clear cash flow hurdles with invoice factoring

Medal-winning ways to leverage invoice factoring

Some business hurdles are easier to overcome than others, but cash flow related obstacles are sometimes the most difficult to clear. Avoid a false start and reach the finish line with invoice factoring.

clear cash flow hurdles with invoice factoring

Surviving the past year has been like winning an Olympic gold medal for most business owners. Even under normal circumstances, running a company is like running a marathon, but it takes another level of determination, grit, perseverance, and nerves of steel during an international health crisis.

Beyond those herculean entrepreneurial qualities, you need to have the cash flow to support your operations and growth plans to reach your business finish line. And since 82% of new businesses will fail because of cash flow, it’s the biggest hurdle.

Luckily, there are creative ways to leap over capital problems with more confidence. Invoice factoring is one of our go-to solutions since it allows you to sell your unpaid invoices and get cash upfront for whatever you need it for. We collect the invoice payment directly from your customer, and we work by your side to strengthen your cash flow planning. This tried and tested financing method can help you remove hurdles altogether.

Here are other ways that invoice factoring can take your business to the top of the podium:

1. Get a great coach.

Being an entrepreneur requires passion, sacrifice and exceptional focus on any given day. But entrepreneurs, just like athletes, need someone to guide them and encourage them to push through the setbacks to come out stronger and better at their business.

With invoice factoring, we partner with businesses and act as that coach and mentor role with many of our clients. We get to know your business, your personal goals, your strengths and weaknesses. And when we assess your business as part of the funding process, we make it a priority to help you develop a plan — like an Olympic training plan — so you know the hard work you’ll be putting into your business will pay off in spades.

Whether you work with us or any other lending company, you need to find that trusted ‘coach.’

2. Be quick out of the blocks.

When your business operations are flat, it’s time to make a bold move and act swiftly. The faster you can get sprinting, the further you’ll be ahead of any cash flow problem. But finding ways to achieve rapid growth at scale is another challenge. And if your growth is exponential, you may also see an equal increase in expenses — creating a need for more cash — fast.

By qualifying and finding the right invoice partner before a cash flow problem exists, you can start to rely on this method to access more cash when you need it — no more searching for capital in a crisis while your competitors are lapping you. Instead, you’ll now be the first to react out of the blocks.

Success Story: Here’s how one small business owner was able to embrace innovation to outlast the effects of the pandemic.

3. Create your own track record.

There’s an old saying that banks will only give you loans when you don’t need them. Factoring, thankfully, is impervious to old sayings and archaic banking restrictions. Where a bank won’t provide a loan to a small or mid-sized business for any number of reasons, factoring has a different structure and set of regulations, making it much easier to apply to businesses of all sizes.

Read: To get more on the specifics of invoice factoring, see how it works here.

4. What if it turns into a marathon?

Depending on your industry, you may have to wait 30, 60 or 90 days from the date of the invoice to receive payment. While this may be okay for the more established players, for a newer business or one under a cash crunch, waiting 90 days on an invoice (especially a large one) can be extremely difficult or even damaging. And offering early payment discounts can often cost more than leveraging invoice factoring.

5. A dropped baton doesn’t have to mean it’s over.

Nobody likes late payments, but every business has experienced the pain of waiting on accounts receivable. And no matter the size of the business, late payments can have far-reaching consequences. Factoring eliminates this problem and often shifts the responsibility of collections from you to the factor.

6. Sometimes it’s a sprint to the finish.

Stocking up your inventory often requires paying suppliers on the spot. It’s imperative to have cash upfront to keep inventory at the right level to meet demand. The flexibility offered by factoring means you can have the right working capital to keep inventory levels on target, avoiding supply issues before they happen.

Ask these questions to get on the inside track

If factoring could be the solution to your cash challenges, it’s crucial to find the right partner who understands your industry, the specific challenges you’re up against and can offer the best funding solution to advance your business.

But before signing an agreement, there are 10 important questions to ask any invoice factoring partner. The answers will help you quickly narrow down the pool of candidates and find the perfect match.

Do you have questions about invoice factoring? Get the answers to the most commonly asked questions in our Invoice Factoring FAQ guide.

Drive business results

Drive business results: Rely on your invoice factoring partner for more than just cash

At Liquid Capital, your local Principal is more than just a source of capital — they’re industry and funding experts who want to help you drive business results.

Drive business results

When a business is experiencing a lack of sufficient cash flow, taking out a bank loan and offering clients early payment discounts are two common tactics used to fill the gaps. But there’s another solution that could be a better strategic decision: utilizing invoice factoring services from a commercial finance company.

Unfortunately, invoice factoring is often misunderstood among business owners who view it as a “last resort” financing option. In the right circumstances, however, invoice factoring can be the ideal strategic solution for business owners and CFOs who are looking to drive business results.

“The partnership has been really positive and Liquid Capital helped position us to grow the company. Last year, we grew around 20% and we expect to grow another 20% next year. With this funding strategy, we’re set up to keep expanding.”

