Sin categorizar Archives - Liquid Capital

Say “Yes” to Larger Orders: How Invoice Factoring Lets You Take On Bigger Opportunities Without the Cash Flow Stress

enero 8, 2025/en Sin categorizar, Factoring/por Liquid Capital

Every business owner knows that heart-sinking moment. A major opportunity lands on your desk – the kind that could transform your company’s trajectory. But instead of excitement, you feel a knot in your stomach. The order is simply too big for your current cash flow to handle.

It’s a cruel paradox of business growth: The bigger the opportunity, the more working capital you need to seize it. And traditional funding sources often can’t bridge this gap fast enough, if at all.

The Growth Plateau Trap

This scenario plays out countless times across industries, forcing businesses into what we call the “growth plateau trap.” It’s a frustrating cycle where companies have the capability and market demand to grow but lack the working capital to make that growth possible.

The consequences go beyond just missed opportunities. When businesses can’t grow, they often become trapped in survival mode – barely covering overhead, unable to invest in improvements, and leaving both owners and employees stressed and demoralized.

Breaking Free with Strategic Factoring

This is where invoice factoring enters the picture – not as an emergency measure, but as a strategic growth tool. Think of it less like a fire extinguisher and more like a rocket booster for your business.

Consider the story of Best Broadcast, a Florida-based HVAC installation company. When they landed a series of contracts with Marriott International worth $150,000, it should have been cause for celebration. Instead, owner Dave Kip faced a dilemma: The jobs would require thousands in upfront costs for labor and materials, but payment wouldn’t come for 45-60 days after completion.

“If we couldn’t get funding really quickly, we probably couldn’t have done the jobs,” Dave explained. Traditional financing wasn’t an option – the bank’s timeline simply didn’t match the opportunity’s urgency.

By partnering with Liquid Capital for invoice factoring, Best Broadcast was able to:

Take on contracts worth five times their typical project size
Get paid within days of completing each job instead of waiting months
Scale their average daily revenue from $1,000 to $5,000
Build a strong relationship with a major client that led to ongoing work

How Strategic Factoring Works

Unlike traditional loans that focus on your company’s credit history and assets, factoring leverages your customers’ creditworthiness. Here’s how it enables growth:

Immediate Capital: Convert unpaid invoices into cash within 24-48 hours
Scalable Funding: Your available capital grows automatically with your sales
No New Debt: Since you’re accessing money you’ve already earned, there’s no loan to repay
Flexible Terms: Use factoring as needed for specific large projects or opportunities

When to Consider Strategic Factoring

Factoring can be particularly powerful when:

You have opportunities to take on larger contracts
Your customers are creditworthy businesses but have longer payment terms
You need working capital faster than traditional financing can provide
You want to grow without taking on additional debt

Beyond Crisis Management

Too often, businesses view factoring as a last resort – a “fire extinguisher” to use only in emergencies. This mindset can cost you valuable growth opportunities.

Instead, consider factoring as a proactive growth strategy. With a factoring relationship in place before you need it, you can say “yes” when transformative opportunities arise.

Getting Started

To determine if strategic factoring could help fuel your growth:

Assess Your Opportunities: What size contracts could you pursue with better cash flow?
Review Your Cash Cycle: How long do you typically wait for customer payments?
Calculate the Return: Compare factoring costs against the potential profit from larger projects
Consider Timing: Don’t wait for a crisis – set up factoring relationships when you’re stable

The Path Forward

Business growth doesn’t have to be limited by working capital constraints. With strategic factoring, you can break through growth plateaus and transform “too big to handle” opportunities into stepping stones toward your company’s next level of success.

Three Gifts That Will Brighten Your Client’s Holidays

diciembre 18, 2024/en Sin categorizar, Factoring/por Liquid Capital

Have some clients who made it to your “nice” list and want to give them something more meaningful than a tin of Moose Munch, a five-pound summer sausage, and a box of magical pears?

As always, your friends at Liquid Capital have you covered.

We’ve put together three thoughtful invoice factoring-inspired gifts that address the holiday season stressors common to many B2B operations. We have gifts that help solve their immediate challenges and others that put them on stronger financial foundations for the new year.

No need to wait until December 25th to unwrap and enjoy all year long. Let’s see what Liquid Capital’s hard-working elves have prepared for you to gift … after all, Santa shouldn’t get all the credit.

1. Properly-Stocked Shelves

Many B2B businesses struggle with the cosmic irony that is the annual overlap of peak demand and year-end cash scarcity. With their money tied up in unpaid invoices, these businesses are forced to miss opportunities because they cannot restock adequately.

Invoice factoring offers a smarter solution. Here’s how to help your clients use it effectively:

Convert upcoming receivables into immediate cash to fund inventory purchases
Maintain optimal stock levels without maxing out credit lines
Keep supplier relationships strong by paying on time or early
Take advantage of supplier early payment discounts

Consider Baby’s on Broadway, a retail store that used purchase financing to make larger inventory purchases and maintain optimal stock levels. This allowed them to save on shipping costs, secure vendor discounts, and keep products available longer – leading to 100% growth in sales even during challenging market conditions.

2. A Little Holiday Cash

Remember opening Christmas presents your grandparents or other relatives sent. There was usually one grandparent (usually a grandma) who sent hot, itchy hand-knit wool socks. But then there was the relative (maybe the rich, fun uncle … the “FUNcle”) who sent the #10-size envelope that contained the card with the money flap. You could almost see beams of light radiating from the card as it opened.

