supplier contracts

Navigating unexpected supplier price increases

/en , /por

How can businesses remain competitive in today’s market when faced with navigating unexpected supplier price increases?

supplier contracts

Small and medium-sized businesses have gone through tough times over the last few years. With unfavourable market conditions pushing businesses to make hard decisions, many companies are facing new and increasing challenges.

Decades-high inflation has made pricing and contracts more difficult to navigate, and, along with labour shortages and continuing supply-chain delays, some businesses have been struggling to keep moving forward. 

This is particularly the case for B2B businesses that operate on small margins and offer fixed-price contracts, such as manufacturing or trucking and transportation companies. 

 

Companies in manufacturing, transportation and energy have seen instances where suppliers have increased costs by as much as 20%, even though they had a contract in place at a lower price. 

 

So how can business owners continue to deliver at the fixed-price contract rate? Keep reading as we examine this growing problem and how small and medium-sized business owners can overcome it. 

Contract reneging is a wide-reaching issue

In recent months, we’ve heard of numerous instances where North American-based companies have had suppliers increase costs at short notice. This is causing strains to their cash flow and putting their client relationships at risk. 

Manufacturing, transportation and energy have seen an increase in suppliers reneging on contract pricing. Often in these sectors, purchase agreements are locked in for years or are structured in such a way that they can’t simply pass along the increased costs to their customers. 

Supplier increases

If a business depends on one or two large accounts (such as a company that is selling products to a grocery chain or a transport company who provides exclusive shipping rights to a single customer) the last thing they want to do is damage or lose a contract. 

So what is the driving force behind this phenomenon and what can business owners do to overcome the cash flow challenges it presents?

Dramatically shifting market conditions to blame

The fall-out from COVID-19 lockdowns and ongoing supply issues are partly to blame for the increase in supply prices. Continuing lockdowns in China (which is the world’s leading manufacturer, with almost 30% of the world’s output) have had serious impacts on the supply of goods and materials. 

The Russian invasion of Ukraine has played a large part in the increase in global prices for oil, which in turn has raised the costs of transportation and the overall cost of a wide variety of supplies. The war has also caused an increase in energy and food costs, bringing a knock-on effect to the price of many other materials. 

The cost of moving goods around the world has also increased considerably. In some places the price of transporting a container almost quadrupled within a year. Labour shortages and wage increases have also had an impact on the cost of most goods and materials. 

These pressures have brought about unavoidable chain reactions: businesses’ costs have spiralled and so the goods they provide have also had to jump in price. 

For the foreseeable future, these pressures are likely to remain for many businesses. Between 75% and 84% of businesses expect to continue seeing increased supply costs, supply shortages and delivery delays.

 

Manufacturers are facing almost $1 billion in increased costs, with 80% admitting that they have had to considerably raise their prices and delay deliveries of orders.

 

It looks likely, therefore, that suppliers reneging on contracts is likely to be a reality for many businesses, for some time to come.

How businesses are reacting to increased costs

To stay afloat, many small and medium-sized businesses know that they have to continue delivering on their contracts, regardless of higher costs they themselves may face. Increasingly, therefore, companies are reconsidering the viability of offering fixed-price contracts. 

No business with small profit margins can continue to swallow price increases that can’t be passed on to the customer. More and more companies are providing estimates but no fixed price, so they have leeway to account for potential fluctuations in the cost of materials. 

This is fine for the future, but how can companies manage increased costs which they can’t pass on to their customers, right now?

Financial ways to bridge the gap

Many companies will need extra financing to help bridge the gap between what they’re paying for materials and what they can charge their clients. They can, of course, apply for a loan or line of credit with their bank. However, the big banks are typically more risk-averse than other lenders, and less likely to approve loans to small businesses that are experiencing cash flow issues.  

This is where alternative lenders could come into play. One option is asset-based lending, which provides businesses with a line of credit based on the company’s assets, and repayments which are made on a monthly basis.

bridging the cash flow gap

There is also an option for businesses that need improved cash flow without taking on extra debt. Invoice factoring involves selling invoices for cash, meaning companies can get paid up-front, without having to wait 30, 60 or even 90 days. This can help businesses to deliver on their contract obligations without having to pay debt interest.  

