The Early Payment Advantage: How Invoice Factoring Turns Supplier Discounts into Growth Fuel

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Every business owner has faced this frustrating scenario: Your supplier offers a significant discount for early payment, but you’re waiting on customer payments that won’t arrive for 30, 60, or even 90 days. The math is simple – paying early could save thousands, but without the working capital to do so, these savings remain perpetually out of reach.

The Hidden Growth Plateau

This common situation creates what we call the “hidden growth plateau” – a ceiling on your business’s potential that’s rarely discussed but widely experienced. While your competitors with deeper pockets capture early payment discounts of 2 to 5% or more, you’re forced to pay full price, putting you at an automatic cost disadvantage.

It’s more than just missed savings. When businesses can’t improve their supplier payments, they often get trapped in a cycle where higher costs eat into margins, reducing the capital available for growth, which in turn makes it harder to capture future savings opportunities. It’s a subtle but powerful force keeping businesses from reaching their next level of growth.

Capture Savings with Smart Factoring

This is where invoice factoring enters the picture – not as an emergency financing option, but as a tool for better business performance. The invoice factoring benefits go beyond cash flow relief; it enables businesses to capture supplier discounts and reinvest in growth. Think of it less like a last resort and more like a financial lever that turns future revenue into present-day savings.

Consider the story of Silani Cheese, a family-owned specialty cheese manufacturer. “The need was critical and two-fold,” explains Joe Lanzino, CEO of Silani Sweet Cheese Ltd. “Coming out of a company restructuring process, we of course had to pay the creditors. But to get the business rolling and back on its feet, we needed a steady, reliable source of working capital.”

For Silani, the challenge was clear: their business required significant upfront cash for milk deliveries three to four times weekly. While the company was growing and had strong customer relationships, the timing mismatch between supplier payments and customer receipts created a constant strain.

By working with Liquid Capital for invoice factoring, Silani was able to:

  • Make timely prepayments for critical supplies

  • Build stronger relationships with key suppliers

  • Secure better pricing through reliable early payments

  • Keep production running smoothly without interruption

  • Focus on growth rather than day-to-day cash management

How Invoice Factoring Works

Unlike traditional loans that focus on your company’s credit history, factoring turns your unpaid invoices into immediate working capital. Here’s how it improves your supplier relationships:

  1. Quick Access: Turn customer invoices into cash within 24-48 hours

  2. Reliable Timing: Know exactly when funds will be available for supplier payments

  3. Better Terms: Use consistent early payments to build stronger supplier relationships

  4. Cost Savings: Capture early payment discounts that directly improve your margins

When to Consider Payment Factoring

This approach works especially well when:

  • Suppliers offer meaningful early payment discounts

  • Your customer payment terms are longer than supplier payment terms

  • You have strong customer relationships but uneven cash flow

  • Supply chain reliability is critical to your operations

Too many businesses see factoring merely as a way to survive slow-paying customers. This limited view misses the chance to use factoring as a tool for reducing costs and building better supplier relationships.

By using factoring as a planned approach rather than a reactive measure, you can turn your supply chain relationships from potential stress points into competitive advantages.

Ready to Reduce Your Costs?

To see if these invoice factoring benefits could help improve your supplier payments:

  1. Review Your Opportunities: Calculate the total available discounts across your supplier base

  2. Map Your Cash Flow: Document the timing gaps between supplier payments and customer receipts

  3. Run the Numbers: Compare factoring costs against potential early payment savings

  4. Consider Relationships: Factor in the value of stronger supplier partnerships

Factoring Matches Capability to Opportunity

Business growth doesn’t have to be limited by out-of-sync cash flow. With smart factoring, you can break through the hidden growth plateau and leverage the invoice factoring benefits to reduce costs and strengthen supplier relationships.

Ready to explore how factoring could help your business capture early payment discounts? Let’s talk about turning your future receivables into present-day savings.

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How Factoring Can Help You Prepare for and Exploit Seasonal Opportunities

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Every seasonal business owner knows the rhythm: The peak season brings massive opportunities, but also massive stress. Your suppliers need payment now, and your staff needs to grow quickly, but your cash reserves are still recovering from the off-season. Just when the market is most ready for your expansion, your working capital hits its lowest point.