Claudia Serna, Owner of Serna’s Trucking

If you are a commercial finance professional, you know that your clients look to you for creative and strategic financing solutions, including solutions that might be a little bit outside the traditional box such as invoice factoring. However, you can build trust and strengthen client relationships by being proactive and presenting invoice factoring as a reliable option with them before they find themselves in a cash flow crunch.

Choosing the right financing partner to help drive business results

Who you partner with is important, and if you choose the right one, you’ll gain much more than just working capital. Your invoice factoring partner will have insights into your customers and your company’s financial records. They should also act as a trusted business advisor who can help guide you through various challenges and opportunities.

Learn key questions to ask to choose the right factoring partner.

Liquid Capital offers invoice factoring and other asset-based and alternative lending solutions to businesses throughout the U.S. and Canada. We go beyond a transactional approach with our business clients in order to help them with overall strategic planning when it comes to commercial financing.

Our local Principals are business owners, helping business owners.

“My Liquid Capital Principal is always just a call away. It’s so reassuring to know that I can ask them questions and get their advice. They’re a great wealth of knowledge on the business operations side as well as the financial side. It’s helpful to have someone in your corner, to have an advisor that you didn’t really expect to find, especially someone who’s so available that you can just give them a quick call.”

Adelle Starin, Owner of Baby’s on Broadway

Come for the capital, stay for the partnership

Having a trusted invoice factoring partner as part of your extended team can also focus your entire team’s attention on positive cash flow. Review this solution with the appropriate team members and ensure you’re leveraging all its potential. Accountants, bookkeepers, office managers and other team leads can often contribute to budgeting, resourcing and cash flow conversations.
Naturally, CFOs and other leaders on your executive team should also be working invoice factoring into their financial planning as a key capability, to ensure that your business is never in a crunch.
For many of the business owners that we work with, their local Principal becomes an invaluable resource for information and advice on how to achieve business results. They can also work directly alongside your team to ensure everyone is on the same page.

“Sometimes I call my Liquid Capital Principal when I have questions and he is there to lend a hand. When we wanted to start working with a new company, he was able to advise me about the possible benefits and risks. It’s a really good relationship.”

— Claudia Serna, Owner of Serna’s Trucking

In short: Invoice factoring can be part of a strategic plan to keep a business’ working capital flowing, so you can get the results you need.

Want to read more about how invoice factoring can fuel business growth? Be sure to check out part 1 and part 2 of our series on making invoice factoring part of your business growth plan.

Pandemic pivot in business

Keep your company’s pandemic pivot from becoming a money pit

Like many companies these days, you may have gone through your own pandemic pivot. Make sure that strategy helps increase revenue, not expenses.

Pandemic pivot in business

Plenty of businesses managing the wider supply chain ebb and flow evolved to meet dynamic consumer demands amidst the coronavirus pandemic. But you might find that juggling new revenue streams is more complicated than you thought. Liquid Capital presents a guide to how you can boost profitability while continuing to scale your business and meet customers’ needs.

Boost efficiency with smart tools and processes

One way to ensure your new business strategy remains profitable is by increasing efficiency — whether it be a new fleet of vehicles, a new product line, supplemental services or a shift in your operations and personnel. The right combination of smart tools and hyper-efficient processes can help you preserve funds while ensuring your customers stay happy.

Manage assets with the help of technology

Tracking inventory is a significant challenge when you’re trying to move products quickly. But equipment ID tags and custom labels can help your team identify assets in a super-quick way. With easily readable print or scannable barcodes, less time is wasted scouring the shelves for the right item to ship to your consumer.

Whenever possible, automate

Automating as many steps in your supply chain as possible is another way to enhance efficiency. Supply chain automation is a popular tactic for big businesses — and especially those impacted by COVID-19.

While implementation comes with a price tag, it can be cost-effective in terms of revenue increases over time. Budgeting for automation now can mean fewer bumps in the road if another pandemic—or any other industry upset—threatens your business model in the future.

Keep your remote teams productive during a pandemic pivot

From coordinating delivery drivers to overseeing customer service reps, you likely have many work-from-home staff to manage. Even if telecommuting is new to you and your team, there are ways to make the process easier to stomach.

Overall, keeping your team accountable requires a willingness to adapt and roll with the punches. Outlining your expectations and following work at home best practices is a good start. Using job scheduling software, for instance, can be a boon. An app like QuickBooks provides text or email reminders, time tracking and estimation, GPS tracking, and even has drag-and-drop capability. From there, personally checking in with your people can reduce turnover and maintain motivation.

Offering more on-the-job perks is a great way to incentivize your team, too. Many companies are providing free services like coaching, fitness and even psychotherapy to support their workforce. Consider what types of freebies your team would appreciate and consider the potential payoff for implementing such offerings.

Consider outsourcing where feasible

You might not think that hiring more people could actually save you money. But when it comes down to it, investing in your workforce is one way to boost your bottom line. Whether you’re aiming for a lower turnover of existing staff or plan to delegate tasks to save time, outsourcing can support your profitability goals.