You can be the FUNcle by helping your clients free up cash. How? Many businesses carry expensive short-term financing that strains their cash flow. Factoring can help create breathing room to restructure these obligations.

Consider these strategic approaches:

Use factoring proceeds to pay down merchant cash advances or high-interest loans
Consolidate multiple payment obligations into more manageable structures
Improve cash flow by reducing monthly debt service
Start the new year with a stronger balance sheet

Consider Silani Cheese, a family-owned specialty cheese manufacturer that used factoring to restructure its outstanding debts and rebuild its business. By establishing a reliable factoring relationship, they not only resolved their immediate debt challenges but also secured the steady working capital needed to return to profitability and fund future growth.

3. A “Future Favor” Certificate

Admittedly, this gift does not have the immediate curb appeal of the previous two … but it is by far the most valuable. It’s like the “Future Favor” certificate a parent puts into a card promising help on demand when redeemed. Sure, it’s not a plastic candy cane filled with M&Ms but what good are all the M&Ms in the world when you need help building a dinosaur out of toothpicks for school tomorrow because you put it off until the night before? Time to redeem that certificate!

That’s kind of what it is like when you help a client set up a factoring relationship BEFORE an urgent need surfaces. That’s the thing about urgencies and opportunities: they are very difficult to plan for but they need to be addressed quickly. This is where strategic factoring relationships become vital.

Help your clients lay the groundwork now by:

Establishing factoring relationships before urgent needs arise
Creating flexible funding that grows with their sales
Building a track record that can support larger credit lines later
Ensuring they can quickly fund new contracts or opportunities

Consider Defense Products & Services Group USA, who secured a $5 million military contract but needed to place manufacturing orders 30 days in advance. By establishing their factoring relationship early, they created a reliable $2 million credit facility that lets them confidently take on new contracts without waiting for customer payments to start production.

Merry Christmas and here’s to the happiest and most prosperous of New Years!

The Gift of Strategic Preparation

The intent of all of these gifts is to give you resources you can use to help your clients not just finish strong but to prepare for an even stronger new year. By helping your clients look beyond immediate cash needs, they can see how factoring can strengthen their long-term financial position.

Factoring works best when it’s part of a broader financial strategy. Encourage your clients to consider:

How improved cash flow can support their growth goals
Ways to leverage factoring alongside other financing tools
Opportunities to strengthen supplier and customer relationships
Steps to build more sustainable financial operations

Work with an experienced factoring partner who can help you support your clients’ broader financial goals. The right partnerships help you deliver solutions that go beyond simple transaction funding to create durable business value.

5 Common Invoice Factoring Misconceptions Debunked

noviembre 19, 2024/en Sin categorizar, Factoring/por Liquid Capital

As a business owner, you’ve heard about invoice factoring. Maybe you’ve dismissed it as too expensive or complicated. But when bank loans aren’t an option and you need working capital, factoring deserves a clear-eyed second look.

Let’s cut through the confusion and examine the five most common invoice factoring misconceptions so you can decide if factoring fits your business.

1. “The fees are too high”

This objection comes up first in most conversations about factoring. Yes, factoring typically costs more than a traditional bank loan. But here’s what many miss:

Factoring isn’t a loan – it’s an advance on money you’ve already earned
The cost reflects the speed and flexibility you get
Unlike loans, factoring grows with your sales without taking on debt

The real question: Will the capital generate more value than the fees?

For example, if factoring lets you take on a large new contract or get supplier discounts through early payment, the returns often outweigh the costs. But if you’re using factoring just to cover regular expenses, it’s worth a closer look to see whether your business has deeper cash flow issues.

2. “Invoice factoring will make my business look weak”

Many owners worry factoring will make their business look financially weak. Consider these points:

Most customers already work with vendors who factor
Major corporations regularly factor their receivables
Professional factors handle customer communication with discretion
You can often choose notification or non-notification factoring

The key is finding a factor who understands your industry and communicates professionally with your customers. A good factor becomes an extension of your accounts receivable team.

3. “I’ll lose control of my customer relationships”

This fear stems from horror stories about aggressive collection practices. Here’s the reality:

Reputable factors succeed by maintaining good customer relationships
You can set communication parameters with your factor
Factors often improve customer relationships through professional AR management
Many businesses find that factoring helps them serve customers better

Look for a factor who values long-term partnerships over quick profits. Ask about their collection practices and communication style.

4. “The application process is too complicated”

While bank loans require extensive paperwork and weeks of waiting, factoring typically offers:

Simpler qualification requirements
Focus on customer creditworthiness over your credit
Faster approval process
More flexible terms

Most factors can pre-qualify you in a single conversation. The full setup usually takes days, not weeks or months.

5. “I’ll become dependent on factoring”

You might have a deeper worry about financial sustainability and becoming addicted to factoring. But factoring can actually be a great way to get ahead. Smart use of factoring means:

Using it strategically for growth opportunities
Having a clear plan for how factoring fits your cash flow
Understanding when to factor and when to use other financing
Working with your factor to optimize your AR processes

Many businesses use factoring as a stepping stone to stronger financial footing. Others make it a permanent part of their cash flow strategy. The key is choosing what works for your business model.

The key is to make sure your factoring partner shares your goals. The goal at Liquid Capital is very future-focused: to get our clients “bankable.”

Making the Right Choice for Your Business

Invoice factoring isn’t right for every business. It works best when:

You sell to creditworthy business customers
Your profit margins can absorb the fees
You need flexible funding that grows with sales
Traditional financing doesn’t meet your needs

Focus on finding a funding partner who:

Understands your industry
Offers transparent terms
Provides the level of service you need
Treats your customers with professionalism

Understand both the costs and benefits. Talk to multiple factors. Ask tough questions about their processes (consider using this post as a guide). The right factoring relationship can transform your business – but only if you choose a partner who aligns with your needs and goals.

