Archives for November2011

Free Tips on Business Financing

November 14, 2011 by admin in Financing

For a business to stand firmly there is need for adequate funding. You must learn the many types of business financing, learn how to keep cash, how to increase sales, how to do market analysis, how to keep proper customer’s records and how to source for capital for a business. You must consider carefully where to source for funds, how much money you needed to start the business and where to site the business entity. I recommend you source for more money than you actually needed so that the surplus can be transferred to emergency fund. The emergency fund will be kept in case of any unforeseen circumstances.

There are various options of raising funds that may be cheaper than bank financing. The nature of the enterprise will determine how much money needed to start the trade. You must decide whether the project is for a long term or a short term.

This will give you the directions on which type of business financing that suite your business plan. You may decide to lease or purchase equipment, this will depends on the opportunity cost and the duration the equipment will be used for the trade.

When deciding on financing a business that suite you ventures needs, it is significant you submit your business plan to the bank or financier of your business organization. The business plan will give details of the amount needed to run the firm, date of loan repayment, an industry overview, sales analysis, market analysis and customers demand. It includes other sources of revenue to your industry. It also includes the amount you are ready to introduce into the business ventures, whether from your personal savings, friends, relatives or social club members.

Finally, many things are connected with business financing.

If you really want to be successful in day to day running of your entity, make sure you keep adequate records of your daily sales transactions, general expenses, bills receivable and bills payable. Ensure to open separate current account or savings account for your business enterprise. There are some free business resources online that can help you manage your firm properly. These will enhance growth and success to your business.

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Small Business Finance: What Is Vendor Financing?

November 13, 2011 by admin in Financing

Every business needs financing. Vendor financing is one way to find money for small business financing.

Stretching out trade payables from, say 30 days to 60 days, is a pretty common method for companies to improve their cash flow. Usually vendors are not very happy when this happens, and some even voice their disapproval in no uncertain terms. Most businesses are small businesses and stretching out payables only hurts everyone in the long run. Think about it: if you are depending on one of your customers to pay you within 30 days, and that customer doesn’t pay for 90 days, it can significantly affect your cash flow. If it’s one of your major customers, the impact can be quite serious. You don’t have the cash to pay your bills and so a ripple effect is caused on down the line.

This suggestion is different. If you’ve established a good relationship with your vendors, sometimes it’s possible to get them to agree to finance part of your company by extending their terms for a particularly large order for an extended length of time. If you’re a new company with little or no history, you could approach vendors showing them your business plan and documentation of orders you’ve already received. If the vendor is convinced that your company will be successful, and one of their better customers in the future, they may be willing to give you a break now.

Another alternative is to guarantee the vendor that they will be your exclusive supplier for an agreed to length of time in exchange for longer credit terms. Or you can offer to pay slightly higher than market price in exchange for longer credit terms. This method can be dangerous, because it sets the precedence of a higher price. When the longer terms are no longer necessary, it may be a challenge to decrease the price you pay the vendor.

Occasionally, it’s possible to convince a vendor to exchange a trade payable owed to them for a note payable instead, or possibly an equity position in your company. If you decide to offer an equity position, document it thoroughly and have your attorney draw up whatever papers are required. Make sure you include a buyout clause in case you sell the business. If you don’t have the buyout clause any investor can forestall the sale of the business.

Vendor financing is one option for small business financing.

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Business Financing for Small Businesses

November 13, 2011 by admin in Financing

Start-ups and small businesses have traditionally had difficulty raising capital through outside sources and, for new companies, the chances of getting a bank loan is close to zero. Most banks today won’t even consider lines of credit or loans for companies that have been in business less than 3-5 years. Start-ups haven’t built up adequate credit history and banks are just not willing to give money to companies with no credit history. Without adequate money coming in, it is difficult for a small business to maintain payroll and pay its bills.

No wonder we keep reading the statistic that 85 percent of business start-ups fail in the first five years. Some research has indicated the reasons for these failures are a lack of funding and poor planning. These facts combined with today’s economy makes small business financing more important than ever.

Well, there are ways for small businesses to avoid funding issues and find alternatives for obtaining business financing.

One method is receivables financing, also known as receivables factoring, invoice factoring, invoice discounting or debtor financing.