For example, instead of hiring another part-time employee to work on your website, you could hire a freelance developer to tackle the project. If your company needs rebranding to suit your pandemic pivot, a freelance marketer can create a package that works for your budget.

Not only does hiring contract workers make sense for your short-term payroll, but it also helps you avoid personnel costs. Generally, businesses don’t pay unemployment or benefits for independent contractors. This means you don’t have out-of-pocket costs beyond the scope of the project you’re hiring for.

Of course, both pros and cons exist when it comes to hiring independent contractors. But you might find that the balance weighs in favor of sourcing freelance help.

Continuing to maintain profitability post-coronavirus boom can be challenging. Even if your business has done well by scaling to suit customers’ needs during the shutdown, the evolving economy is sure to bring more changes. By implementing smart tech and creatively managing your team, you’ll be poised to remain profitable well into the future.

Liquid Capital provides business funding with heart. To learn more about how we can help you with working capital before, during or after your pandemic pivot, please get in touch today.

 

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Post-pandemic perspectives - The times they are a-changing

Post-pandemic perspectives: «The Times They are A-Changin»

Bob Dylan’s poetic lyrics and timeless melodies have been stitched into modern culture. Although Dylan’s 1964 song was not about the business world per se, his words are just as applicable today. The times certainly are a-changing as we soon enter into the post-pandemic era.

Post-pandemic perspectives - The times they are a-changing

Without question, much has changed since March 2020.

Fueled by the COVID 19 pandemic, our world has been dramatically impacted by this medical crisis. In almost every aspect of our lives, both personal and professional, some form of change was required to deal with the multiple issues affected.

Within the banking industry, bank executives, lenders and staff members witnessed the impact on their customers in general and commercial customers in particular. Some industries were harder hit, such as restaurants, hotels, hospitality, and retailers. Many businesses were scrambling to survive, with rightful concerns as to the impact on their employees, as well as the ripple effect on their suppliers and other vendors.

Ironically, the pandemic presented some companies with unique and sizeable opportunities to expand their businesses or to pivot to another product or service. As the pandemic wore on, governmental programs were developed to provide some level of relief, albeit temporary.

In all of these scenarios, an underlying need and theme was and is, where can I source financing? As with similar situations, where there is a gap, someone will find a way to fill the void. Many business owners turned unconventional lenders offering merchant cash advance loans and other types of “unsecured” loans. While this type of lending appeared attractive on the face of it, in many instances it only exacerbated the problem by subjecting the business owner to onerous terms and conditions.

Keeping up with financial demands

In responding to the needs of business owners, Congress approved various programs such PPP, CARES Act and EIDL loans. Banks initially led the way in assisting their customers with the application process, followed by the loan forgiveness process. Other third-party, non-bank lenders joined in to address the volume of applications.

The congress then approved a “2nd Draw” PPP loan program for those businesses qualifying. While these programs have clearly been helpful for many businesses, the government can’t continue an open-ended level of support. Unfortunately, while helpful, these governmental programs have, in a number of instances, served to mask underlying problems and/ or give a company a false sense of confidence to overstep their bounds.

With that being the case, as the financial support progressively dissipates, the scope and severity of a given company’s financial condition will become apparent.

Every bank executive and commercial lender that I’ve spoken with, as well as numerous economists and chief investment officers agree that as we progress into 2021, many businesses will have financial challenges that impair their operations or put them at risk of failing.

On the other hand, as mentioned earlier, some companies will experience a level of growth that can also pose challenges. In both instances, the need for sufficient financing will be mandated.

Both banks and customers are changing to new business models

Post-pandemic perspectives

As the magnitude and severity of the financial impact on businesses became known, banks started to assess the level of risk within their loan portfolios as well as revisiting their credit policies. While governmental programs for payment deferrals, covenant easing and loan classification allowed banks some level of latitude in working with their customers, these too were only temporary support.

While the extent of financial impact on current and prospective customers and the length of this evolving scenario is unknown, it fosters thought as to what issues will banks need to address in whatever is considered the “new normal..

Clearly, the needs of businesses to have the appropriate level of financing will continue. However, the lending landscape has been altered by the pandemic. Prospects that previously appeared bankable may not be. Current customers may have facilities that don’t qualify for increases, are subject to reduction, not renewed or in more severe situations, the bank may wish to exit the relationship.

Conversely, some customers may experience a level of growth that either surpasses the bank’s ability approve the requested level of financing or involves a business transaction that the bank is unwilling to underwrite (i.e., purchase order financing). Given the pandemic’s emotional and psychological strain imposed on business owners, any of these scenarios does not bode well for the bank from a relationship and reputational perspective.

Although a similar situation existed prior to the pandemic, in a post-pandemic world, it’s even more important that banks have alternative options to offer the customer to enhance their ability to secure a new customer or maintain the allegiance of customers they wish to retain. In a highly competitive industry, losing an attractive prospect is a missed opportunity or having to replace a current customer is time consuming and costly.