Reputable factors want you to succeed. They grow by helping businesses like yours thrive. Look for a partner who invests time in understanding your business and offers solutions tailored to your situation.

25 Years of Liquid Capital: Helicopters and Life Lessons

octubre 25, 2024/en Sin categorizar/por Liquid Capital

As we celebrate 25 years, we’d like to blather on about our accomplishments. But instead, let’s take a slightly more embarrassing route and talk about the reality of growing a business through the eyes of our team.

When Deodorant Isn’t Enough

Sometimes, deodorant will do. Other times, you really need the antiperspirant.

One of our long-time team members recalls their first networking event after training:

«My first networking meeting after going through training was at a local chamber of commerce. I walked into the room full of people and attempted to sound experienced and confident. But inside, I was terrified. What would I do when someone asked me a question I couldn’t answer? How do I approach people I’ve never met before? How do I explain what factoring is? Well, it turns out it wasn’t so bad. People were friendly. So I told my stories and moved on to subsequent networking meetings, and my confidence grew and grew.»

The lesson? People are mostly friendly if you’re friendly with them. And she didn’t need the antiperspirant after all.

There’s a Reason We Have Two Ears and One Mouth

Of course, not every interaction led to immediate success. Another team member shares a valuable lesson from their early days:

«My first real prospect was a commercial printer. I gave him my best pitch, expounding on the benefits of factoring. I didn’t end up signing the prospect. When I asked him why, he gave me some good advice. He told me he saw that I seemed too anxious to have him as a client.»

The takeaway: The best approach with prospects is to ask questions and listen, not talk (and talk and talk).

We’ve Pioneered A New Business Model

At the heart of Liquid Capital’s success was a groundbreaking idea:

«You have to give Sol, Brian, and Barnett credit. They created a brand new concept – franchising business lending. It had never been done before. Brian figured out how to sell it. Sol was always there for us to help solve client and customer problems. Barnett was LC’s rock, the hardest-working of anyone in the system.»

This innovation and collaboration set the stage for Liquid Capital’s growth and impact in the financial industry.

We Dared To Be Different

«We don’t just list our core values – we live them.»

Liquid Capital found power in thoughtfully choosing values that were meaningful and unique to us, rather than just picking popular buzzwords. Think about it: while most companies claim «integrity» or «collaboration,» the ones that stand out have values unique to their brand. We’ve learned that success comes when every decision, from investments to hiring to partnerships, flows naturally from guiding principles that are uniquely ours.

Take-away: When you align your decisions with deeply personal values and work, you create a compass that can navigate your firm around the perils and into profits.

We’ve Hired Leaders from Other Industries

As we look back, we also remember those who left their mark.

«Robert Thompson-So came to us from the investment banking world and wasn’t familiar with the factoring concept when we first arrived. But he learned and created a supportive team environment that made working at LC so special. I always appreciated that he never hesitated to join us to help in new prospect meetings. We will never forget you, RTS.

Robert’s journey from outsider to beloved leader exemplifies the growth and change that have been constant themes in Liquid Capital’s story.

We’ve Even Sniped the Occasional Lawyer

Our general counsel tells us how he joined the team:

«My first awareness of Liquid Capital came back when I had a private law practice. One day I was retained by a prospective Liquid Capital franchisee to review all the documents that had been presented to him by the Liquid Capital franchisor. I knew a fair bit about factoring and, after reviewing the documents, was so impressed I joined the LC team … and I am still here!»

This perspective reminds us of the unexpected twists and turns that can lead us to where we’re meant to be.

We’ve Had to Call Search and Rescue

Yeah, it’s exactly what you’re thinking.

«A part of the Liquid Capital leadership team barely survived an eventful hike up Camelback Mountain in Phoenix. We drove from the hotel in Scottsdale before dawn to the foot of the mountain. Many hours later, we trekked down into the dip of the camel’s back where Sol fell and broke his ankle. The sun rose, and the temperature climbed while a few of us waited with Sol for rescue. A helicopter followed by a group of firefighters found us and helped out.»

The unexpected crises we face as a team weld us together.

25 Years Changes You

Especially when it involves helicopters and deodorant. But one thing’s for certain. Our success is built on more than just financial transactions. It’s relationships, shared experiences, learning from our mistakes, helping each other and constantly pushing ourselves to grow and improve. Here’s to the next 25 years of innovation, community, and success.

We’ll pass on the rescue choppers.

Build Your Business’s Creditworthiness: A Guide for Business Owners

septiembre 18, 2024/en Sin categorizar/por Liquid Capital

Your company’s credit management record, its “creditworthiness,” affects your ability to secure loans, negotiate with suppliers, and even win contracts. But what exactly is creditworthiness, and how can you improve it?

This guide breaks down the essentials and introduces a powerful tool that can help: invoice factoring.

What Is Creditworthiness?

Creditworthiness is a measure of how likely you are to repay debts on time. It’s not just about your credit score—though that’s part of it. Lenders, suppliers, and potential business partners look at several factors to gauge your creditworthiness:

Payment history
Current debt levels
Length of credit history
Types of credit used
Recent credit inquiries

They also consider your business’s financial health, including:

Cash flow
Revenue trends
Profit margins
Assets and liabilities

Why Creditworthiness Matters

Good credit opens doors. It can help you:

Secure loans with better terms
Negotiate favorable payment terms with suppliers
Win contracts that require financial stability
Attract investors
Lease equipment or property more easily

Poor credit, on the other hand, can lead to higher interest rates, stricter payment terms, or even rejection of loans and contracts.