When traditional funding options aren’t available, many companies have benefited from alternative financing options to help them overcome the cash flow challenges posed by the current market conditions. The key is to find a partner who understands the company’s specific needs and is able to provide a funding solution that is in the best interest of the business’s long-term growth.

As one of North America’s leading alternative business funding providers, Liquid Capital delivers agile working capital to small and medium-sized businesses to help accelerate growth. To learn more about our alternative lending options, contact your Liquid Capital Principal today.

alternative business funding strategies

Cash Flow Survivor: Alternative business funding strategies to outwit, outplay & outlast your competitors

/en , /por

3 alternative business funding strategies to help you avoid cash flow exile.

alternative business funding strategies

With 42 seasons under its belt, Survivor has lasted the test of time and remains one of the longest-running reality TV game shows. To win the game, you must not only be strategic and form alliances, but you also need to have sheer determination to overcome the challenges contestants are faced with. 

And when it comes to battling it out in business, finding the craftiest ways of improving your bottom line can often feel like you’re competing for an immunity idol to send  the competition packing. 

Often the biggest obstacle standing between a business owner and success is working capital, and having sufficient cash flow to support your goals. Luckily alternative funding solutions can be the immunity idol that growing companies have been searching for.

Here are three ways to outwit, outplay, and outlast your competitors to the finish line of the fiscal year.

1. Outwit your bank loan challenges

alternative business funding strategies - outwit bank loan

 

When you need funds, one of the first places you likely turn to is your bank. But banks can have strict criteria and getting that loan can become an instant roadblock. Unfortunately, it’s no surprise that businesses can struggle when trying to access credit and a lack of cash could put you on the chopping block.

To outsmart the traditional loan criteria, form an alliance with an alternative funding partner who can offer you solutions such as invoice factoring — allowing you to sell unpaid invoices to access cash faster. You get paid upfront and can continue operating as usual, even if your credit rating isn’t the strongest. The important part is to form that alliance with an alternative funding partner that has a proven track record and is willing to work with you to advance your business goals.

cash cycle guide

2. Outplay the risk

outplay the risk

Being marooned with no lifeline is a horrible feeling, so it’s important to have a support team to help avoid any risk in the business that can leave you stranded. Whether it be the risk of not getting paid on time (or at all), being subject to fraud, cybersecurity risks, or not getting cash in time to pay your suppliers or staff, you’ll want to mitigate the issues.

To start, ensure that your alternative funding partner has the experience to back up their claims. They should have their own team dedicated to assessing risky funding opportunities, and they should understand your specific cash flow challenges so  they can help keep your torch lit. And since 76% of businesses are concerned about cybersecurity risks, it’s important to work with partners who are equally aware of online risks and take data privacy and security seriously.

 

Related Read: 5 ways factoring can clear your cash flow hurdles

 

3. Outlast without giving up equity

Outlast without giving up equity

When you work so hard at growing your business, would you give up equity in the company to gain financing? Many business owners do this, turning to venture capital firms, angel investors, crowdfunding, or even friends and family to increase their working capital. But according to the University of Cambridge, 67% of companies would still rather follow a debt financing model (such as PO financing) than give up a portion of their business

Why is this the case? It may come down to predictability. Looking at your balance sheet is often easier to understand, and knowing exactly how much you are borrowing (and need to pay back) can allow the average business owner to formulate a plan that fits into their schedule. The equity model, on the other hand, can raise more questions and leave you wondering just how much of your business you’ll leave on the table.

Related Read: Is my money running out? Create a cash flow budget to find out

Make a comeback

Even if you stumble upon cash flow challenges, you can still make a comeback. Obtain your secret advantage by conducting a cash flow audit and updating your cash flow budget to accurately forecast your incoming and outgoing cash flow. Assess all the financing options available to determine which will be best at maintaining consistent cash flow to stay ahead of expenses. And of course, don’t be afraid to explore options beyond what a bank may have to offer.

To become the ultimate business survivor by making the most of alternative business funding, download The Invoice Factoring Guidebook now.


The invoice factoring guidebook download

company values

Company values rise above a major network outage

/en , /por

Even when disruptions happen out of our control, our clients still need to rely on funding to keep their business going. This is the story of how our team embraced our company values, came together with a shared purpose and worked together to find a way to keep things moving for our clients—despite enormous obstacles.

company values

Just another Friday…

On the morning of Friday, July 8, Nikita Silvestrov awoke to find that his Internet wasn’t working. He didn’t think much of it at the time and took his dog out for a morning walk. Then he checked his phone and realized that wasn’t working, either.