Read: Bankers where capes, too! How funding superheroes work together

 

Even before the pandemic, banks recognized the need to expand the range of non-bank financing options.

Through strategic alliances, organic development and direct acquisitions, a number of banks have equipped themselves and their lenders to offer solutions that enhance their ability to more broadly attract new customers and offer alternatives to supplement a current customer’s lending facility.

With so much demand for financing in the marketplace, a bank needs to demonstrate their desire to address the needs of their customers with a thoughtful and innovative approach. The “new normal” requires new thinking.

Reassessing the marketing thrust and branding of the bank is a serious consideration. Messaging will play an important role in communicating the bank’s sensitivity to the business owner’s situation and the bank’s desire and intent to address their needs. It needs to be communicated uniformly among all team members to convey a unified image.

Do you have a client that hasn’t met all the criteria for lending? Send them this quick guide so they know what steps to take next.

To say that we’ve all been through a lot would be a gross understatement. Everyone looks forward to the day when we can resume regular activities. The changes, adjustments, and adaptations we’ve had to make has, in many instances, caused us to rethink our priorities and values in our personal and business lives.

While it has been stressful in many respects, it has been a teaching moment and raised our awareness as to what were temporary changes or those that are permanent. In many respects, it’s caused us to reflect on what needs to be changed going forward.

The banking industry, in its efforts to attract and retain customers, most of which have been impacted by the pandemic, is one where that analysis and thought process is well served by doing so.

As the old saying goes, “the one constant is change.” Recognizing the need to change and acting in a strategic and decisive manner can make a meaningful difference in the final outcome. The time to prepare is now.

 

 

Editor’s Note:This article originally appeared in the Illinois Banker Magazine. Liquid Capital is an IBA Preferred Vendor, and author Tom Stamborski (President of Liquid Capital of Illinois) is the program manager for the Liquid Capital Bank Alliance Program.

With the Liquid Capital Bank Alliance Program, we help banks grow their market share and strengthen client relationships — now and ongoing post-pandemic. Learn more about how this exclusive program can work for you and your customers here.

Business growth plan and invoice factoring

If you’re building your business growth plan, include invoice factoring

Invoice factoring shouldn’t be considered a last resort. It’s a powerful alternative funding solution that can jumpstart your business growth planning, and should be included as a fundamental funding resource for many companies. Here’s why.

Business growth plan and invoice factoring

Often business owners think that invoice factoring is only for failing businesses. But this is a common misconception. Businesses that are on a high growth trajectory can benefit greatly from alternative funding such as invoice factoring.

Unlike a traditional bank loan or line of credit, your funding amounts are based on the size of your accounts receivables. While banks qualify you based on your business credit strength, your invoice factoring partner will look at variables such as your accounts receivables and your customer credit strength. 

This means you may often qualify for funding amounts larger than what a bank can offer, which can really help when you’re looking at ways to fund your business growth plans. You can also access extra working capital quickly, allowing you to seize growth opportunities when they arise without worrying about how you’ll support the associated operational costs. 

 

Does your current funding solution and partner support your business growth plan?

It’s a common situation that many of our clients find themselves in: they have a great growth opportunity, but their current funding arrangements aren’t enough. 

For instance, when Carm Borg, President and CEO of Global Aviation wanted to expand his business growth plans, the bank couldn’t sufficiently support the financing he needed.

 

“The banks want three to five solid years of history, whereas factoring will base their funding solutions off of your current book of business.”

— Carm Borg, President and CEO of Global Aviation

 

With Liquid Capital, Borg was able to access over $40 million in working capital over the years he spent working with his local Liquid Capital Principal. “They gave me the ability to grow the business twice as fast,” says Borg.

Other traditional sources of funding, such as venture capital deals, often require that you sacrifice some of that equity, factoring does not. You’re able to keep ownership of your company, access the funds you need and manage your business growth plans on your terms.

 

Is invoice factoring really too expensive?

One common concern about many financing solutions is the cost to the business — both monetary and other. If you take into account the planning, time spent and other expenses that go into just attempting to get loans, lines of credit, grants, venture capital, angel investments, family donations and other investment dollars, those costs really add up. You may not even be successful in gaining capital, and then you’re further behind.

 

When compared to the fees, interest and equity lost from these other kinds of financing, invoice factoring can be much more favourable. Your invoice factoring partner can work out the numbers quickly to explain how much you’ll receive upfront, which allows you to plan your next move with reliability. 

As part of the factoring process, you can also cut your admin costs.

When a business factors invoices, it no longer has to worry about collecting accounts receivable. This responsibility (and risk) shifts to the factoring partner, which effectively becomes the business’ outsourced credit and collections department. The factor takes over all aspects of credit and collections including folding, stuffing, mailing and documenting invoices and payments. This frees employees up from these time-consuming tasks so they can focus on core business pursuits.