How to Assess Your Creditworthiness

Start by pulling your business credit reports from major bureaus like Dun & Bradstreet, Experian, and Equifax. Review them for accuracy and get familiar with your scores.

Next, calculate these key financial ratios:

Current Ratio = Current Assets / Current Liabilities
- Aim for 2:1 or higher
Debt-to-Equity Ratio = Total Liabilities / Shareholders’ Equity
- Lower is generally better; under 2 is good for most industries
Debt Service Coverage Ratio = Net Operating Income / Total Debt Service
- Aim for 1.25 or higher

These ratios give lenders a snapshot of your ability to pay debts and manage cash flow.

Strategies to Improve Creditworthiness

Pay bills on time, every time
Keep credit utilization low (under 30% of available credit)
Maintain a mix of credit types
Build a long credit history
Monitor your credit reports and dispute any errors
Improve your cash flow management

That last point—cash flow management—is where many businesses struggle. This is where invoice factoring can be a game-changer.

How Invoice Factoring Boosts Creditworthiness

Invoice factoring is a financial tool that converts your unpaid invoices into immediate cash. Here’s how it works:

You complete work for a client
You invoice the client
Instead of waiting 30, 60, or 90 days for payment, you sell the invoice to a factoring company
The factoring company pays you most of the invoice value upfront (usually 80-90%)
When your client pays the invoice, you get the remainder, minus the factoring company’s fee

This process offers several benefits that can improve your creditworthiness:

1. Improved Cash Flow

With factoring, you get paid faster. This steady cash flow helps you pay your own bills on time, avoiding late payments that could harm your credit score.

2. Reduced Reliance on Traditional Loans

Factoring isn’t a loan. It doesn’t show up as debt on your balance sheet. This can improve your debt-to-income ratio and overall financial health in the eyes of lenders.

3. Credit Checks on Customers

Many factoring companies perform credit checks on your customers before buying invoices. This helps you avoid extending credit to risky clients, reducing potential losses that could hurt your own creditworthiness.

4. Builds Business Credit

Consistent use of factoring and timely repayments can help build a positive credit history for your business.

5. Enables Growth Without Debt

Factoring provides working capital without incurring debt. This allows you to take on new opportunities and grow your business without negatively impacting your credit profile.

6. Stabilizes Finances

Regular cash flow from factoring can help your business weather seasonal fluctuations or unexpected expenses. This financial stability contributes to good credit.

7. Improves Financial Ratios

By converting accounts receivable into cash, factoring can improve your current ratio and other financial metrics that lenders and credit agencies consider.

Real-World Example

Let’s say you run a manufacturing company. You land a big contract, but it requires investing in new equipment and hiring more staff. You’re worried about cash flow while waiting for payment on your invoices.

Here’s how factoring could help:

You complete the work and invoice your client for $100,000, due in 60 days.
Instead of waiting, you factor the invoice.
The factoring company pays you $85,000 upfront (85% of the invoice value).
You use this cash to pay for equipment, staff, and other expenses on time.
When your client pays in 60 days, you receive the remaining $15,000, minus the factoring fee.

In this scenario, factoring allowed you to:

Take on a large contract without cash flow worries
Pay your bills on time, maintaining good credit
Avoid taking out a loan, keeping your debt levels low
Demonstrate financial stability to future clients and lenders

Is Factoring Right for Your Business?

Invoice factoring can be an excellent tool for improving creditworthiness. Consider factoring if:

You have creditworthy commercial clients
You often wait 30 days or more for invoice payments
You need working capital to grow or stabilize your business
Traditional loans are hard to get or too expensive

Remember, factoring does come with fees. Make sure to calculate the cost against the benefits before deciding.

Building credit takes time … so start building today

Your business needs credit to grow. Access to credit is the result of the intelligent stewardship of the credit you have now. By understanding creditworthiness, how it’s measured, and how to improve it, you’re taking an important step toward financial stability and growth. Tools like invoice factoring can play a crucial role in this process, providing the cash flow you need to meet obligations, seize opportunities, and build a strong credit profile.

Remember, good credit isn’t built overnight. It takes consistent effort and smart financial management. But with the right strategies—and perhaps the help of invoice factoring—you can build a creditworthy business that opens doors to new opportunities and success. If you’d like to see how invoice factoring could help you build your business’s credit, reach out. We’d be glad to help you sort through your options.

Building Your Business with Smart Financing: A Guide for Business Owners

agosto 13, 2024/en Sin categorizar/por Liquid Capital

Navigating the Financial Landscape as a Growing Business

In business, growth requires capital.

You can have great processes, a great idea, and killer logistics. But if you don’t have capital, nothing moves.

Whether you’re looking to expand your operations, invest in new equipment, or simply manage cash flow during busy seasons, finding the smart financing solution can make all the difference. But with so many options available, how do you choose the best path for your company?

Let’s talk about financing options for small and medium-sized businesses (SMBs), with a special focus on invoice factoring – a flexible solution that’s helping many B2B companies overcome cash flow challenges and fuel their growth.

