abril 2022 - Liquid Capital

4 ways to invest in people for rapid business growth

abril 29, 2022/en Biz Tips, Sin categorizar, Business Growth, Cash Flow, Factoring/por Mark Glucki

Expanding your business creates new opportunities to invest in the right people to support rapid growth. Learn where to focus your efforts.

You can help more customers, increase sales revenues and improve people’s lives when you invest in the right team members. It can also escalate into more rapid business growth and help you zoom past your income goals — since your people will be invested in the success of your business.

After all, as a business owner, you don’t want to settle for mediocrity. You want to grow not because you have to, but because you desire to move forward. That’s what makes every entrepreneurial-minded person special.

And for those who aren’t running a business directly, but working with business owners every day as your clients, colleagues, vendors and partners, you likely also want to see them achieve their growth goals.

Here are four ways that you and those around you can help build your business and support rapid scaling efforts:

1. Build new relationships

Relationships introduce you to new opportunities and should be a top priority for business owners. Everyone knows a group of people you don’t — which is why business networking can help you find partners who will stick with you for years.

New relationships also make it easier to hire great talent and can snowball into expansive networks over time. When you post a job opening, for example, some colleagues will share referrals for people they think can help scale your operations.

Accelerate your networking further by participating in local events, social media groups and other places where both top talent and your customers gather.

2. Hire the right people

Successfully scaling a business depends on a wider team. As you likely know, executives can only achieve so much on their own. Savvy business owners hire people to help with specific responsibilities that support growth, but you must do so carefully.

Hiring the wrong people can actually slow down production and have a negative consequence on your most trustworthy employees. Their lack of productivity can frustrate hard workers and turn them into babysitters.

Keep in mind that businesses only benefit from great hires by retaining top talent. Hardworking employees help your business grow and you should do what you can to keep them.

Further, many people are dropping out of the workforce during the Great Resignation. Woo your top talents, so they stick around for the long-term. Give them a great workplace with some perks such as….to compete with other top employers.

When it comes to employee referrals, consider the referrer before accepting a new candidate, and understand how they know each other, the history of their experience and how that matches your organization. While you’ll naturally assess every referral as part of your hiring process, keep in mind that hardworking people often recommend other hardworking people — and the same principle holds for unproductive workers.

3. Invest in yourself

During rapid growth mode, business owners invest in their companies. They hire more people, buy new equipment and purchase other assets. You can also invest in education to learn more about your industry trends, new technology and other innovations to keep current.

Investing in yourself stretches to areas outside of your business. For example, exercise increases productivity and happiness, and some business owners that understand these benefits will even hire personal trainers to help keep them on schedule.

Improving yourself puts you in a better position to improve your company.

4. Host events in your area

Events bring people together, and when you’re the host, it puts your brand in the spotlight and offers benefits such as:

Company executives can present new products and gather customer feedback in real-time.
Your team can chat with colleagues and peers in other companies to learn about the latest and greatest in the industry.
You get to talk with customers face-to-face and understand their pain points.

These touchpoints build trust, provide insights and strengthen your credibility.

When people in the community hear about your event, they will hopefully also spread the word and tell their business acquaintances, growing your company’s local footprint.

Some business owners do several pop-up events across multiple cities, then analyze results from each event to decide which cities to revisit next year. With each new event you host, that reach should expand. This is particularly beneficial when you do business across a wider territory, or if you have multiple offices or salespeople spread out remotely.

Businesses can also scale their impact with virtual events. Since these events don’t have the full in-person experience and location isn’t an issue, they can attract attendees who are short on time, budget for travel, or who are located further away.

You can also book more speakers for a virtual event. It costs them less to speak at the event, and some may even consider waiving their fee for the chance to promote their own company. In some cases, speakers may treat virtual stages like podcast appearances, so it’s a win-win.

Expand your cash flow to reach the next level

Rapid business growth doesn’t always mean you’ll earn higher margins, especially when sacrificing profits for development.

You may actually choose to reduce profit in the short term to achieve growth goals. For example, spending money on Google Ads can significantly cut into current earnings, but if it leads to prospects discovering your business and eventually becoming a customer, that long-term plan can pay off. While an advertising budget often represents a healthy trade-off of expenses vs. ROI, there are other expenses that can be more problematic to a healthy level of ongoing working capital.