It’s one of the most challenging paradoxes in seasonal business: The very nature of your business cycle can keep you trapped in a growth plateau, unable to fully capitalize on your peak season potential.

The Seasonal Growth Plateau

This pattern creates what we call a “seasonal growth plateau” — a frustrating cycle where businesses can clearly see their growth potential but remain trapped by their cash flow limitations. Each year, they have to choose between turning down profitable opportunities or taking dangerous financial risks to seize them.

The consequences extend far beyond just missed seasonal revenue. When businesses can’t fully leverage their peak seasons, they struggle to build the reserves needed for year-round operations. This keeps them perpetually understaffed, under-equipped, and unable to invest in the improvements that could help break the cycle.

Break the Cycle with Strategic Seasonal Factoring

This is where invoice factoring enters the picture — not as an emergency measure, but as a strategic tool for seasonal growth. Think of it less like a fire extinguisher and more like a rocket booster that helps you time your growth with market opportunities.

Consider the story of Ridgeline Manufacturing, a manufacturer of aluminum recreational products. Their summer boat dock business was strong, but the seasonal nature of the industry created significant cash flow challenges. They needed to manufacture and produce products prior to the retail season, which meant giving their dealers enough lead time to stock up. However, standard 90-day payment terms meant their cash would be tied up precisely when they needed it most.

“When manufacturers advance funds to their customers, there is often push-back on us charging interest,” explains owner Nick Newman. “But with factoring, it’s different. As a third party, it’s more palatable to our dealers and helps the collections process too.”

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

  • Maintain production during off-peak months
  • Offer competitive payment terms to dealers
  • Keep skilled staff employed year-round
  • Build inventory ahead of peak season demand
  • Convert seasonal success into sustainable growth

How Strategic Seasonal Factoring Works

Unlike traditional loans that focus on your company’s year-round performance, factoring lets you leverage your strongest season’s receivables to fuel growth. Here’s how it enables seasonal businesses to thrive:

  1. Flexible capital: Access funds based on your invoices, scaling naturally with your seasonal peaks
  2. Timing control: Build inventory and staff up when needed, not just when cash flow allows
  3. Cash flow-friendly terms: Offer competitive payment terms without straining your working capital
  4. Year-round stability: Convert seasonal success into sustainable operations

When to Consider Seasonal Factoring

Factoring can be particularly powerful for seasonal businesses when:

  • You need to build inventory before peak season
  • Your suppliers require payment before your seasonal revenue arrives
  • You want to maintain quality staff year-round
  • Peak season opportunities exceed your current cash flow capacity

Move Beyond Survival Mode

Too many seasonal businesses view factoring as a last resort — a “fire extinguisher” to use only when cash flow hits critical levels. This mindset can trap you in the same seasonal plateau year after year.

Instead, consider factoring as a proactive growth strategy. By having a factoring relationship in place before peak season hits, you’re positioned to say “yes” to opportunities that could transform your business.

“Sure, factoring is higher interest,” notes Newman, “but we build it into the cost of our product and it’s seasonal. So if I pay more than I would with a bank, but can factor for just a few months a year, that’s a big bonus.”

Getting Started

To determine if strategic seasonal factoring could help fuel your growth:

  1. Map Your Cycle: Document when you need capital vs. when you receive payment
  2. Calculate Growth Costs: What inventory, staff, and resources would you need to handle more peak-season business?
  3. Review Terms: Are your current payment terms aligned with seasonal realities?
  4. Plan Ahead: Don’t wait until peak season – set up factoring relationships during your slower period

Say Goodbye to the Boom-and-Bust Cycle

Seasonal business doesn’t have to mean perpetual cash flow struggles. With strategic factoring, you can break free from the seasonal growth plateau and build a more stable, profitable operation year-round.

By timing your growth financing to match your market opportunities, you can transform seasonal stress into sustainable success. The key is viewing factoring not as an emergency response, but as a strategic tool for seizing the opportunities your peak season presents.