At Liquid Capital, we also don’t make you jump through hoops just to learn if you’ll qualify for funding. We try to qualify our clients quickly and provide practical guidance if there are areas you need to improve.

 

Want to read more about how invoice factoring can fuel business growth plan? Check out part 1 our series on making invoice factoring part of your business growth plan.

Scaling your business with invoice factoring

Scaling your business with invoice factoring

When you’re scaling your business, invoice factoring should be part of your growth plan.

Scaling your business with invoice factoring

Cash flow. It’s often referred to as the “lifeblood” of a business, and for good reason. While most businesses can operate for a period of time with slow sales or little-to-no profits, their days are usually numbered if cash runs out or there is an inconsistent flow of working capital. 

However, often businesses will find themselves needing to regularly inject their cash flow with extra working capital — and it’s not because they’re failing to produce sales. In many industries, it’s common to have longer payment terms or they may be scaling their business at such a rate that their current financing is sufficient. 

 

“Positive cash flow in my industry has always been extremely important because it eliminates unwanted stress that can come with staffing and managing the day-to-day operations. Having a reliable cash flow allows me to focus my attention on growth opportunities.”

Dave Kip, CEO of Best Broadcast

 

When faced with this situation, many businesses will offer early payment discounts, which ultimately leads to fewer profits — something no business wants to see happen.

So how can businesses make sure they’re able to maintain a positive cash flow without offering early payment discounts? And what tools should be in your funding toolkit so you’re ready when a growth opportunity presents itself?

Stop offering early payment discounts

While many may think of invoice factoring as a last resort for companies who don’t qualify for (or can’t secure) traditional funding, it’s actually a smart strategic solution that can be used ongoing. For those that make it part of their company’s overall financial strategy, it can help ensure that the business never has to face a critical cash flow shortfall. This is especially critical for businesses that operate within a seasonal sales model or those that work with clients that have extended payment terms (such as 45 to 60 days or longer). 

And when you compare the expense of factoring to the cost of offering early payment discounts, it can become clear that invoice factoring is a cost-saving tool. 

For example, some businesses offer prompt pay discounts of between 5 and 10 percent of the invoice total if customers pay their bills in less than 30 days. In tight-margin industries, this can be the difference between profit and loss. The cost of factoring is usually lower.

How invoice factoring works

With invoice factoring, a finance company (or factor) will purchase a business’s outstanding accounts receivable, or invoices. The factor advances the business a percentage of the value of the receivables at the time of purchase — usually between 70 and 90 percent. It then releases the balance, less the factoring fee, when the invoices are collected. 

Fast-growth companies tend to be good candidates for invoice factoring because this growth can adversely impact their financial ratios, which makes them unattractive to traditional lenders like banks.

The same goes for startup businesses that don’t yet have enough operating history to qualify for a traditional bank loan. Invoice factoring is relatively common in the trucking, manufacturing, staffing and other service industries — but can be a useful tool or almost any size company in any industry.

Invoice factoring isn’t a last resort

At Liquid Capital, it’s not uncommon for us to help businesses who are on an upward trajectory and need to unlock extra working capital to take things to the next level. And if you’re scaling your business, establishing a relationship with a commercial factor before you’re faced with a cash crunch, will allow you to access capital whenever — and for whatever —  is needed. 

Recently, we worked with one business owner who faced this exact problem.

While business was booming for Best Broadcast, having a positive cash flow became increasingly important for the company to continue growing. Because the company invoices on net 45-day terms, incoming cash flow can slow down. That means they can be waiting for a minimum of 60 days from when they start a job to get paid (which can cause a significant barrier for growth). To increase their working capital, Best Broadcast resorted to offering early payment discounts, which proved to be a costly solution.

 

“If a company is offering early payment discounts, factoring is a cheaper option to gain access to money.”

Dave Kip, CEO of Best Broadcast

 

Every day we’re helping business owners (and finance professionals who work with business owners) to grow and reach their goals. 

Want to learn more about how invoice factoring can fuel business growth? Get in touch with us today, and we’ll be happy to help.

CFOs

Attention CFOs: Here’s how to protect your business through uncertainty

As the world slowly starts to reopen, focusing on these four areas will be critical for CFOs and business leaders.

CFOs

Running a business is difficult. Factor in instability and socio-economic challenges influenced by an ongoing pandemic, and it becomes downright impossible. But there are so many organizations that are persevering, regardless of the many challenges created in the past year. 

Business leaders are using these hurdles to create new opportunities, shift gears and improve processes. They’re leveraging change — if they have the agility to do so — and protect their business through uncertainty and risk.

This is particularly true for the finance role. More particularly, CFOs must be prepared to mitigate risk for their organization in both the short and long term. Here are key ways finance leaders can adapt and manage that uncertainty:

Plan business around liquidity

CFOs can overcome some uncertainty by making strategic real-time decisions that focus on the most urgent liquidity needs first. Naturally, leaders need to take immediate action to preserve cash flow, so prioritizing business needs will help focus your attention. 

