factoring vs bank loans

Need a Bank Loan? 16 Ways Factoring is Better

factoring vs bank loans

If you own or operate a company, you probably know the challenges of finding business funding. Relationships with banks are important, but sometimes bank loans don’t work out. That’s where alternative financing options like factoring, also known as accounts receivable financing, come in handy.

Factoring allows you to leverage your existing and ongoing customer invoices into financing. You’ll work with a factoring partner who will provide you working capital and take over the collections of those accounts receivable in return for a professional services fee.

When a company needs cash flow, factoring can be the quick and reliable solution to keep your business heading in the right direction. Here are the additional bonuses to using factoring that you may have never considered:

1. Get faster funding

If you need to urgently buy supplies, order product, make payroll or repair key equipment, factoring can be easier and quicker to secure than traditional loans – sometimes as quickly as 24 hours after submitting your invoices. Unlike a traditional loan, you don’t need to submit tax returns, detailed financial statements, business plans or your financial projections – saving you a lot of time and hassle. Banks can also take longer to approve your requests, potentially making you wait for fiscal year end or the results of an audit. Instead, your factoring partner will perform an initial underwriting process to approve your application – then you’re all set.

2. Flexibility – Borrow more when needed

The amount your company can borrow will actually grow the more you sell. As your business grows, you’ll need even more cash flow to pay for supplies as you wait for customers to pay their invoices. So factoring gives you the immediate ability to borrow more, and keep the growth going. Compared to traditional banks, you will never outgrow your line of credit, as a big enough factoring company can accommodate all your growth needs.

3. No other assets required

Factoring only requires that you have customer accounts receivable to secure your funding. You don’t need other assets like real estate, equipment or inventory to apply. That means your personal home or property doesn’t have to be offered up as collateral, which may sometimes be the case with traditional bank loans. (If you do have those other assets, you can also qualify for additional funding options like Asset-Based Loans).

4. Cash flow boost when you need it – now or ongoing

Whether you need a longer-term solution or a temporary boost in cash flow, factoring can help you out of a tricky working capital dilemma. Every business will eventually run into the need for more cash on hand – so with factoring, as soon as new orders are invoiced you can have cash released into your business account. This gives you the chance to take advantage of growth opportunities that require more consistent cash flow.

5. Get larger funding than banks

Unlimited funding sounds amazing. With factoring, lending power is dependent upon the size of your accounts receivable – so an abundance of working capital is possible. Banks qualify you based on your business credit strength, whereas your factoring partner looks to your accounts receivable and your customer credit strength. If you’re selling goods or services to financially strong customers and have ongoing invoices, you can get substantially more financing than you’d qualify for with a traditional bank lender.

6. Grow your business the way you want

Instant cash means you can accelerate your growth strategy. Some companies need to hire more sales people to secure new accounts. Others will need additional equipment to manufacture their product. Still others may need working capital for marketing and advertising, office upgrades or new project development. Whatever the need, you’ll have the working capital to execute and grow the business.

7. Take advantage of supplier discounts

Volume discounts, early payment discounts or special supplier offers are attractive options – but only if you have the capital available at that moment in time. Traditional bank loans are often not fast enough to allow you to take advantage of these discounts. But now, you can factor invoices quickly and free up cash flow to jump at the opportunities when they present themselves.

8. Shorten your cash cycle

Waiting for customers to make payment is a burden. With factoring, you can significantly shorten your cash cycle. Instead of waiting 30, 60, 90 or more days for traditional payment terms, you can receive that payment from your factoring partner in as little as 24 hours. By the time your original terms would have come due, you could have now been able to purchase more goods, make more sales and earn higher profits.

9. Free up your time

Searching for funding and traditional bank loans is a time-consuming process. Meetings, business plans and applications take up a lot of your valuable schedule that could be spent on other areas of the business. With factoring, you’ll have to complete the application process, but once approved you can regularly factor your credit eligible invoices and save time while improving cash flow.

10. Lower your overhead costs

Since your factoring partner takes over the management of your invoices, including handling customer payment and collections, your costs in these departments will likely lower. This can help offset any fees and makes factoring an even more attractive solution. You won’t get that service at a traditional bank.

11. Focus on new revenue

You and your team likely already spend a lot of time processing customer invoices and collecting payment – maybe too much time. With those duties removed from your to-do list, you can now work on other tasks that will improve your revenue like sales, marketing and building new client relationships.

12. Faster collections

Prompt and professional collections can be a big bonus when you work with the right factoring partner. With a reputable company handling customer collections, the result can be more timely payments (customers don’t want to risk a poor credit report). Once the customer makes their final payments, you’ll also receive your reserve funds from the factoring partner – so on-time collections are important to everyone.

