When the bank denies your loan, you have options. Accounts receivable factoring could give you the funds you need in a very short time – sometimes as quick as within one day. But first, make sure this option is right for your business.
If you fit into this list of criteria, you could be approved for accounts receivable factoring.
✓ You’re a B2B company, whether you are a small business or startup, a growing operation or an established enterprise.
✓ Your company provides a service or sells a product to other businesses rather than private individuals
✓ You don’t meet the standard list of requirements for a bank loan
✓ Your company’s credit rating may not be very high, but your customers’ credit is.
✓ You operate in an industry that has reliable customers that pay on invoicing. See a list of common industries below.
✓ You have sales on the books with dependable customers who are credit-worthy
✓ You invoice your clients on credit terms.
✓ You have strong sales opportunities in the pipeline.
✓ You have credit-worthy accounts receivable that are very likely to be paid on their due date.
✓ Your customer invoices tend to have longer terms such as 30 or 60 days from the invoice date.
✓ Your invoices are free of liens and encumbrances.
✓ Your invoices are within credit terms and credit limits.
There are plenty of advantages to using accounts receivable factoring, aside from the obvious need for working capital.
Your factoring company can provide back-office support and take care of collections for those accounts receivable, freeing up time to focus on your company. You’ll also obtain more working capital that can be used to purchase additional supplies and fulfill new orders, helping grow your business at a faster pace. And by working with the right company, you’ll gain an invaluable business partner that can provide broader financial analysis and support – so the process can continue at a scalable pace to meet your business needs.
Learn more about factoring in the below video — and get in touch with us to discuss financing options for your business.
Strengthening the credit and risk department of expanding finance company.
TORONTO, ON – Liquid Capital is pleased to announce its recent hire of Sergio Mindreau, who has joined as Director, Credit Risk working out of the Toronto, Ontario, Canada headquarters. Mr. Mindreau joins the experienced credit and risk department, which reviews all new business opportunities to support 80+ franchisees across North America, ensuring cash flow financing deals are efficiently and effectively assessed.
Mr. Mindreau comes to Liquid Capital with over 16 years experience in commercial and international credit and risk analysis in the United States and Canada. An alumnus of the University of Florida, Mr. Mindreau is also a Certified International Credit Professional (CICP) through The Finance, Credit & International Business Association (FCIB), a globally recognized mark of distinction earned by demonstrating professional development in global credit management and risk analysis.
“Liquid Capital is a dynamic company that is constantly expanding, and I wanted to be a part of that success,” Mr. Mindreau said. “Previously, I was an insurance underwriter with an International Insurance Company, and managed the Liquid Capital account. I saw first-hand how Liquid Capital operated and I was always impressed with the extremely high level of expertise from Liquid Capital team members. Their research and questioning regarding credit and risk management were unmatched.”
Reporting to Vice-President, Chief Risk Officer, Tammy Kemp, and working closely with Liquid Capital Principals, Mr. Mindreau is eager to improve upon already exceptional credit practices by proactively reviewing exposure and monitoring, risk by industry, mitigating losses and building a strong relationship with new Principals. “Our main focus right now is to improve response time with all Principals so deals can be closed even faster. We want to be transparent, and in the event any application is declined, we want to provide feedback on our risk analysis.”
Ms. Kemp is pleased to grow her department’s bench strength with the addition of Mr. Mindreau. “We value the expertise Mr. Mindreau brings to Liquid Capital, as his attention to detail and knowledge of industry best practices will assist us in meeting our ambitious plans to grow our business and continue to support our Principal network,” states Ms. Kemp. “It is a pleasure to officially welcome Mr. Mindreau to the organization as we look forward to an exciting 2017.
About Liquid Capital
Liquid Capital is a full-service working capital and trade finance network and has been in operations since 1999. The Liquid Capital network has the largest geographic footprint of alternative funding professionals, with over 80 independently owned businesses across North America, offering clients a customized and flexible approach with local decision makers.
We offer a complete range of solutions for all industries and provide immediate financing upon approval with no long-term contracts or hidden fees.
At Liquid Capital, we help you grow your business.