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

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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:

  1. Immediate Capital: Convert unpaid invoices into cash within 24-48 hours
  2. Scalable Funding: Your available capital grows automatically with your sales
  3. No New Debt: Since you’re accessing money you’ve already earned, there’s no loan to repay
  4. 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:

  1. Assess Your Opportunities: What size contracts could you pursue with better cash flow?
  2. Review Your Cash Cycle: How long do you typically wait for customer payments?
  3. Calculate the Return: Compare factoring costs against the potential profit from larger projects
  4. 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

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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 a former client, 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.

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Year-End Financial Planning: How Invoice Factoring Can Help Your Clients

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As a financial broker, you know the fourth quarter brings unique challenges for your B2B clients. While they’re managing holiday season demands, they also need to position themselves for success in the coming year. Many struggle to balance immediate cash flow needs with longer-term financial planning.

Let’s explore three strategic ways to use invoice factoring in your clients’ year-end planning. These approaches help solve immediate challenges while building stronger financial foundations for the new year.

1. Maintain Optimal Inventory Levels During Holiday Season

Many B2B businesses face a common dilemma as the year ends: They need to stock up for holiday demand but their cash is tied up in unpaid invoices. They find themselves walking a line. This creates a risky choice between missing sales opportunities or overextending credit lines.

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

For example, a retail store 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. Set Up Factoring Relationships to Support New Year Growth

Smart business owners use year-end planning to prepare for growth opportunities. But expansion plans often stall when traditional financing can’t scale quickly enough. 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.

3. Restructure or Pay Down High-Interest Debt

Year-end offers a perfect opportunity to improve your clients’ debt positions. 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 who used factoring to restructure their outstanding debts and rebuild their 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.

Look beyond year-end to the year (and years) ahead

The key to successful year-end planning lies in taking a strategic rather than tactical approach. Help your clients look beyond immediate cash needs to see how factoring can strengthen their overall 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

Remember that year-end planning isn’t just about closing the books – it’s about positioning clients for success in the coming year. By helping them use factoring strategically now, you strengthen your role as a trusted advisor for their long-term growth.

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

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5 Common Invoice Factoring Misconceptions Debunked

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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

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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

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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:

  1. Payment history
  2. Current debt levels
  3. Length of credit history
  4. Types of credit used
  5. 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:

  1. Current Ratio = Current Assets / Current Liabilities
    • Aim for 2:1 or higher
  2. Debt-to-Equity Ratio = Total Liabilities / Shareholders’ Equity
    • Lower is generally better; under 2 is good for most industries
  3. 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

  1. Pay bills on time, every time
  2. Keep credit utilization low (under 30% of available credit)
  3. Maintain a mix of credit types
  4. Build a long credit history
  5. Monitor your credit reports and dispute any errors
  6. 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:

  1. You complete work for a client
  2. You invoice the client
  3. Instead of waiting 30, 60, or 90 days for payment, you sell the invoice to a factoring company
  4. The factoring company pays you most of the invoice value upfront (usually 80-90%)
  5. 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:

  1. You complete the work and invoice your client for $100,000, due in 60 days.
  2. Instead of waiting, you factor the invoice.
  3. The factoring company pays you $85,000 upfront (85% of the invoice value).
  4. You use this cash to pay for equipment, staff, and other expenses on time.
  5. 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

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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:

  1. 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.
  2. 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.
  3. SBA Loans:
    • Pros: Government-backed loans with favorable terms.
    • Cons: Application process can be lengthy and requires lots of documentation.
  4. 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.
  5. 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:

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

Benefits of Invoice Factoring for SMBs

  1. Improved Cash Flow: Get paid for your work almost immediately, rather than waiting weeks or months.
  2. Scalability: As your sales grow, so does your access to capital.
  3. No New Debt: Unlike loans, factoring doesn’t create new debt for your business.
  4. Easier Qualification: Approval is based more on your customers’ creditworthiness than your own business history.
  5. 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.

  1. Understand Your Needs: Clearly define why you need financing and how you’ll use the funds.
  2. Plan for the Future: Choose financing options that can grow with your business.
  3. Compare Costs: Look beyond interest rates to understand the total cost of financing.
  4. Build Relationships: Work with financial partners who understand your industry and business model.
  5. 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

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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.