Review your business and look for opportunities to improve your cash flow. Keep a list of expenses and trim them down when necessary. Assess the ongoing sustainability of the financials, as unprofitable companies don’t stay in business for long.

When comparing year-over-year profit margins, you will then see the trajectory of your cash flow over time. Higher or stable profit margins combined with expansion indicate a healthy business. If your cash flow isn’t at the right level, get ahead of the problem as quickly as possible.

One funding solution that can provide the working capital for your growing needs is invoice factoring. For businesses who don’t qualify for traditional financing, or need to complement their current financing, this solution has proven to be helpful for many businesses.

Read some of our Success Stories:

Global Aviation: Above and Beyond

Rayzor Edge Tree Services invoice factoring

Rayzor Edge: Clearing the way for reliable cash flow

Best Broadcast boosts sales with invoice factoring

Best Broadcast: AV company booms by adding invoice factoring

How to determine your company’s “cash conversion cycle”

abril 28, 2022/en Sin categorizar, Business Growth, Cash Flow, Factoring/por Mark Glucki

Part 1 in the Cash Cycle series: Learn the basics of a “cash conversion cycle” and how you can use it to your company’s advantage.

Reaching success and growth in business requires a healthy cash flow. This allows your business to be prepared for the unexpected challenges and growth opportunities that will come your way. For example, if you buy and sell inventory on account, it’s critical that you know how long it takes to turn that inventory into cash.

As a business owner, you want to make sure you have the money you need when you need it, and the very last thing you want to experience is cash flow issues that restrict business operations.

Understanding your cash conversion cycle (CCC) is key to ensuring you’re on top of your company’s working capital.

Know your company’s cash conversion cycle

Your company’s cash conversion cycle (CCC) tells you how many days it takes to turn your inventory purchases into cash. It’s a cycle that is all too familiar: you acquire inventory from a supplier, store that inventory, sell it to a customer on account, pay your suppliers and collect on your invoices — thus getting paid and putting cash back into the company.

The CCC is an important financial indicator of your company’s cash flow. It shows your ability to maintain highly liquid assets and is a metric that lenders and other finance providers will use to assess your potential risk level.

Follow all six steps to becoming «lender friendly» and get prepared to access funding from any lender.

Access the complete eBook.

It’s not magic, it’s just math

You don’t need to be a magician to unlock the power of the CCC formula for your business. All you need are three figures to complete the basic CCC formula, all of which you can find in your financial statements.

Let’s look at each component a little more closely.

DIO: Days Inventory Outstanding
- This is the number of days on average that your company turns your inventory into sales. The smaller this number, the better.
DPO: Days Payable Outstanding
- This is the number of days it takes you to pay your accounts payable. The higher this number, the longer you can hold onto cash, so a longer DPO is better.
DSO: Days Sales Outstanding
- This is the number of days you’ll need to collect on the sales of that inventory after the sale has been made. Again, the lower the number, the better.

So the CCC is equal to the number of days it takes to sell your inventory, plus the number of days you need to collect on your sales, minus the days it takes you to pay your vendors.

Example:

Keisha runs a PPE manufacturing company. Keisha always pays her suppliers within 30 days. She keeps enough inventory on hand to satisfy 60 days of sales and is good at managing this. It will take 52 days on average for her customers to pay their invoices.

This would be her CCC formula:

CCC = 60 days – 30 days + 52 days

CCC = 82 days

Keisha’s CCC is 82 days, meaning that she will need on average 82 days of working capital to convert purchased inventory into cash.

The above is a simplified example, and to get accurate results you must calculate and track your DIO, DPO and DSO on a monthly, quarterly or annual basis, along with the dollar values for inventory and sales.

“Our Liquid Capital Representative is more than just a lender — he’s a built in consultant.”
Nick Newman, Co-owner, Ridgeline Manufacturing

How the Cash Conversion Cycle reveals hidden potential

Now that you have gathered the necessary numbers and ran them through the CCC formula, you will have a good indication of your cash liquidity position — and it can point your attention to what is helping or hindering your cash flow. Depending on the results, you may determine immediate areas that can be improved.

The longer the CCC, the more working capital you’ll need to manage your operations. And that can be an overwhelming challenge for many businesses. Generally speaking, companies want to shorten their CCC.

To shorten the CCC, you may be able to manage inventory levels better, get longer supplier payment terms, improve your collection process or adjust the payment terms you give your customers. However, this may not always be practical or something you’re wanting to change for a number of reasons.