And how to use failure as a guidepost.
At a recent business conference, a young professional walked on stage to deliver the final keynote. With confidence, he stated:
“Failure is the tool I use to figure out if we are really being ambitious enough.”
Jason Silver was speaking about his experience working with Airbnb as the Growth Lead for their newly expanding Canadian market. To launch his Airbnb career three years prior, he was flown out to the San Francisco headquarters to present his strategy in front of senior leadership (all of whom were also young professionals).
Silver was sure he had blown them away with his incredible plan to increase revenue by 10% in the next year. But those brash young execs turned him back and said he needed to think bigger, bolder and reimagine his strategy. His presentation had failed, but Silver was just getting started.
“If you fail and it’s not crippling to your business, then you’ll be improving and getting better at what your do. You’re trying something new and progressing.”
Airbnb wanted Silver to fail. They wanted him to feel the sting of defeat so that he could completely change his approach.
On his flight back home that same day, Silver scrapped everything he had been working on. He reinvented a completely new strategy from the ground up, and in that first year as Growth Lead their team proudly accomplished 9 times the growth they originally forecast. It was an unbelievable accomplishment. Silver had quickly learned that failing at Airbnb wasn’t the end – it was a tool to get to a better strategy.
Now, Silver advocates three steps to change the framework for failure – and it all revolves around being innovative.
1. Ask new questions.
“The right questions will lead you down a path that can change your business, industry or even the world.”
So what are the right questions?
These are not the conventional ones that everyone else is asking. Ask a question that reframes the problem, so you attack it from a completely different angle.
Twitter lit up with Jason’s quotes and advice, including user @ColleenMCole who tweeted the above.
When creating smartphones, Silver suggests that the questions may have taken a successful company like Apple down roads less traveled. A conventional question would ask, “How can we make a better mobile phone?” This would constrain the company to the status quo and make an incremental improvement. They would likely end up with a version 2.0 of the same phone.
But with innovative questioning, another company could ask, “How can I carry around the power of a computer in my pocket?” This forces the company into new territory, raising new and innovative questions, and ending up with a brand new product like the iPhone when no other devices on the market compare.
2. Imagine a vision, realize it with data.
Imagine the world or your business as you want it to be, and then use data to realize that vision.
This can be seen as a form of goal setting – forcing you to dream and think beyond your standard goals. Be bold and envision what you’ve always wanted to achieve with your business. Don’t let real or imaginary roadblocks get in your way. Remember that your strategic creativity is capable of getting around any roadblock as long as you truly want to realize your vision.
Silver recommends using supporting data that can help you answer the innovative questions and realize the vision. Starting with a clear path that you believe in and using real world data points to find a solution will create a more successful reality. The reverse – starting with data points at hand and then developing your vision around those – will restrict your growth and put limits on what you can achieve.
3. Fail often.
“Business grows by learning from what doesn’t work,” Silver stated. “Embracing failure is incredibly difficult. The key is making mistakes and then always learning from that.”
Airbnb operates in over 34,000 cities and 19 countries, constantly adding more locations and dealing with incredibly challenging rental environments. With 100 million total travelers in Airbnb’s system, Silver explained that the company needed to fail to grow to that level. If the company was afraid to fail, they would absolutely fail.
“Don’t turn a blind eye to negative results,” Silver cautioned, going on to explain that the entire team from top to bottom needs to be on board with the culture to learn from failure. “Shareholders don’t like failure because they want to see ROI. Everyone has to be bought into this because the worst thing you can do is start down the path and then want to go back.
If you fail, and you should, go back to step one.
Ask more new questions. Use data and analytics to prove and disprove your theories, and to support your strong vision. Then never forget to fail again.
I thought reducing wasteful spending in your business is always a good thing…right?
I’m always surprised at the response from business owners when I suggest they can possibly save money every month, with minimal to no effort on their part. There is generally push back before I can finish my statement. I’m not even promoting a service that has anything to do with me or my business. I guess it has to do with the skepticism of “something for nothing”.
It’s true, there is the possibility of a little effort, but if the suggestion comes from a trusted source, it is definitely worth listening.