13. Improved credit checks

Your factoring partner will also be responsible for credit-checking your customers. That gives you the advantage of having valuable intelligence about the credit worthiness of your clients, including new customers you may close. That can help improve the quality of accounts you take on, improve your credit decisions and advance your business’ debt security.

14. Less costs than equity investments – and you keep control

Equity investments and venture capital can be alternatives to traditional bank loans, but they can also demand much higher returns than the costs associated with factoring. In addition, you may be required to give up shares in your company, and that dilutes your ownership stake. It may even shift control of your business to the investors. But with factoring, there is no requirement to give up a stake in your business.

15. Protect against bad debt

In certain circumstances, some factoring companies offer non-recourse factoring, which means the factoring partner will take on the risk if any invoices are left unpaid. This type of factoring offers you additional protection against bad debt – a level of protection can be very important to some companies.

16. Improve your balance sheet

Factoring is not the same as receiving a loan. On your books, a loan would get recorded as a “debit,” which is considered a liability. Instead, with factoring there is no debt incurred. Your factoring partner is purchasing your accounts receivable with cash, and that reduces your balance sheet debt. The result will be a lower debt to equity ration, and that can actually improve your financial position on the books.

 

Factoring can be a highly attractive option for companies at any stage in business. If you’re interested in learning exactly how it can work for your business, get in touch to learn more. We’re always happy to chat.

Recent Fundings – May 2017

A Presentation That Pays Off with Future Sales

The success of a presentation begins with its very first sentence. Ask yourself what will be most interesting to your attendees. Is there new research or data within their industry that can help their businesses run more efficiently? Maybe there’s a recent success story that may impact their mindset about a new technology in the marketplace?

Not every presentation needs to be exactly like Steve Jobs would have done it, or in the style of a famous TED Talk, but there are some key points that will captivate your audience and keep their attention — helping you close deals. Follow the tips below to prep for your next presentation and stand out in front of the crowd.

What makes an amazing presentation?

Experts at CustomShow, a sales presentation platform, stress that capturing your audience’s attention with a strong opening will engage their minds, enabling the presenter to effectively convey his entire message. Their advice: “In general it is not a good idea to memorize your entire speech. It is, however, a good idea to memorize the beginning four to 10 sentences. This is critical because it allows you to feel confident and ride the wave of confidence as you continue your presentation.” For additional ideas, view How To Start A Presentation Tips And Tricks – 22 Powerful Strategies on their website.

The mechanics of speaking will in itself make a difference in the effectiveness of your presentation, too. Your voice speaks volumes about your confidence and will reflect, rightly or wrongly, on how you feel about the topic. Therefore, speaking clearly and confidently is important.

4 ways your speaking voice matters

You’ll find many useful tips for prepping your voice at SkillsYouNeed.com. Its primer on Aspects of Effective Speaking provides useful exercises on increasing your comfort in developing a speaking voice, using breath to improve your voice and the four important aspects of voice when making a presentation:

  1. Accents
  2. Finding your voice
  3. The effect of breath on voice and speech
  4. Vocal production

One example of how your voice matters is inflection. For example, when a person asks a question, the last word of the sentence typically goes up in tone at the end. Sometimes when speakers are uncomfortable with a subject or nervous about their situation they fall into a rhythm that ends every sentence on a high note, whether it’s a question or a statement. This leaves an impression of uncertainty. Practice your presentation, record it and listen for proper inflection. Strong statements should finish with a steady or lower tone. Make sure your voice varies appropriately.

Make the content memorable

Equally important, of course, is the content. You have earned a precious opportunity to stand in front of an audience that includes prospective clients. Show them how much you value their time and how you intend to make it pay off. Talk with knowledge about the audience’s industry or needs. Share important trends or information relevant to their needs.

While your talk may include a scripted explanation about your company’s services, make certain the bulk of your presentation offers in-depth information that makes for useful takeaways. When you do so you’ll build trust and that is the first step toward opening the door to business after the presentation.

new school marketing tricks

7 New-School Digital Marketing Tricks For Your SMB

new school marketing tricks

We’ve shown you how you can leverage seven old-school marketing tricks for your small and medium-sized business. Of course, old-school isn’t the only way, and you can always teach a dog new tricks.

Our business is all about helping other businesses get access to funding and grow. But aside from finances, part of business growth is understanding how to take advantage of trends—in this case, digital marketing tactics that help you connect with your customers.

Here are seven new-school and actionable ways to take advantage of digital marketing tactics for your SMB.

1. Help people take action on your website

Your website should be the center of your online strategy to build trust and describe your products, services and business values. So make sure your customers keep reading. How do you do that?