“Liquid Capital allows me to operate without stress. If a company is offering early payment discounts, factoring is a cheaper option to gain access to money.”

Dave Kip, CEO of Best Broadcast

Making adjustments that fit your business

Choosing to use an alternative financing solution such as Invoice Factoring can help to lower your CCC by turning accounts receivable into cash faster.

Factoring can help to lower your DSO which means that you will get paid on your sales faster and have quicker access to working capital. This cash can then be reinvested into your company faster than if you had to wait on outstanding invoices to be paid out according to the usual payment terms.

Or you could get extended payment terms from suppliers to reduce the DPO portion of the formula or use financing tools such as Purchase Order Financing to help you make up the gap where suppliers are not providing adequate or any terms. By extending the number of days you have to settle your accounts payable, you can keep cash in the company and effectively increase your working capital.

However, the CCC alone cannot be a complete indication of liquidity. You’ll need to look at calculating other liquidity metrics like the current ratio and quick ratio to paint a complete picture. You may already have these calculations in place, but if you haven’t yet calculated your cash conversion cycle, it’s time to start crunching the numbers and tracking changes over time to manage your business better.

Reducing your DSO and DIO or stretching your DPO are also useful tactics that can help your cash conversion cycle to grow your business. Do you work in an industry where “inventory” doesn’t apply? There are also other ways that you can use the CCC.

Keep reading our four-part cash conversion cycle series:

Part 2: Learn about the 7 proven cash flow tactics every CFO and finance pro needs to know.

Part 3: Learn how to leverage your assets to grow your working capital

Part 4: Learn how to keep suppliers happy and cash in your pocket

Want to learn more about how invoice factoring and alternative funding solutions from Liquid Capital can help? Contact one of our Principals today.

Should your business use invoice factoring services?

abril 19, 2022/en Sin categorizar, Factoring/por Sarah Schoepfer

Leveraging invoice factoring services from a trusted funding partner can help support your growth. Find out if this alternative funding solution is right for your business.

The benefits of invoice factoring, as we’ve discussed, can provide business owners with the freedom to increase cash flow when needed. It can also free up time and resources (instead of worrying about receivables) and avoid disruptions in their business growth plans.

Deciding if invoice factoring is right for you depends on your cash flow budgeting. If you need to create a cash flow budget or need to update an existing one, use these seven easy steps to help you get started:

Finding the right tools or software to prepare forecasts
Setting a time frame for your budgets
Preparing a sales forecast
Projecting cash inflows
Projecting cash outflows
Calculating the ending cash balance
Setting a minimum cash flow balance

These proactive steps give you a 30,000-foot view of your business’s cash flow situation and how much money you may need for future growth.

Finding the right lending partner

Once you’ve determined your budget and cash flow projections, it’s time to begin finding the right partner for your invoice factoring journey.

It’s important to know:

The type of service being offered: recourse (when the customer will buy back invoices that are unpaid) or non-recourse (when the factor assumes the risk and guarantees the invoice)
The terms and rates of service: including cancellation clauses, fees and transparency of the transaction
Industry experience and knowledge
Service: speed, availability and flexibility

Beyond knowing the kind of partner you want to (or should) work with, it’s important to know the right questions to ask of your invoice factoring company. It could be anything from simply asking about their experience and contract terms, to the fees for service.

Read what questions to ask with the Liquid Capital Invoice Factoring Guidebook.

Who can benefit from invoice factoring services?

Invoice factoring can solve a variety of common problems that small and medium-sized businesses experience. However, it’s also important to consider why and when you would choose to use invoice factoring services.

For example, invoice factoring is ideal for businesses that work with other businesses where transactions involve invoices.

While some factoring companies will require a buy-back for the unpaid invoice or replace it with one of equal or greater value, Liquid Capital takes a different approach to factoring our clients’ invoices.

Liquid Capital will never surprise you with hidden terms or fees, and there won’t’ be any constricted or complicated provisions. We believe in complete transparency.

Control your cash flow

We want our clients to stay in control of their business and feel confident about the invoice factoring process as a strategic funding tool. We’re committed to making sure you understand how invoice factoring works and how you can use it to grow your company.

While the ups and downs of the current economic environment may make financing a difficult path to navigate, we make it easy with alternative options to traditional debt. When considering the future growth of your business, the benefits of invoice factoring may make a lot of sense when addressing your cash flow challenges.