A perfect example is the service of Rob Goodale at Schooley Mitchell. Schooley Mitchell delivers objective advice and analysis to ensure you are receiving superior telecommunications and card processing services at the best price. They are independent of all vendors and act only with your best interests in mind.
A risk-free review will identify the challenges you face and provide practical, cost-savings solutions. The best part – If they don’t find savings for you, there is no fee for their services.
This seems like a no-brainer to me. Here is an overview of their services:
• Billing error identification and recovery
• Ongoing optimization of landline, long distance, wireless services, data, internet, conferencing & more
• Merchant services analysis, including credit card, debit card, eCheck & ACH transactions
• Project management, needs analysis, technology recommendations
• Assisting with hardware upgrades & installs, office relocations, network integration
Let an experienced professional like Rob Goodale look into reducing your overhead, while you keep growing the business.
You are a business owner, you need cash. What else is new?
When considering the options, traditional personal financing wisdom always suggests avoiding debt. Does that hold true however for business financing? Surprisingly, debt is often preferable when you are financing your business. Why is that?
First you have to ask yourself why you need the money in the first place. Do you just need cash, or could you benefit from more industry connections or knowledge? Do you actually know someone with cash and these added value benefits of knowledge or connections that would be a good fit as an investor?
Every time you opt for equity investment over debt, you are giving part of your business away. When you use debt, you are keeping your business for yourself. Debts will eventually be paid off. Equity given away will always grow (most likely far more than any interest you pay on your debt) – meaning your portion of the business will shrink. So if you are tempted to raise cash by giving away equity, don’t do it just to get the cash. Make sure the investor brings added value to the table. Do they have key connections to customers you need? Do they have substantial industry knowledge or insight you lack? Make sure the intangible value of what they bring to the table far exceeds the cost of any interest or other fees you would pay on the debt.
If you are looking for cash only, and maybe also need some help with the administration in your office, there may be a number of options available to you, so give us a call to find a good fit for your situation.
If Plan A is not working, do you have a Plan B or are you looking at a blank page and hoping for inspiration?
Your business should be actively managed every single day, of every single week, every month to survive. The problem is when you are doing well you want to take a break. You reach your goal for the week, and you let yourself relax. As soon as you realize that you’re not making money anymore, you rush to pick up the slack but it’s too late- you’re only improving your business minimally, and these results never improve. Therein lies the heart of your problem and the only way to improve is to find a solution.
Start by making a plan. Track the hours that you’re working and the income that you make. Plot your expenses daily, and then weekly, and eventually monthly. Define what your work goals are, and work to track your progress for the entire year.
How to Make Your Business Plan
Track your aspirations, deadlines, and sales projections and stick to it.
Set up goals, and consequences for yourself if you don’t reach those goals. Incentivize yourself and your employees with recognition, appreciation, and more money as well.
Avoid allowing yourself to become unmotivated. If your team gets distracted or thinks that their jobs are in trouble, they aren’t going to work well. Set clear expectations and goals, and be clear with job descriptions.
Track Your Work and Your Income and Expenses Per Day and Per Week
It might seem superfluous, but either put the data in a spreadsheet now or hire someone who will. Too many business owners hold all of their receipts and invoices in shoe boxes and wonder why they get audited by the IRS.
Define Your Work Plan, and Cut Excess
Figure out who’s benefiting your bottom dollar and who isn’t. Every company needs ways to improve business; using marketing, accountants (to manage tax and revenue), and security (either online or in person).
Track The Progress You Make in a Month and Write it Down
Write down how much you’ve spent, how much you’ve made, and how you can make it better next month. Having these standards helps you earn more and spend less over the long run. You’ll continue finding ways to grow and improve, helping keep you on track to succeed.
5 Ways for Your Business to Make More Money
- Rent out Part of Your Business Space to Other Businesses
When you own or lease your business premises, if you’re not using all of the physical space, it only makes sense to rent it out and sell your space to another business. All you have to do is organize your business assets, and set them up in a central location that makes better use of the available space.
Then, you can put your business in a booth or corner of the office, and rent the rest to other local businesses, throwing in add-ins to up the rent capabilities, including potential workstations and secretarial services.