 

> What can leadership do to raise more capital?
> Can we get a loan to cover expenses and operational costs?
> How can we speed up our invoice payments?

 

Partnering with a lending company that always has your back and can support you with speed and precision is important. It’s like having a special phone line to capital. 

Liquid Capital (as our name suggests) offers funding to businesses that need to meet business demands without adding more debt to their books. Using invoice factoring, businesses can sell unpaid invoices from credit-worthy customers and inject capital into their organization. This enables them to adapt to change quickly and meet the pressures of doing business today.

For example, Best Broadcast, a fast-growing AV company based in Toronto, Canada, uses factoring from Liquid Capital to overcome cash shortages in slower months to pay for operational expenses and employee wages. 

Adopt a hybrid work model

How CFOs work during uncertainity

The entire world has been working remotely for the past year. But as the world slowly starts to reopen, we’re seeing many companies bring on a hybrid work model to their organizations. Now, companies are offering their employees the chance to choose where they want to work from — the home, office or both — and many are choosing to adopt a hybrid work model

From a financial perspective, it makes sense for CFOs and business leaders to shift to a work setting that encompasses the best of both work modes (remote vs. in-office). When you have fewer people in the office, you’re not just cutting down on rent for bigger office space but also reducing the costs associated with keeping every employee in the office. Think office supplies, utilities, and those fully-stocked kitchens!

A recent survey indicates that 84% of CFOs and business leaders in a traditional work setting plan to bring employees back in waves, while 5% plan to keep employees working from home permanently. Obviously, the preference changes from company to company, so it’s best to analyze how much it would cost to take on a hybrid work model and offer flexible work opportunities to employees after running the numbers.

Use technology to upskill and reskill roles

In a world that is becoming more open to automation, finance has an opportunity to transform from being the gatekeeper of transactions into a strategic guide for their organizations.

This means helping teams upskill or reskill to manage macro-challenges and truly transform into a modern workforce for the CFO. The emergence of machine learning and data-driven technologies can drive up change and financial leaders should adapt their role to welcome more AI-based tools.

New technologies can streamline manual processes and help them make strategic business decisions with a long-term approach. Instead of being scared of robots or machines to take over the finance department, CFOs can also use emerging tech to predict the need for cash flow better and forecast any business funding needs that may arise.

Build trust and transparency

CFOs during uncertainity

Transparency is key to doing business today. And finance has its part to play in building trust and clarity among customers and stakeholders in their company.  

CFOs can do this by using up-to-date data from different sources and business functions and delivering central insights to everyone involved in an organization to drive better participation and enhanced decision-making. It’s vital that CFOs notify stakeholders about the measures they’re taking to protect cash flow and outline tactics to ensure preparedness during uncertainty. 

Business leaders and CFOs can ensure consistency when it comes to being transparent and honest:

  • Communicate regularly with employees about how the company is doing, changes that will go into effect to tackle uncertainty, and how it will influence them or their roles
  • Inform suppliers and vendors of real-time changes to avoid interruptions to their services
  • Bring up to date lenders on the need for cash flow and discuss discounts you may need in the present or the future 
  • Speak with investors to gain strategic insight and access financial support

Why change matters

Making agility the number one priority while supplying the organization with the right tools and direction to make better decisions is critical. And grasping how finance will achieve what the business demands — from any location —  along with a heightened need for trust and transparency is imminent.

But perhaps the most important is the need to reshift your business operations to focus on liquidity and the willingness to inject capital by partnering up with a lending partner, such as Liquid Capital, when required.

 

To find out how we can help, get in touch with us today and get access to your own money through invoice factoring.

 

future business funding - alternative lending

What does the future of business funding look like?

future business funding - alternative lending

The pandemic has changed the way businesses operate — including the finance industry. Some financial institutions have become more conscious of consumers and businesses during the past year and have pivoted to offer greater flexibility, support and leniency to borrowers. However, other businesses have experienced the opposite — with greater challenges accessing capital.

We’ve already seen the change come into effect in some parts of the world. In Canada, central banks have cut interest rates extensively, offering historically low borrowing rates to boost economic activity. In the U.S., mortgage lenders saw a rise in refinancing applications as the Fed lowered interest rates down to 3.45%. 

But the changes brought to the financial sector go beyond slashing rates and offering more favourable borrowing terms. For leaders and CFOs of small and medium-sized businesses, this means they should be prepared to shift gears within their organizations and embrace the following future business funding trends: 

1. Digital transformation 

The banking industry is more keen than ever before to adopt technology that will help them assess credit-risk factors for borrowers and automate much of its underwriting processes. 

Similarly, many business and finance leaders in small businesses will be investing in technologies to help them better plan and prepare for cash flow and manage expenses. 

According to PwC, nearly one-third of CFOs surveyed already look to tech-driven products and services to revamp their business in light of COVID-related restrictions and allocate cash flow where it’s needed the most. Using digital savvy-tools, CFOs can better predict when they’re likely to experience slow cash flow months and apply for funding strategically. 