At the end of the day, you know your business best — including your customer relationships and your future cash flow needs. But we will do our best to help understand your needs, business goals and help you get there.

Want to learn more about invoice factoring? Contact us today!

Financiamientos recientes – Abril 2022

abril 14, 2022/en Recent Fundings/por Liquid Capital

How can invoice factoring companies help fund your growth?

abril 12, 2022/en Sin categorizar, Factoring/por Mark Glucki

Running a business is stressful. Funding your business growth shouldn’t be. Read how invoice factoring companies can help you achieve your goals!

Being in business means having to wear many hats and juggle a variety of challenges. The very last thing a business owner wants to experience is a cash flow problem that curtails business operations.

Cash flow and funding issues can arise when outstanding receivables aren’t paid in a timely manner, inventory levels need replenishing, inflation affects costs and even sudden growth opportunities or shifting market conditions arise unexpectedly. In these cases, how can businesses reliably fund cash flow in a difficult economic environment?

With business getting back to normal, owners and leaders may also be faced with the “good problems” of increased sales, but with new or different cash flow issues. As accounts grow, so can outstanding receivables. Unfortunately, this limits a business’s working capital, as you pay out expenses before you’ve collected on your invoices.

The benefits of invoice factoring

First off, what is invoice factoring? Invoice factoring is a type of financing where you “sell” a portion of (or maybe all of) your company’s outstanding receivables to a third party. Why?

The benefits of invoice factoring are as follows:

A factoring company pays you most of the invoiced amount immediately – thereby creating revenue and cash flow stability.
Forecasting and planning can be more accurate because you now have a better sense of your assets.
The invoice factoring company takes on the responsibility of collecting payment from your customers directly.
A struggling business may have a better chance of staying afloat due to better cash flow.
Businesses can use invoice factoring as part of their cash flow management toolkit to build inventory or pay for other immediate needs.
Often, invoice factoring is cheaper and easier to acquire than a traditional loan. This makes it better for short-term funding needs and reduces the headaches of debt management.
Increasing immediate cash flow allows you to maintain a better credit score by paying bills on time.
Invoice factoring companies can enhance your business success and your growth potential.

When opportunity knocks, be ready to answer the door

As a business owner, you need money when you need it. You can’t always anticipate growth opportunities or the direction your business will take despite your best efforts.

Take the case of Global Aviation. The company, which provides airline staffing services such as aircraft detailing, baggage and load control services, needed additional financing as expansion grew more rapidly than anticipated.

Traditional sources of capital were unavailable, and Liquid Capital was able to step in to help them access over $40 million of funding since 2016.

“Liquid Capital was instrumental in listening to us and coming up with a game plan on how we could repay our facility balance and right side the operations.”
Carm Borg, President and CEO of Global Aviation

A similar situation occurred for Rayzor Edge Tree Service as it expanded into commercial contracts. By helping the company better understand the benefits of invoice factoring, Rayzor Edge Tree Service has been able to double sales and strengthen its business relationships.

“As a small business owner, it’s helpful to know someone’s got your back because you’re so reliant on yourself for so many aspects of running the business. Having somebody that I can turn to for advice is worth a lot.”
Ray Bowman, Owner and President, Rayzor Edge Tree Service

Other benefits of invoice factoring

Did you know that Liquid Capital’s business model makes it even more advantageous for businesses considering this option?

What makes Liquid Capital different from other invoice factoring companies:

We develop relationships with clients beyond a simple transaction. We’re business owners ourselves, so we understand the pain points owners experience running their companies.
Our business model allows clients to control how they engage with our business — and we can provide flexible funding when you need it.
Our clients do not get tied into long-term contracts, termination fees or minimums.
By joining our referral program, you can, in turn, help your clients access quick and flexible funding when traditional funding options aren’t available. If you’re a commercial lender, BDO or other funding professional, reach out to learn more.

Ultimately, all businesses want high-value service that meets their needs. Liquid Capital does that by taking the time to build a structure around the client’s individual needs – which leads to freedom and the ability to choose.

By giving clients the control they desire, Liquid Capital can keep costs down for clients and provide a best-in-class service in a timely and efficient manner.

4 ways to invest in people for rapid business growth

1. Build new relationships

2. Hire the right people

3. Invest in yourself

4. Host events in your area