Your Financing Options

Before we look at specific solutions, let’s review some common financing options available to SMBs:

Traditional Bank Loans:
- Pros: Often offer lower interest rates for established businesses with strong credit.
- Cons: Can be difficult to qualify for, especially for newer or less established businesses.
Business Lines of Credit:
- Pros: Flexible, allowing you to borrow only what you need.
- Cons: May have higher interest rates than term loans and can be challenging to qualify for.
SBA Loans:
- Pros: Government-backed loans with favorable terms.
- Cons: Application process can be lengthy and requires lots of documentation.
Equipment Financing:
- Pros: Allows you to purchase necessary equipment without a large upfront cost.
- Cons: Limited to equipment purchases and may have higher interest rates than traditional loans.
Merchant Cash Advances:
- Pros: Quick access to cash based on future credit card sales.
- Cons: Can be expensive and may impact cash flow.

The Cash Flow Crunch

Between when you invoice and when they pay, you still have bills.

This gap between delivering and receiving payment can create problems:

Difficulty covering operational costs
Struggles with making payroll
Missed opportunities for growth or expansion
Inability to take on new clients or larger projects

When other financing options aren’t available (or are just impractical), invoice factoring may be able to help.

Invoice Factoring: A Closer Look

It’s like financing, but not exactly.

In other words, you sell your invoices. So you’re not carrying debt.

Invoice factoring lets you sell your outstanding invoices to a factoring company at a slight discount.

Here’s how it works:

You complete work for your client and issue an invoice.
Instead of waiting 30, 60, or even 90 days for payment, you sell the invoice to a factoring company.
The factoring company advances you a majority of the invoice value (often 80-90%) within 24-48 hours.
Your customer pays the factoring company directly when the invoice comes due.
Once the invoice is paid, you receive the remainder of the invoice value, minus the factoring fee.

Benefits of Invoice Factoring for SMBs

Improved Cash Flow: Get paid for your work almost immediately, rather than waiting weeks or months.
Scalability: As your sales grow, so does your access to capital.
No New Debt: Unlike loans, factoring doesn’t create new debt for your business.
Easier Qualification: Approval is based more on your customers’ creditworthiness than your own business history.
Outsourced Collections: The factoring company handles collecting payment from your customers.

Is Invoice Factoring Right for Your Business?

Invoice factoring can be particularly beneficial for:

B2B companies with longer payment cycles
Seasonal businesses needing steady cash flow
Growing companies that need capital to fund expansion
Businesses that have been turned down for traditional bank financing

Building Long-Term Success with Smart Financing

When you’re small, you may not have a finance department within your business. It might be up to you to understand the big picture and know your options.

Too many businesses limp from one short-term financing option to another without planning their path.

Protip: Start with the end in mind. As you’re thinking about financing options, make sure you’re still coming out ahead, so you’re building your way toward better financing options.

Understand Your Needs: Clearly define why you need financing and how you’ll use the funds.
Plan for the Future: Choose financing options that can grow with your business.
Compare Costs: Look beyond interest rates to understand the total cost of financing.
Build Relationships: Work with financial partners who understand your industry and business model.
Stay Flexible: Your financing needs may change as your business evolves, so remain open to new options.

Operating Capital Builds Your Business

Growth often comes down to the right financing at the right time.

Whether it’s traditional bank loans, invoice factoring, or a combination of financing options, the goal is to find solutions that give you the capital you need while supporting your long-term business objectives.

Remember, smart financing isn’t just about solving immediate cash flow problems – it’s about lining up your financing plan with your vision for sustainable growth.

Think through the options, including invoice factoring, and then talk to someone to get guidance toward the smart financing solutions for your business.

And contact us if you want some help thinking this through for your situation.

Debunking Misconceptions About Invoice Factoring

julio 17, 2024/en Sin categorizar/por Jaclyn Richard

Let’s discredit the misconceptions about invoice factoring and explain how invoice factoring is a realistic solution to cash flow problems.

Invoice factoring, or accounts receivable financing, improves liquidity by turning outstanding invoices into instant cash.

Many business owners miss out because of their misconceptions about invoice factoring. They often see invoice factoring as the industry’s “payday loan.”

Myth 1: Invoice Factoring Means You’re in Financial Trouble

In reality, invoice factoring is evidence a business is making strategic decisions about its cash flow. Companies use invoice factoring to manage working capital more predictably without having to wait for customer payments.

So, how is invoice factoring different from traditional financing methods?

Invoice factoring is debt-free, and doesn’t add to your balance sheet like a bank loan. Selling your accounts receivable lets you avoid new liabilities. This approach keeps your financial position strong and your credit rating healthy while giving you the cash flow to grow your business.

Myth 2: Invoice Factoring Reduces Control Over Customer Relationships

Some business owners worry that invoice factoring might disrupt their customer interactions. A respected firm works discreetly to provide the cash flow your business needs while maintaining your professional relationships.

Will my customers know my business uses invoice factoring?

The type of factoring agreement determines the firm’s involvement with your customers. In non-notification factoring, your customers remain unaware of the factoring service. In notification factoring, the factoring company collects payments directly from your customers while respecting your client connections.

Myth 3: Invoice Factoring is Complicated

Here’s how it works. You sell your invoices to a factoring company, which advances you a large percentage of the invoice value. Then, the factoring company collects payment from your customer. It’s straightforward, hassle-free, and efficient.

How quickly can I access funds through invoice factoring?

An advantage of invoice factoring is the rapid access to working capital. After initial setup, submit your invoices to the factoring company, and you typically receive the funds the next day.

Myth 4: Invoice Factoring is Only for Businesses in Financial Trouble

Businesses use invoice factoring to manage their cash flow needs proactively. In other words, it lets you take initiative. You can strategically use the cash to hire new staff or invest in expansion projects.