“I wondered, ‘What’s going on? This is a bit weird, right?’ When I got back and tried resetting my modem, I realized nothing was working,” he said. “And I couldn’t call anyone because my phone didn’t work.” So Nikita went to a nearby Starbucks where he saw about 100 people standing outside trying to access free Wi-Fi.

That’s when Silvestrov, a relationship manager with Garrington Group (the parent company of Liquid Capital), discovered there was a massive service outage at Rogers Communications—including Internet and cellular networks—affecting more than 12 million Canadians across the country. The outage also affected systems that relied on the Rogers network, including Interac debit payments and certain federal government services, as well as access to 911 emergency services.

Since his office also ran on the Rogers network, Nikita—whose job is focused on supporting long-term franchisee relationships—couldn’t work from there either. But rather than throw in the towel, call it a long weekend and take the day off, as so many other Canadians did that day, he and his colleagues banded together and found a way to make it work.

 

Nikita Silvestrov

“We work with so many people who need funds day to day. Just because there’s a network outage doesn’t mean the world stops. People have to make payroll and pay their suppliers. If we don’t send cash out the door at the end of the day, they’re not able to pay their employees and suppliers.”

— Nikita Silvestrov, Relationship Manager, Liquid Capital/Garrington Group

 

Getting creative to keep things moving

“I ended up running around the whole day between Starbucks, the library and a couple of restaurants that had free Wi-Fi,” Nikita explained.

He knew that there was a lot riding on it. Garrington Group provides alternative financing solutions to entrepreneurs and emerging businesses, allowing them to quickly access funding without the need for traditional bank financing. Liquid Capital is part of a wider group of companies that share the same funding source and underwriting resources that fall under the Garrington umbrella.

While many companies claim that customers are at the centre of everything they do, that messaging sometimes falls apart in a crisis. But Garrington’s values came to life that day in how the whole underwriting team responded during the massive outage to keep money flowing for clients.

banding together with company values

Banding together, through shared purpose

“Our teams knew the importance of getting money out to our clients and they did whatever had to be done, just to make sure everyone who needed money that day got their money,” said Robert Thompson-So, Managing Director and Chief Strategy Officer of Garrington Group.

Colleagues who were on the Rogers network teamed up with colleagues who were on a different network. By tethering to a network that was still in service, they were able to contact clients, submit paperwork and move money where it was needed.

“Senior management didn’t have to tell them to do that. Our people have consciously chosen to make their contribution in the world with our company. And that just speaks to the kind of company culture that we’ve tried to promote,” Robert proudly said of his team.

“We just focused on getting cash out the door, making sure that everyone got their funds that day,” said Nikita. “If you’re really passionate about your work and passionate about helping others, it shows. Everyone really banded together to get through the day.”

Read more about the Liquid Capital Difference

overcome cash flow challenges

Keep the business beat going with accelerated funding to overcome cash flow challenges

/en , /por

You don’t need to lose your groove when you hit a wrong note with your financing. Overcome cash flow challenges and keep the beat going with invoice factoring.

overcome cash flow challenges

For many business owners, growing a company can often feel like you’re improvising as part of a jazz ensemble – you and your team are trying to create beautiful music on the fly. And if you miss a note and hit a cash flow challenge, it can throw you off the beat of success.

However, just as any musician (and savvy business owner) knows, it’s not the notes that you’ve already played that matter; it’s the notes you play next that do. And often your inspiration for the next note comes from your fellow musicians.

So if you or your client need some inspiration for overcoming a wrong note, keep reading to learn how these entrepreneurs created their magnum opus, seized growth opportunities and created beautiful music (even after playing a wrong note or two).

Overcome long payment terms

Ray Bowman, Owner and President of Rayzor Edge Tree Service had plans to take his company, which provides professional, environmentally conscious tree services for commercial and residential properties in southern Ontario, to new heights. But his goals for growth initially outpaced his working capital. 

As a small firm, he was constrained by cash flow, as his need to pay subcontractors quickly was met head-to-head with invoice payment times of 30 to 120 days from commercial customers, limiting the number of jobs he could accept.