2. Alternative lending 

The harsh reality of the pandemic is that banks are only lending to SMBs with no risk at all. 

It is a daunting task for businesses, which often have low-to-moderate risks associated with their organization, to receive funding from traditional financial institutions. Last year, about 70% of U.S. small businesses owners applied for the Cares Act Loan (backed by the Federal government but executed by banks) but it’s still unclear how many actually received any financial support. This is just one example of how banks run on a risk-averse basis.

Instead, alternative lending companies have stepped in and reshaped SMB funding, helping to bridge the gap that traditional bank lenders cannot fill. Lenders such as Liquid Capital build relationships with businesses based on trust, knowledge, experience and expertise. This way, SMBs always have access to capital without having to go through a long drawn out process, without knowing if they’re even eligible for a loan or not. 

3. Business funding will become more agile

future business funding - remote work

Doing business is not just about getting your products to market — it’s also about protecting your cash flow. If you don’t have access to working capital, you can quickly fall behind on payments and find yourself in financial trouble before you know it.

In the U.S., 50% of companies now consider themselves under severe financial strain and millions have indicated they may have shut their doors for good. To help these struggling businesses, the banking industry will need to find creative, versatile solutions. 

Many banks have started working with alternative lenders, such as Liquid Capital, and refer clients who don’t meet their underwriting standards to us. We are happy to work alongside our colleagues in the traditional banking system to ensure business owners, CFOs and leaders get the right product to keep their business healthy.

Our business funding services and products, including invoice factoring, asset-based lending, PO financing and other solutions, can be leveraged during various stages of business. During good times, this can further increase cash flow and help leadership make strategic moves. In downtimes, these solutions can help companies bounce back or prepare for an emergency by maintaining their cash flow during disruptive economic environments.

 

When you work with Liquid Capital to leverage invoice factoring (one of our main solutions), you get access to money owed to you through your open invoices — and get paid sooner. Many SMBs who are more familiar with traditional funding such as business loans and lines of credit are surprised to learn that invoice factoring does not add debt to your books. Instead, it quickly injects capital into your business. 

 

Is your business prepared for the future of business funding?

As business leaders and CFOs consider how to prepare for the many changes the future will bring, the time is now to adopt new technologies that will help them streamline their cash flow, develop relationships with alternative lenders so they always have access to working capital, and be prepared for change and disruptions. 

funding companies

How do you pinpoint amazing funding companies? (Hint: It’s the people)

Look out for these human-centered characteristics from great funding companies.

funding companies

As a business owner, what do you look for when starting a new partnership with a lender? You’ll take the obvious parameters into account — such as their ability to fund your business. But how often do you establish relationships based on a human-centered approach?

It’s easy to forget that real people are behind funding companies because you may not always have faces put to names (especially online lenders). But there are funding companies out there who take a more personal approach, including us at Liquid Capital. We are rooting for our clients and their businesses to succeed, and we want their teams, revenue and profits to grow.

Next time you’re searching for a funding partner to invigorate your business cash flow, these are some of the additional characteristics you should look for:

Great funding companies build relationships

A funding company that looks beyond dollars and cents is someone worth partnering with. Look for someone who can follow your struggles and understands what you’re going through, especially in unpredictable economies. 

At Liquid Capital, our ability to connect with clients at a human-level based on trust, experience and knowledge is what makes us stand out from our competition. Instead of developing one-way access to lending, we promote a reciprocal partnership that encourages business owners to lean on us for anything business-related.

One day we might be assisting our client in finalizing a new supplier. The next day, it could be supporting them to open a new warehouse location. It’s involvement like this that makes us stand out and puts us at the heart of business funding today.

Great funding companies understand the immediate and future needs of business owners

If your business is going through a cash shortage, chances are you need the problem resolved ASAP. When you work with a funding partner, they should perceive critical business challenges and provide timely and convenient solutions. 

But a great lending partner will also try to identify why there was a working capital gap in the first place — and anticipate future funding needs. In this case, their goal should be to offer continued support so you can rely on them to help you meet ongoing challenges.

Great funding companies are industry specialists

At Liquid Capital, we have experience and practice in almost every industry and market. Working with a lending partner who understands specific industries can significantly benefit you — and not just in terms of funding. 

Not only do they know the ins and outs of how particular markets work, but they can also use their knowledge to resolve problems and offer strategic insight.

Great funding companies are willing to ask the hard questions

It’s important to work with a provider who’s ready to ask difficult questions to learn more about your business and see if there’s a fit. 

Are they inquiring about your credit score? Do they ask about past bankruptcy filing or insolvencies? Have they figured out if you’ve been making payments on time? Will they delve into the health of your relationships with vendors and clients? 

Although it may be awkward to answer these questions, they’re willing to learn more about your business so they can lead you to a funding solution that’s affordable and wise.

 

funding companies to work with

Great funding companies will educate you

Ideally, you want someone who will offer you advice and feedback to help you grow your business. After learning more about your operations, they can pinpoint what’s working and acknowledge areas to improve productivity and output. 