- Package Your Services Together
If your service is multifaceted, your business can make money by selling services as products rather than doing it per hour. You can increase your revenue, and people feel like they’re getting the better end of the deal, helping overcome their resistance to sign-up for your service. Work is far more tangible when people can plan out how they’re spending their money, especially in regards to a set budget. This can greatly increase your profit margin. Find out about the conversion process here .
- Add Value to Your Services or Products
One of the best ways that people make money for their business is by adding value to the things that they sell. Little add-ons and freebies are the basis of many advertising strategies because the facts show that people love them. These services are all over the place:
You buy a phone and you get a free headset or phone case
You buy a large popcorn and a box candy at the movies, and they throw in a “free” soda
Discount coupons if you buy a specific amount
Bargain sales that offer “rock-bottom prices”
I’ve found that unless you find at least some good reasons for your customers to buy something, your customer already has reasons why not to unless it’s such a great deal that they can’t help themselves. Understanding why people buy things and figuring out what little conveniences that you can offer helps you maximize your business profits, and keep your business afloat.
- Focus on Selling to Both New And Old Customers
It’s always easiest to sell something to your old customers, especially if you have a good reputation and customer service. The best part is that they already understand your business concept so you don’t have to pay for advertising to convince them to buy your products. All you have to do is tell them what you’ve done: you’re providing a discount, you’ve acquired new, awesome products, or you’ve developed a member reward program. Whatever you choose, these kinds of incentives help convince people to keep coming back to you.
- Factoring Through A/R Funding
Factoring can be one of the fastest and easiest ways for your company to make money. In fact, successful businesses have used factoring for hundreds of years (since the industrial revolution) to help them maximize their sales and continue growing. Factoring involves a company selling their accounts receivable at 75-80% of their current value. Factors collect on these accounts, holding onto the remaining portion of the account until the remaining balance is paid off. Then, companies get this money back, minus a small fee.
If your business is cash strapped, factoring can be one of the only options to help find business success. Factoring opens up working capital, pushes your investments, and helps you take steps forward. It provides a continuous option for your business to access capital that you might not get on a regular schedule from your customers. It can help you make employee payments, pay off bills, and re-supply. Factoring helps many small businesses take advantage of otherwise unavailable business opportunities.
Many small business owners and start-up entrepreneurs get overwhelmed with what they have to do. One of the leading indicators for a failing business is the inability to pay their bills on time. Being overwhelmed, it’s easy to let small things slip and understandable. After all, it’s hard to do everything right when you are just starting out. But some slips can be very costly; taxes and other important payments cannot be neglected, there are severe consequences if you do. Failure to meet payroll is not uncommon for a startup, but those loyal hardworking employees will eventually leave if not paid on time.
The most common reason that a business cannot pay their bills is because their customers don’t pay them quickly. Waiting a long time for a payment from customers is commonplace, but it’s hard to meet payroll and pay for expenses when you are not getting paid for your services and/or goods.
Factoring, or selling accounts receivable to a third-party at a discount, can dramatically raise your capital. It’s not a new practice either; many businesses have used factoring processes to help manage their cash.
It might seem like an expensive endeavor, but when it’s hard for you to manage your money and time, factoring companies can help you to stay on top of your business. Factors will give you 75 to 80 percent of your invoices immediately, and forward the rest of the payment (minus what you’re paying for the service) back to you when your customer pays you.
Think of factoring companies more like extending your credit line (not a loan or liability). Factoring is an asset that allows you to be more concerned with your clients and your service, rather than worrying about your customer’s ability to pay and timeliness of payments. The factors fees are usually pretty nominal (between 2 and 3 percent), but the services they provide are worth much more than that. Additionally, there’s a lot of misconceptions that factoring is a last ditch effort, but it’s not. Usually, factoring is for businesses that have a lot on their plate. Factoring provides these businesses the on-hand cash that they need to grow.