Put calls-to-action, known as CTAs, on every page. Make them clear, concise and obvious. What action do you want your readers to take? If you want them to subscribe to your newsletter, then include a sign-up form directly on that page. If you want them to call a rep, then make that number front and center (and clickable on mobile devices). And if you want them to read more content, then include widgets with catchy headlines to the next pages and blog articles.

Review your site and list the pages that are missing a CTA and ones that can be improved. Then make a plan to fix that.

2. Blog once a week

There are so many advantages to building a thought-leadership section to your website. And it doesn’t have to be hard.

Use this list of blog headline starters from Co-Schedule to come up with some initial ideas. Then create a quick and easy publishing calendar on Excel that shows the topics you’ll publish each week. Voila! You’re blogging. Start with articles around 500 words long, and always answer the question, “How will my customer benefit from this?”

Blogs keep your website up to date with new content, which will improve your Google ranking. By updating your blog at least once a week, Google will have new material to scan and your customers will have a reason to return. Not sure where to start? For starters, check out How to Start a Blog from First Site Guide, which details exactly what it takes to turn your blog from concept to reality.

how to start a blog

The team at First Site Guide walks you through their “five easy steps to starting a blog” including:

  1. Choose a blogging platform
  2. Pick a domain name
  3. Get a web hosting account
  4. Install blogging software and set up a blog
  5. Select a blog design and layout

Once you’ve got a blog up and running, it’s important to share every article—not once or twice, but multiple times on Twitter, Facebook, LinkedIn, Pinterest, YouTube and more. If you have evergreen content (it doesn’t go out of date), then you can continue to share it over the next quarter and year.

3. Find the right keywords to improve your SEO

SEO (Search Engine Optimization) is extremely important for the growth of your digital marketing. By adding the right keywords on your website, customers will be able to find you when they search for certain topics on Google. For example, if you make incredible birthday cakes you should be found when someone searches “best cake for kid’s birthday party” and similar terms.

It’s all about making sure that people can find your business website. Make this a priority – whether you learn more out about it yourself or hire an SEO expert to help out. Start with these steps:

  • Use your blog to add even more of the right keywords, which allows you to stay up-to-date with current trends in your market.
  • Check what your competition is talking about on their website, blog and social media sites, then include those topics in your blog so you can be found by prospects.
  • If there’s a new innovation in your industry, blog about it and make use of those strategic keywords so people will find you when they’re searching for info about that hot topic.

How do you find the right search keywords? One of the most trusted resources is the Google AdWords Keyword Planner Tool, but it can get complicated. If you’re just starting out, try Wordtracker to get a sense of the type of keywords searched around specific topics.

For a crash course in SEO, check out this page from Moz.

4. Find the right followers on Twitter

We all know the potential value in Twitter as a business-friendly social media platform. But how do you grow your following and find the right demographics that meet your target market. Enter a host of free tools (yes, free!) that can help you do that in a somewhat automated way.

  • ManageFlitter: A great tool to find active Twitter users who are in your target geography and industry. Make use of the “refine search” function to find the right Twitter users. Then follow people using the automated feature (some paid options) to set it and forget it. Come back a couple days later and see who followed you, then unfollow the ones that didn’t. You’ll maintain a symbiotic Twitter relationship that way.
  • Tweepi: Another similar tool, but check out their “Follow List” feature that allows you to easily follow Twitter users from someone’s list – an often overlooked tactic.
  • Followcheck: Although the search options aren’t as robust as ManageFlitter, this tool gives you two great features. One is their “Sleepers” list that shows your inactive followers (ditch them!) and the other is their F/F ratio in the Search function. Follow users with 70 – 100% F/F ration for a better chance of them following you back.

5. Update your website with a “responsive design”

Over 50% of web traffic is now reported to come from smartphones and tablets these days. So your website better look great and perform even better on mobile devices.

Many sites have what is called a “responsive design,” meaning the layout of the site will adjust to fit any screen or device. Companies like Womp Mobile can help turn your existing site into a responsive design.

If you’re not sure how your site looks on mobile devices, it’s time you find out. Go to MobileTest.me, select a mobile test, enter your website URL and presto – you’ll see what it looks like. Take a test drive and see if it’s a positive experience. If you’re having problems with your own site, you know your customers won’t be too happy either.

6. Narrow in on your target marketing with Facebook Advertising

Your online advertising should also target mobile users. Facebook claims that two-thirds of its customers access their sites via mobile devices, so advertising there can be a potential boon for your business.

Facebook allows you to easily set up your own ads and adjust your campaigns at the click of a mouse. Select demographics like the age, gender, region and even relationship status of the people you want to reach. Its analytics let you measure and evaluate your investment, so you’ve got a lot of control.