Receivables financing enables small businesses to obtain the cash necessary to keep the company running by getting the money they need without having to go to a bank for a loan or take on additional debt. What they can do instead is sell their receivables at a discounted rate to a factoring company. Factoring companies pay cash for the invoices and handle the collection process.

A factoring company usually pays 70 percent to 90 percent of the total invoices. Then, after collecting the invoices, the factoring company returns them to the small business owner.

For this service the small business will pay a fee of 1.5 percent to 3.5 percent of the total invoices.

As you can see, factoring differs from a loan in that invoices are being sold to the factoring company and not being offered as collateral. The small business or start-up is then able to convert its invoices into operating cash and not have to wait 30, 60, 90 days or more to receive payment.

There are numerous benefits to factoring for any business, but especially for a small business or start-up. Receivables factoring will shorten the collections process giving a small business the cash flow they need without taking on new debt. Factoring can also be a great option for a small business or start-up that has been attempting to obtain a loan and is having trouble qualifying with a bank.
Many small businesses that are in a start-up situation will find it difficult to receive a bank loan making factoring services essential if they want to maintain an adequate cash flow.

Most small businesses don’t have a collections department or adequate personnel and working with a factoring company provides this much needed service. Factoring provides them with the required cash flow to survive and enables the business owner to focus on the day-to-day operations.

Receivables financing, receivables factoring or invoice factoring places the time, cost, and effort of collection into the hands of a factoring company. This enables the business’ staff to concentrate on what they were hired to do and not worry about how to sustain the business financially.

Paragon Financial was founded in 1994 with the initiative to afford growing businesses an alternative to conventional Bank Financing. When the banks either couldn’t grant funds or bestowed too little, Paragon could promptly offer them a steady stream of cash through the factoring of their Accounts Receivables. Please visit us at http://www.paragonfinancial.net or call 800.897.5431.

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Business Financing For Small Businesses

November 13, 2011 by admin in Financing

Start-ups and small businesses have traditionally had difficulty raising capital through outside sources and, for new companies, the chances of getting a bank loan is close to zero. Most banks today wont even consider lines of credit or loans for companies that have been in business less than 3-5 years. Start-ups havent built up adequate credit history and banks are just not willing to give money to companies with no credit history. Without adequate money coming in, it is difficult for a small business to maintain payroll and pay its bills.

No wonder we keep reading the statistic that 85 percent of business start-ups fail in the first five years. Some research has indicated the reasons for these failures are a lack of funding and poor planning. These facts combined with todays economy makes small business financing more important than ever.

Well, there are ways for small businesses to avoid funding issues and find alternatives for obtaining business financing. One method is receivables financing, also known as receivables factoring, invoice factoring, invoice discounting or debtor financing.

Receivables financing enables small businesses to obtain the cash necessary to keep the company running by getting the money they need without having to go to a bank for a loan or take on additional debt. What they can do instead is sell their receivables at a discounted rate to a factoring company. Factoring companies pay cash for the invoices and handle the collection process.

A factoring company usually pays 70 percent to 90 percent of the total invoices. Then, after collecting the invoices, the factoring company returns them to the small business owner. For this service the small business will pay a fee of 1.5 percent to 3.5 percent of the total invoices.

As you can see, factoring differs from a loan in that invoices are being sold to the factoring company and not being offered as collateral. The small business or start-up is then able to convert its invoices into operating cash and not have to wait 30, 60, 90 days or more to receive payment.

There are numerous benefits to factoring for any business, but especially for a small business or start-up. Receivables factoring will shorten the collections process giving a small business the cash flow they need without taking on new debt. Factoring can also be a great option for a small business or start-up that has been attempting to obtain a loan and is having trouble qualifying with a bank.
Many small businesses that are in a start-up situation will find it difficult to receive a bank loan making factoring services essential if they want to maintain an adequate cash flow.

Most small businesses don’t have a collections department or adequate personnel and working with a factoring company provides this much needed service. Factoring provides them with the required cash flow to survive and enables the business owner to focus on the day-to-day operations.

Receivables financing, receivables factoring or invoice factoring places the time, cost, and effort of collection into the hands of a factoring company. This enables the business staff to concentrate on what they were hired to do and not worry about how to sustain the business financially.

Read More
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