What types of businesses can benefit from invoice factoring?

Invoice factoring helps businesses with long payment cycles or multiple outstanding invoices. It’s widely used in transportation, manufacturing, staffing, and healthcare, but it can assist any company with reliable invoices that serve the B2B market.

Myth 5: Invoice Factoring is Like a Loan (it’s not)

Invoice factoring is a sale of your accounts receivable. It doesn’t add debt to your balance sheet, so you don’t take on new liabilities. Invoice factoring can help you maintain a strong financial position and credit rating.

Does invoice factoring require collateral?

Invoice factoring doesn’t require collateral outside of the invoices themselves. The factoring company looks at the creditworthiness of your customers, not your business assets. So, invoice factoring is an attractive option for businesses without the collateral to secure a loan.

Myth 6: Factoring Companies Are Pushy and Demanding

A good factoring company, like Liquid Capital, treats you like a partner and your customers with respect. They operate with complete transparency, no hidden terms, and are easy to work with. They provide personalized guidance to meet your needs without any pressure.

How do I choose the right factoring company for my business?

Look for a reputable firm experienced in invoice factoring within your industry. Evaluate their fee transparency, customer support, and client success. Reviews and testimonials tell you about their reputation and how they treat their clients.

Partnering for Success: Real-Life Benefits of Factoring

Case study: A mid-sized manufacturing company had struggled with long payment cycles. They partnered with Liquid Capital to factor their invoices. This move allowed them to access funds for purchasing raw materials, paying staff, and accepting larger orders. This proactive approach resulted in a 20% revenue increase within a year.

The company saw invoice factoring not as a last resort but as a flexible strategy for growth.

Invoice Factoring Helps You Meet Long-Term Business Goals

Invoice factoring isn’t a desperate attempt at fast cash. It’s a medium-term solution that supports your long-term business strategy, making cash flow more predictable, and taking a variable out of your long-term strategic equation.

We hope you can see invoice factoring for what it is: a tool in your arsenal allowing you to plan ahead with more confidence. And if you’re ready to leverage that tool get in touch with one of our principals today.

Cash Flow Problem? Invoice Factoring Could Be Your Answer

junio 14, 2024/en Sin categorizar, Cash Flow/por Liquid Capital

Liquid Capital’s Solution to Working Capital Can Get You Fast Cash Flow Access

Managing cash flow is the lifeblood of your business operations. Bank loans or lines of credit can often fail to provide for the gap in your working capital. That’s where Liquid Capital’s invoice factoring services step in.

Does this sound like your situation? Your clients take 30-60 days to pay their invoices, leaving you scrambling to cover payroll and other essential expenses, leaving you chasing payments, draining your energy and resources. There has to be a better way to manage your cash flow.

Enter Invoice Factoring: The Fastest Solution

Invoice factoring gives you cash for your invoices. It lets businesses sell outstanding invoices to a third-party provider, like Liquid Capital, in exchange for immediate cash. This means your company can access the working capital it needs to cover expenses, invest in growth, and take advantage of new opportunities.

Liquid Capital’s invoice factoring solution offers access to up to 80% of the value of your unpaid invoices within a short amount of time, typically within 24 hours, providing you with an immediate influx of working capital. This can help your business keep bills paid on time, upgrade or replace your equipment, and even expand.

Unlike traditional financing methods, invoice factoring doesn’t rely on your personal credit score or require you to put up collateral. Instead, Liquid Capital evaluates your customers’ creditworthiness, allowing you to tap into the value of your outstanding invoices without adding additional debt to your balance sheet.

Why Invoice Factoring Works

1. Access Cash the Next Day:

Invoice factoring capitalizes on outstanding invoices for instant cash flow. This can close the gaps in your current cash flow caused by delayed customer payments.

2. Control Cash Flow:

If you’re not having to worry about payments on outstanding invoices, you can better manage your everyday expenses, like payroll, supplier payments, and operational costs, ultimately reducing your stress levels.

3. Adapt to Change:

Your goal is for your business to grow. When it does, your financing needs will grow, too. Invoice factoring, with the right partner company, can evolve along with your cash flow needs.

4. Reduce Reliance on Debt:

Invoice factoring does not add to your company’s debt load, so don’t think of it like a bank loan or a line of credit. No extra debt means you can access the working capital you need without putting your personal assets at risk.

5. Grow Creditworthiness:

In addition, invoice factoring can help improve your creditworthiness. Having an immediate cash flow to pay your bills on time, all the time, will positively impact your credit score and increase your credibility in the eyes of potential lenders, suppliers, and other stakeholders. This benefit can open up new opportunities for growth and expansion.

Flexible Financing Without the Lock-In

Unlike rigid loan agreements, Liquid Capital’s invoice factoring service offers flexibility to adjust to the ebb and flow of your cash flow. You’re not locked in, so you don’t have to worry about costly prepayment penalties or long-term commitments that may not align with your business’s trajectory.

Affordable Financing to Help Your Business Grow

Compared to traditional financing options, Liquid Capital’s invoice factoring services provide a more cost-effective solution for businesses.

By converting the value of your outstanding invoices, you can avoid the high interest rates and inflexible credit requirements of bank loans or lines of credit. This releases your capital, so you can reinvest in your business, take advantage of new opportunities, and start to see your business grow.

A Partnership That Delivers

Liquid Capital has spent years understanding the needs of business owners. They aren’t just a transactional service provider; they invest the time to get to know your business, your objectives, and the unique hurdles you have to jump over.

