Publicaciones principales

In Part 1 of this series, we discussed how business owners need to focus on whether a sale will result in cash received.  In Part 2, we discussed how business owners need to consider the net cash – the gross profit – that a sale will achieve.  Building on this concept – and after taking a break recently to discuss our Spring client satisfaction results –  when I talk to people about accounts receivable financing/factoring, they will sometimes raise the issue of cost.  Yes, compared to a prime rate bank loan, our fees for working capital, outsourced professional credit and outsourced accounts receivable collection combined are certainly higher because we’re providing far more service in a far different risk category.  But so far they aren’t comparing correctly.  If a bank line of credit met a business owner’s needs, they wouldn’t be talking to us.  They’re meeting with us because a bank line isn’t available, or is too small to be sufficiently useful to them.

The correct calculation for a profitable growing business is:

1. No additional cost or profit vs.
2. Incremental sales from having unlimited working capital, less related cost of sales and other variable costs, less Liquid Capital advance fees, + value of lowered bad debt risk.

Our clients become our clients because they’ll be much better off if they do.

Sometimes we’re compared to bringing in an equity partner.  Professionals I speak with generally agree that is the most expensive solution. On day one it looks inexpensive, because little cash goes out the door other than for legal fees, but in year 2 when there’s a big dispute, or the co-owner wants to make more of the decisions, or is pushing for bad choices, or in year 10 when you have to pay them out for half the current value of the successful company, entrepreneurs realize that bringing on a partner was the most expensive decision they could have made.

Learn more about me and the Liquid Capital Advance team

Here are some further results from our recent client survey: respondents believe they get good value from working with us, with the majority also stating we have helped them increase their profits. Often people express concerns that our working capital solutions are “high cost”.  However, perspective means everything, and in this case it’s very important when determining if Liquid Capital Advance solutions are “cheap”, “high cost” or “valuable”.  Here’s what I recently wrote to a referral source:

“Certainly, an equity take-out [mortgage] is a low-cost option if available.  In our case, we’re far less expensive than an equity partner, or turning down profitable work due to a working capital shortage, and our client is in control of how much they pay in Liquid Capital fees (no minimums, exit fees, etc.).”

Our clients realize we work hard for them as their reliable working capital providers, and that although we charge a fee for this service, it’s far better to get most of their gross margin % on millions of dollars in extra sales, instead of forgoing revenue and profits due to a working capital shortage.

Learn more about me and the Liquid Capital Advance team

In my last post, we discussed how important it is to focus on whether the customer will pay their bill, rather than just focusing on whether the customer issued a purchase order or signed a contract. 

This by definition will bring cash in the door. But that also isn’t the right end goal – it’s the net cash that’s important, after the expenses are paid.

Again, business owners will often focus on the sale/cash in the door, while not focusing an equivalent amount of time on the cash going out the door to fulfil that sale. I’ve spoken to business owners with 5-10% gross profit margins. With the level of risks business owners face today, that’s usually not a business worth getting up for. Often business owners just make sales for the sake of the sale (which might make sense for a specific purpose, but it has to be a pretty sound business decision….).  

Want to learn more about me and the Liquid Capital Advance team? Contact me today!

In the prior blog post I highlighted my boss, friend and Liquid Capital Advance owner Jonathan Brindley, CPA, CA. 

This time around I want to talk about how it’s great to be back – back providing trade finance solutions.

I’ve got two primary reasons. Firstly, the people. It seems to me that corporate finance professionals are generally some of the nicest people you will ever speak with. Maybe it’s because they and I both have experience in the same industry, or because I’m a CPA, or (lol!) because I’m not asking them for money, but I find them to be very friendly and a delight to speak with. It might be because bankers are in business to help people, and they want to say yes, and there are plenty of times when they can’t say yes, especially now with their employers becoming more selective in approving loans given the recent bank failures and recession they see looming.

Secondly, I also love helping people. At Liquid Capital Advance, we help keep dreams alive – we allow business owners to dream again (literally sometimes, as they get to start sleeping again!).

I owned the BC/Vancouver Liquid Capital office for a decade, and then spent 8 years in other roles.  I find my present role at Liquid Capital Advance Corp. very fulfilling, and am glad to be back!

Want to learn more about me and the Liquid Capital Advance team? Contact me today!