The best advice here is to test, test, test. Because you have so much control of your ads, you can A/B test your ad copy and images, but you can go further and test your actual market. Find out if millennials like your brand more than Gen X. Discover if Texas outperforms California. Or see if people who make $50K a year click more than those who make $100K.

When using Facebook, remember that it’s more consumer focused than Twitter and LinkedIn, so make sure your posts are friendly and provide a real benefit to the market to keep your fans hooked.

7. Show off your work on LinkedIn

If you’re in a visual business like web design, graphic design or photography, there’s obvious reason to show off your work. But it’s also important for industries like manufacturing, transportation, oil and gas, or even for staffing companies.

How do you do this? On your personal LinkedIn profile, click on the “Add Media” icons within your work experience sections. You’ll have the ability to add documents you’re proud of, presentations you have created or given at conferences and events, websites you may have launched or blog articles you’ve penned. This is very important for your current work experience, as your customers and prospects will find you online. You need a well-rounded profile that shows off your talents and expertise in your current position. That builds trust.

If you run your Company Page on LinkedIn, start to do the same thing. But use your updates as a way of showing off your company assets like websites, blog posts, whitepapers, eBooks, events and other social media profiles. Pepper all of these amazing assets into your social publishing calendar to show your followers a better view of your business.

One last tip—make sure you include your contact info so you can be easily reached. You may not want to publicly display a direct phone number or email address, but including your general company phone number, a general inbox address for inquiries or even your Twitter handle is a great way to stay connected.

Do you have a new-school digital marketing tip that your business has used effectively? Tell us in the comments section.

mobile app growth

Amplify Your Business With Mobile Apps

mobile app growth

Are you up-to-date on the best apps for business?

Important hallmarks of successful entrepreneurs include the ability to maximize personal productivity and to find streamlined ways to manage both your tasks and employees. Fortunately, technology aptly zeros in on these qualities, offering an ever-changing array of mobile app solutions.

Top rated marketing apps

Aaron Strout, president of global integrated marketing and communication agency WCG, blogs monthly for Marketing Land, a daily online publication that covers all aspects of the digital marketing industry. His focus is to highlight the best apps for marketers.

Strout’s Top 20 Most Useful Business Apps feature both newer and tried-and-true recommendations covering everything from self-management to travel, social media, enterprise productivity and collaboration apps. Three examples:

  1. Expensify – scan and categorize receipts to manage expenses on the go
  2. Confluence – create documents, organize plans and collaborate with others digitally
  3. LinkedIn – still a leader in business network apps, recently upgraded to be faster and more useful

Cloudwards 30 apps for business efficiency

Cloudwards has prepared their own list of trend setting apps for business, which focuses on ways to take your office efficiency to whole new level. “Small businesses usually have limited budgets as well as only a handful of staff. The idea behind using the apps below is that of maximizing productivity and so save you time and money.”

Cloudwords 30 app ideas for business

The list includes favorites for accounting, scheduling, cloud storage, data backup and productivity, but our three highlights include:

  1. Quickbooks Online – a cloud-based accounting app that helps you keep on top of your accounting and invoicing
  2. Doodle – a brilliant solution for scheduling meetings based on team member availability. Do yourself a favor and check it out asap.
  3. Google Drive – part of the Google family of products, Drive is touted as the “holy grail of cloud storage” and a must-have app for any business

Security and mobility top the list of app concerns

The website tech.co, featuring startup news, events and mobile resources, shares even further app advice in their article, Prepare For These Mobile App Predictions. The list counsels businesses to use apps to create “more personal engagement with consumers.”

It also hails enterprise mobility (basically handling business infrastructure and connection to staff, consumers, etc. via apps) as a key trend for this year. As you might guess, app security is also a hot topic.

Develop your own app like a pro

There are apps for building apps as well. One handy tool is BuildFire, a leading global mobile application development platform choice for businesses, organizations, professionals, and resellers. The intuitive system and US-based customer support helps thousands of users build mobile apps every week. In fact, more than 50,000 businesses have already used the “click and edit” platform to create custom mobile apps for smartphones, tablets and mobile websites – no technical skills are necessary. It’s free to build your app, followed by reasonable monthly fees once published. 

Getting on board with mobile technology is definitely worthwhile. Recently Gartner Inc., a world leader in IT research and advisory, announced by 2018, 50 percent of consumers in mature markets will use smartphones or wearables for mobile payments. “Innovation in apps, mobile devices and mobile services are impacting traditional business models, particularly in the way people use personal technology for productivity and pleasure,” said Amanda Sabia, principal research analyst at Gartner. “Product managers must understand who their customers are for these new devices and services, and how the products are being used. Knowing your customer is imperative in order to capture a fair share of spending opportunities in this dynamic marketplace.”

This article originally appeared on Liquid Capital on February 5, 2016, with new updates added in April, 2017.