Their commitment to tailored service built around your business needs shows their investment in your success. This personalized approach sets Liquid Capital apart from the «one-size-fits-all» mentality of traditional lenders, and they become more than just a finance partner—they become an integral part of your business growth.

Addressing Common Concerns About Invoice Factoring

While invoice factoring can be a powerful financing tool, we know some business owners might have some reservations. Let’s tackle a few of the usual concerns:

1. «Invoice factoring is too expensive»

Liquid Capital offers transparent and competitively priced invoice factoring fees, often lower than traditional financing options. The cost is typically a percentage of the invoice value, making it a scalable and affordable solution.

2. «I’ll lose control of my accounts receivable»

Partnering with Liquid Capital means you maintain control over your accounts receivable. We integrate with your existing systems and processes, so you can focus on your core business activities.

3. «My customers might not like it»

Liquid Capital’s approach to invoice factoring is discreet and professional. We handle all communication with your customers in a manner that respects your existing relationships and preserves your brand reputation.

Take Your Business Further

In today’s business landscape, access to flexible and responsive financing is vital. Liquid Capital’s invoice factoring services offer a customized alternative to generic-approach financing options. Your business can optimize its cash flow, go after growth opportunities, and succeed in the face of market demands.

By partnering with Liquid Capital, you can take control of your cash flow and take your business further. To learn more about how Liquid Capital can support your business, contact us today. Our team of experts is ready to guide you through the process and help you open up new paths to success. Connect with us.

Invoice Factoring: A Better Alternative to Merchant Cash Advances

mayo 23, 2024/en Sin categorizar, Factoring, Invoice Factoring/por Jaclyn Richard

Business owners lean on Merchant Cash Advances (MCAs) more and more to solve cash flow problems. MCAs offer quick access to cash based on future sales projections. But while MCAs can provide short-term relief, their high costs and rigid repayment terms make them an unsustainable solution. This may not seem like such a big deal when you need cash, but high costs and terms that might not be as aligned with long-term growth.

That’s why, in your search for sustainable and cost-effective financing solutions to facilitate growth, it’s good to look beyond the obvious options to alternatives that align with your business’s unique needs and goals. One alternative is invoice factoring, which immediately frees up cash tied up in your outstanding invoices. And it comes without some of MCA’s drawbacks.

In other words, there’s a time and a place for MCAs. But we’re here to talk about when invoice factoring might be a better long term solution, both for businesses and for brokers.

What is Invoice Factoring?

Invoice factoring allows you to leverage your outstanding invoices for immediate cash flow.

By selling your unpaid invoices to a factoring company at a discount, you get much of the invoice value upfront, typically 70% to 90%.

Unlike MCAs, which provide funding based on future sales projections, invoice factoring is tied directly to the value of your actual receivables. This means that the financing is based on work you’ve already completed and invoices you’ve already issued, providing a more stable and predictable source of funding.

And factoring doesn’t depend on your credit. So your company gets funding based on the credit of the companies that you invoice, giving you a much greater capacity to borrow, something no other financial tool can offer.

And with the right factoring relationship, you could truly accelerate your cash flow every month.

Is Invoice Factoring a Better Alternative to Merchant Cash Advances?

Cost-Effectiveness

MCAs are spendy. With interest rates and fees that can often reach triple digits (when annualized to compare apples to apples), MCAs can quickly eat into your profits and limit your growth potential. Invoice factoring, on the other hand, usually offers much lower rates, with fees ranging from 1% to 5% of the invoice value.

Read: You keep more of your money.

Better Cash Flow

Cash flow issues, like slow-paying customers, seasonal fluctuations, and unexpected expenses, can all put a strain on your finances, making it difficult to meet operational costs and invest in growth.

For some businesses, MCAs, with their quick repayment terms and high daily or weekly payments, can aggravate these cash flow issues, leaving you struggling to keep up.

Invoice factoring is more flexible and sustainable solution. By converting your unpaid invoices into immediate cash, you can smooth out your cash flow and ensure that you have the funds you need to meet your obligations and seize growth opportunities.

This is especially good for businesses with long payment cycles or in industries with extended payment terms, like construction or manufacturing.

Read: Payback isn’t a pain.

Flexible and Scalable

Unlike MCAs, which often come with fixed repayment terms and daily or weekly payments, factoring allows you to access funding on an as-needed basis. As your business grows and your invoicing volume increases, you can factor more invoices and receive more funding without the need for a new application or approval process.

This scalability makes invoice factoring an ideal solution for businesses that are experiencing growth or have fluctuating cash flow needs.

Whether you’re looking to hire new employees, purchase equipment, or expand into new markets, factoring can provide the financial support you need to achieve your goals.

Read: There’s no requirement to factor all of your invoices: just use it when you need it.

Choose the Right Factoring Partner

Look for track record and industry fit. Choose a factoring partner with a track record in your industry and an understanding of your unique needs and challenges.

In addition to good support and a dedicated team, a good factoring company will offer:

Transparent terms
Competitive rates
A streamlined application process

Whether you’re looking to improve your cash flow, invest in growth, or simply stabilize your finances, the right will be on your side, invested in your success.

Make the Switch from MCAs to Invoice Factoring

If you’ve been a little over-reliant on MCAs to meet cash flow needs, and want to switch to invoice factoring, compare some rates, terms, and services. Look for a partner that has experience in your industry and a good reputation.

Once you’ve found the right fit, the application process is typically pretty simple, with minimal paperwork and no long-term contracts.

Yeah, that’s a big one: make sure they don’t want you to sign a long-term contract.