Equipped with industry knowledge and experience, we help clients achieve a firm position in the market by continually educating them on best practices and answering questions that fuel business growth.

Great funding companies are realistic

We know it’s hard to hear ‘no’ if you’re in need, but a responsible funding partner won’t be afraid to decline an application request if it doesn’t make a good fit for your business. If that happens, they should also provide practical feedback on what you may need to adjust to qualify in the future.

Likewise, if you’re applying for a particular funding product but another solution is better for you, they should offer that advice. You don’t want to be working with a company that will sell you a service that’s beyond your affordability or does not provide the optimal solution to your funding challenges.

Great funding companies have proven success

Successful lenders can showcase results in the form of case studies, recent fundings and client testimonials. Don’t be afraid to ask them how they’ve helped clients achieve their goals, overcome a unique problem, or enjoy growth with their support. 

At Liquid Capital, we walk the talk. Here are some of our success stories that prove why our clients love working with us and how we help them achieve their business goals.

Funding is about more than just numbers

Liquid Capital is committed to the long-term success of SMBs and we realize that doing business is about more than earning money. (Naturally, that is important, and we want you to be as successful as possible!)

But business is also about making genuine connections, helping clients beyond their expectations, and working together with a more inclusive approach. With all the qualities listed above, we’re confident that our clients have the support to grow their business. 

 


At Liquid Capital, we understand the struggles and challenges of small, medium and emerging mid-market businesses – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital, you’re talking directly to your funding source and a fellow business person.

how to ask for invoice payments

How to ask for invoice payments the right way—and get paid

Your business survival depends on a positive cash flow. 

how to ask for invoice payments

As a business owner, you probably have some favorite clients. Those people you can call up and chat with about business easily, but that you also get to know on a personal level. The ones who have grown professionally alongside you, having battled through the highs and lows together. You may have both developed a mutual loyalty. 

So what happens when a client doesn’t pay on time?

Even if you want to remain loyal to a non-paying customer, unpaid accounts can negatively affect your cash flow. And without any cash reserve, you may struggle to keep up with overhead expenses. 

Your employees, suppliers and vendors also need to be paid every month, and if your client payments fall behind, you’ll experience an even bigger working capital crunch. If you’re unable to effectively run your business because your clients aren’t regularly paying you, it’s time to do something about it.

How to ask for invoice payments the right way:

If you’ve implemented the above tactics to avoid non-payment but still have clients that refuse to pay you, consider the following:

Get in touch with the main point of contact personally. 

Before taking any drastic measures, pick up the phone and call your customer to have a one-on-one conversation with them. In some cases, your team may have been messaging their Accounts Payable team, but the owner, decision-maker or your key contact may not even realize that payment is outstanding.

Verbally remind them of any outstanding balances, and notify them of any late fees that they’ve incurred or will continue to incur if they fail to make payment. If it’s getting hard for you to get in touch, you may be able to speak to another colleague in a senior role who could shed some light on the situation and come to a mutual agreement on payment timelines.

Try to understand why your customer is unable to pay you. 

Communication is key to overcoming stressful situations such as non-payment, so it’s crucial to understand the reason for the delay. 

Over the past year, businesses have been hit hard by the pandemic. Many continue to see declining sales, have been impacted by lockdowns and travel restrictions, and some have even had to shut down operations. It may be a good idea to investigate if the pandemic has affected your customer. Chances are they’re experiencing a slow season, or also waiting on capital tied up in invoices. Showing a little empathy goes a long way, especially in today’s uncertain economies.

 

how to ask for invoice payments

Stay top of mind with friendly reminders.

Sometimes, all it takes is a little reminder to push your client to pay an outstanding invoice. You can use accounting software or manually set up friendly reminders that follow-up with clients at certain points after an invoice is sent out.

You can set frequencies based on their payment history. If you know a customer takes their time to pay you, schedule more frequent reminders. It’s best to check in with clients to strengthen the relationship, and be open to a two-way conversation. By doing so, you’ll encourage customers to come forward if they think there will be a delay in paying you.

If nothing else works, the last resort is to get outside help. 

Your primary goal should be to resolve any non-payment issues without getting third-parties involved. Because let’s face it, no one likes to be the bad guy.  

If a client is unresponsive after multiple attempts of communication, then hire a professional to send a notice to a customer who hasn’t been responsive. Hopefully, you’ll be able to resolve the matter without further legal measures. 

Alternatively, you may also consider hiring a collections agency to try and recover payment. 

 

Recovering a payment doesn’t have to be a stressful experience 

Late payments can have a negative effect on your business. They slow down growth, you risk not paying your employees or vendors, and they interrupt the day-to-day of your operations. So how you ask for invoice payments from non-paying customers is important.

It doesn’t have to be a stressful experience — when you are waiting on payments, consider taking steps we shared in part one of this series, followed by the tips outlined in this post. 

By following through, you’ll get to the bottom of why a client is unable to pay on time, and decide if you should adjust the working relationship.