There are 5 big reasons that factoring services aren’t expensive for businesses (they’re actually hugely beneficial):
- Factoring can raise money for your business, fast
Factoring deals often happen in less than 24 hours, and this quick turnaround can give your business critical capital that expands operations immediately. The other alternatives are to apply for loans or wait to hear back from your customers- and neither usually happens very quickly. Small businesses don’t have weeks to wait or months to wait for income, businesses need immediate action.
- Businesses that factor can bring in money without filing for loans
Debts can be useful to build businesses, but it can be extremely risky. This is because businesses badly need capital in many phases of development. If you don’t take action for your business now, you’re going to have to have a loan. The more immediate the loan, the more expensive it will be. Factor costs are fixed, and take care of a very important aspect of your company- the cash flow that makes your company grow.
- If your business can’t get a loan, factoring could be a great alternative
It’s never been easy to get business loans, but now it’s even more difficult because so many businesses fail. Banks ask for higher and higher rates and refuse to give money to businesses that do not have an extensive credit history. If your business hasn’t been around long, has had problems making payments, or doesn’t have a lot of spare capital it’s unlikely that your business can get the loan that you need. In these circumstances, factoring services are some of the only options for businesses.
- Often, businesses have collection departments that are non-existent or understaffed, but a factoring company’s isn’t.
Does your business have several employees dedicated to paying the bills, filing invoices, and contacting clients? If you do, you don’t need them anymore because factoring provides one of the cheapest, most efficient services out there. Not only do factors provide your business with money in 24 hours; they also keep track of your invoices and tardy customers, because they’re getting paid for it (it’s built into their fee). So not taking advantage of it is poor business practice. Paying a factor is cheaper than keeping your credit and collection employees. The factors have a professional staff trained in collecting invoices; you don’t have to worry about that anymore.
- Factoring is inexpensive!
The “high costs of factoring services” are grossly misunderstood. In reality, most factor services are inexpensive when you compare what it costs to not have that money right away and to have employees dedicated to collecting payment. Plus, factoring services usually get money from clients within 30 days. This means that when businesses factor, the cost of the service is usually about 2 or 3 percent for nearly a month of financing for amounts up to 75-80 percent (and the money is received right away).
Whenever you assume that factoring services are too expensive, you should also yourself a few questions:
– Could you get needed capital (such as a bank loan?) the next day?
– How much would it cost, even for a small loan?
– Is your understanding of the costs of financing accurate? Have you considered the benefits of factoring?
More often than not, you’ll be pleasantly surprised with the results that you find when you consider the benefits of factoring. Factors free your business from worrying about having the money to grow your business.
Usually the first question I get when I say my company does factoring is “What’s factoring?”.
What is factoring? Factoring involves the sale of invoices to a factoring company. A factor will provide advances against these purchased invoices and will also take care of the collection of these invoices.
Why do companies sell invoices? Companies that are growing often can’t wait for payment from their slow paying customers. Through factoring, companies can quickly convert their invoices to cash in order to meet their immediate financial demands like paying employees, paying suppliers or paying rent.
What is an advance? When a factor purchases invoices from a client, the client can borrow up to a certain percentage of the invoice amount from the factor. This is called an advance and enable the client to borrow up to 80% to 90% or more.
How can I afford to use a factor when my profit margin is very low?An increase in sales realized through factoring can result in higher net income. Companies should weigh whether they can increase their net income/profit by working with a factor. Overhead costs do not necessarily increase in proportion to sales.
Who can factor? Factoring is not limited to a specific industry. Any company that sells products or provides services on terms is a candidate for factoring.
Why should I not go to the bank? Banks’ credit requirements are often much stricter than a factor. Banks also require financial statements that reflect several years of profitable operations and positive cash flow.
What is a factor guarantee? The easiest way to understand factoring is to think of it as a credit card for the business. When a customer makes a purchase and presents his credit card, the merchant transmits the information and requests a credit approval. If the amount is within the purchaser’s credit limit, the credit card company approves the transaction and agrees to accept the risk in case the purchaser is financially unable to pay. When a factor approves a customer and issues a payment guarantee, the related invoices are called approved or non-recourse accounts.
An interesting article in the Harvard Business Review called the “The Five Stages of Small Business Growth” talks about the most important aspects of building a small business.The authors point out that after you start finding clients and making income it all comes down to management.