Invoice Factoring Puts You on a Better Track than MCAs

MCAs can be a great quick fix, but for most business, invoice factoring can be a better long-term solution to put you on course to even better funding options.

Invoice factoring provides an alternative, unlocking the value of your receivables and improve your cash flow without the drawbacks of MCAs.

By partnering with a reputable factoring company and making the switch from MCAs to invoice factoring, you can take better control of your cash flow. With the flexibility, cost-effectiveness, and scalability of factoring, you’ll get the financial support you need to seize growth opportunities, navigate challenges, and achieve your goals. Learn more about working with Liquid Capital as a referral partner. Or if you’d like to see if factoring might be right for your situation, connect with us today.

Invoice Factoring Cheat Sheet for Brokers

abril 19, 2024/en Sin categorizar/por Jaclyn Richard

We’ve all heard that “Cash is King.” But when in business, especially when you’re growing, cash FLOW is king.

As a financial broker, your clients cash flow problems are your cash flow problems, from managing day-to-day operations to planning for sustainable growth. While you help them navigate these waters, offering advice and innovative solutions, there’s a powerful tool you might not be leveraging fully for your clients: invoice factoring.

Imagine being able to offer your clients a way to transform their cash flow challenges into opportunities for growth and stability. Invoice factoring does just that, providing immediate access to funds by selling outstanding invoices at a discount to a factor (a third party).

Basically, transforming their invoices to CoD.

This can give your clients the liquidity they need without the wait or the hassle of traditional lending.

Why Invoice Factoring?

Few things combine excitement and stress like knowing cash is coming but not knowing when you’ll get paid. It’s like waiting for the dragons to show up in Game of Thrones.

Cash flow is at the center of everything.

In other words, it’s about shortening the time a business waits for revenue to arrive.

We all wish cash would come in a little faster. Still, your clients may not realize how much control they have over business challenges, like their cash flow.

And those challenges could be deadly for business. According to QuickBooks, late payments impact over 70% of SMBs, and 40% worry that this problem could close their business if something isn’t done to address it.

Faster invoice payments could dramatically improve:

Cash flow
Scalability and sustainability
Reputation and credit rating

Invoice factoring can help your clients. Let’s take a closer look at how it works.

Faster Returns on Invoices

Invoice factoring relieves the stress of timely payments. It gives your client immediate access to the cash flow locked in their accounts receivable while having the factor handle the payment process with their clientele.

In other words, your client can get 80% or more of the value of your accounts receivable on an ongoing basis. This basically enables them to convert their accounts receivable into immediate working capital, enhancing liquidity and facilitating cash flow management.

Benefits Beyond Invoicing

As a broker, you’re probably already thinking about the benefits beyond the cash flow boost. For example, invoice factoring can also help:

Reduce the need for loans—Faster access to cash reduces your clients’ need for loans. This is good if their position makes it difficult to get loads either because they’re fully extended or they need to build credit. Invoice factoring uses your invoices as direct collateral.
Speed up the slow times: Invoice factoring can help provide access to more cash during slower business seasons when they need temporary access to more cash. This could even be a regular, recurring situation.
Build stability and credit: Since factoring stabilizes your cash flow, it’s much easier for your clients to forecast, staying ahead of bills and building strong credit.
Elevate your reputation with clients: Predictable cash flow helps your clients make better decisions, especially regarding investments, expansions, or strategic moves. This type of financial stability enhances your reputation with clients and peers.

Invoice factoring allows the agent to differentiate their practice, since you now have the ability to solve your clients’ cash flow issues and relieve the tremendous stress that comes with it.

How Invoice Factoring Works

Invoice factoring outsources your clients’ bill collection process. In Liquid Capital’s case, we handle the most stressful, tedious parts of the invoicing collection process and so your client can put the focus back on running their business.

By taking on the responsibility for the invoice, we would cover the process of getting the invoices paid.

The process looks like this:

Your client makes a sale
They sell some of their invoices to Liquid Capital
As the referring broker (agent), you get a continuous commission stream*
We send immediate funds to your client (minus the reserve and fees)
Your clients’ customers pay us
We refund reserves

That’s it.

On a side note, invoice factoring—what we’re talking about in this post—shouldn’t be confused with invoice financing. Invoice financing involves using unpaid invoices as security to obtain a loan or line of credit. This is a classic bank loan.

A bank loan has a strict limit on the borrowing amount permitted. The borrower is still required to collect payment from their customers and then repay the loan with fees and interest. This also tends to involve more paperwork and complexity. With trustworthy customers, factoring allows your client to grow their access to cash as their business grows.

For more on this, check out some myths surrounding invoice factoring.

It Works for You and Your Clients

The truth is invoice factoring helps all kinds of businesses, so why not yours? How many other solutions can take over one tedious and sometimes stressful process and provide immediate financial returns that impact so many critical parts of a business?

To recap, invoice factoring:

Turns invoices into cash within 24 hours, without the need for loans
Increases your client’s cash flow for stability and sustainability.
Reduced stress over the invoicing process, saving time and energy on accounts receivable.
Enhances credit and reputation

The headline here is simple: Instant access to working capital ensures that you’re not missing out on growth opportunities due to cash flow constraints.

Invoice Factoring for Financial Consultants

Everyone at Liquid Capital wants to understand your unique challenges and provide solutions like invoice factoring as a partner who is equally focused on your business’s ongoing success. For more than 20 years, relationships have been a core part of our business.

Please let us know how we can help you. Contact us today with your questions or to take the first steps in making invoice factoring part of your financial success.