As factoring invoices is not a loan, funding is not based on a company's ability to repay the amount advanced, but on the ability of the company's customers to pay what is owed the company for the purchase of its goods or services. Nowadays people prefer account receivable factoring over other traditional funding sources which usually require all the assets available to a company for collateral on a credit line. Factoring is a Receivables-based credit line that needs no other collateral.

The main highlight of invoice factoring is that you can have cash on demand to meet seasonal demands or accommodate new and larger clients who may demand longer terms or use up any excess working capital you have on hand. In short, factoring invoices gives you the option of offering terms to your customers, thus helping you increase your customer base.

If you are looking for a company that can help you with invoice factoring or that can provide you with more information on receivables factoring, account receivable factoring and factoring invoices please visit www.magfinancial.com.

Mr.Scott Stevens is well known author who writes about financial services such as cash flow programs, account receivables, factor receivable etc. Find more information about magnolia financial service at http://www.magfinancial.com