Management, they continue, is the most prominent determination of success or failure. After doing some research, they found out that most businesses have the same eight problems:
- Finding financial resources
- Finding the right personnel
- Understanding how your business operates
- Business resources, customer relations, supplier and distributor relations.
- The owner’s goals for the business
- An owner’s ability to market, invent, and produce
- An owner’s ability to delegate responsibility to others and manage productivity
- A strategy that determines what your business is especially good at, and what you could do better.
The reality of the situation is that businesses need money. Without money or capital, a business can’t grow or expand. Clients end up finding new alternatives for their needs that are either cheaper or more readily available.
Highlighting the top seven ways that successful businesses find working capital:
#1: Factoring your Accounts Receivable
Factoring is probably one of the oldest and best options for small businesses to use to get money. Factors will give you 75 to 80 percent of your invoices immediately, and forward the rest of the payment (minus what you’re paying for the service) back to you when your customer pays you.
Factoring offers the fastest means of getting cash by giving businesses immediate access to funds that could have taken days to receive.
#2: Using Hedge-Funds
Hedge funds are not a resource for smaller businesses and best for bigger businesses and have the same concept as your run of the mill loan- except with a lot more risk. Hedge funds usually allow access to funds much slower than other methods and the loans can be risky.
#3: Peer-to-Peer Lending
These kinds of lenders can be family, friends, or interested strangers. These kinds of transactions are easier than possible through crowdfunding ventures like kickstarter.com or indiegogo.com. With these kinds of programs, the only fees that your business would have to pay would be the fees associated with running your campaign and pay taxes on what you earn. The benefits of these programs are obvious, but not a lot of money is made that way, contrary to what you might believe (only about $300 million annually) per year, according to these crowd-funding venues.
#4: Loans from your Customers
Generally for these types of loans to be effective, businesses should possess solid customer lists and establish customer trust- which can be very time-consuming. Farmers have used this technique to have customers prepay for a share of the harvest and also share in the risk.
#5: Using Credit Cards
Credit cards can be a great option if you’ve got good credit. You get easy access to cash, and usually enough to make a few moves, but there are a wide variety of drawbacks of using credit cards. Usually, credit cards have the highest amounts of interest, huge penalties, and the terms are subject to your credit score. Miss an important payment your credit line could fall.
#6: Convertible Debt Instruments
Convertible debt sounds like you’re riding off into the sunset- but you’d be wrong. These kinds of debt instruments require owners to give up a little bit of equity to qualify for a loan. This gives a lender equity into a business, making the loan a little less risky for the bank. Usually, lenders want to be paid back with a return, not an actual part of your company. The percentage is just to ensure payment if your bottom line fails to grow. Owners may have to pay back the debt that doesn’t convert into payments if the business is under-performing.
#7: Loans from Venture-Capital Companies
These days, some of the richest people in the world couldn’t be happier to give some of it away to you (for the right price of course). If you’ve got a killer idea and a plan to execute on that idea, then there are some big companies that would be interested. Buyer beware- these options usually come with high-interest rates and stock warrant coverage requirements, both of which can be very expensive for small businesses.
Realistically, your financial means determine your ultimate utilization of resources
Your business’s choices on different loans and lenders might have to meet specific variables, including:
-Consideration of the timing of your loans
-Your credit history (the business or the individual)
-Your assets to back up the loan
-Your business’s geographic location
-The risks that your business has, as well as the realistic chance of success for your goods or service
In most situations, the best option is factoring. It releases your natural assets in a way that gives you more money instantly. Because your money is available instantly, A/R type factoring arrangements give your business abilities to operate with fewer complications and only a small fee. In many cases, these types of financing schemes are more reliable in situations when the bank says “no” but you still need your money.
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Helping business grow for 18 years throughout Canada, United States, Mexico and Hong Kong.
Liquid Capital Corp.
5734 Yonge St. Suite 400
North York, ON M2M 4E7
Liquid Capital Corp.
5525 N MacArthur Blvd Ste 625
Irving, TX 55038