 

“Before working with Liquid Capital, we just didn’t have the cash flow to support our growth. We were confined to doing basically a job a month or so. Now with Liquid Capital behind us, we’ve freed up our cash flow to continue to grow — and there’s no ceiling on it.”

–  Ray Bowman, Rayzor’s Edge

 

For Bowman, tapping into the power of his accounts receivable through invoice factoring was the solution. The extra working capital allowed him to double his sales, maintain positive relationships with valuable subcontractors, while also benefitting from the business support and advice of his Liquid Capital principal.

Overcome offering early payment discounts

Similarly, opportunities for further growth were abundant for thriving audiovisual company Best Broadcast — the business was booming after a successful launch set the stage for new business opportunities to work with major companies. 

At the same time, Best Broadcast was facing a cash flow crunch that was limiting the company’s ability to sustain its upward momentum. Customers were taking 45, 60 or 90 days to pay their invoices – often, hundreds of thousands of dollars were tied up in outstanding accounts receivables. While the company initially tried to remedy the situation by offering clients a five percent discount if they paid their bill in full within 15 days, the heavy discounts started to eat into the bottom line.

After taking the time to understand and evaluate the invoice factoring process, Dave Kip, CEO of Best Broadcast decided that the best way to access more reliable working capital was to put his accounts receivables to work with the help of Liquid Capital.

 

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

– David Kip, Best Broadcast

 

With a reliable alternative financing solution in place, Best Broadcast immediately had access to the funds it needed, increasing cash flow and alleviating Kip’s worries around day-to-day operational costs so he could focus on his business strategy and successfully scale his company.

Overcome traditional funding solutions 

overcome cash flow challenges-traditional-funding-solutions

Having enough staff and enough materials to fill orders are the two most important factors for running a successful manufacturing business. They also require sufficient working capital – you need to pay your employees regularly, and you need to purchase materials to fill orders. 

For Summit Retail Solutions, invoice factoring was exactly what they needed to access regular cash to cover these two major operating expenses. They had purchase orders worth hundreds of thousands of dollars in the pipeline and business was booming for the two-year-old custom manufacturer of premium store display fixtures.

However, without an established credit history, the company did not qualify for traditional bank financing, and its small business line of credit wasn’t enough to help them continue growing. As their cash flow started to dry up, they struggled to fill large orders, while supply chain and payroll issues began to threaten operations.

After researching several factoring companies, Summit Retail chose Liquid Capital’s invoice factoring solution for its creativity in meeting the company’s specific needs and for its exceptional service and support.

 

“I honestly believe that we would not have had this success without Liquid Capital’s ability to cut through the red tape and factor our receivables. I would strongly recommend this course for other companies that require working capital to grow.”

– Ted Hope, Summit Retail Solutions

 

With the influx in working capital, Summit was able to draft larger contracts and drive more business. Almost immediately, they began to enjoy higher sales growth, and in just 18-months of working with Liquid Capital, sales more than doubled, going from $1.4 million to over $4 million. Now firmly established – and with the track record to prove it – Summit was soon able to secure traditional bank financing to fund its continued growth.

Overcome cash conversion cycles that can’t support growth

Overcome cash conversion cycles that can’t support growth

When the glove fits, it fits! And for many businesses, including Dig It Apparel Inc., invoice factoring fit their business needs just right.

When the co-founders came up with the idea for Dig It Handwear® —a line of utility/gardening gloves specifically targeted to women because they could protect hands and manicured nails—they knew it was a good one. What they weren’t prepared for was how good—and how in-demand—their product would be after an appearance on a Canadian TV Show, Dragon’s Den.

 

“We fell into the gap. A small business loan is usually about $50,000, which we qualified for, but we needed between $200,000 and $250,000—and weren’t even sure specifically how much. The bank needed more solid information to bump us up to a commercial loan, and we didn’t have it. So we were not able to get the loan secured in time for manufacturing. We needed to look at other options.”

– Claudia Harvey, Dig It Apparel

 

In need of financing—and fast—Dig It started exploring the options. They started talking to other banks, but didn’t yet have the relationships or track record needed. Next, they considered selling a portion of their company—fortunately, a trusted person in their business network introduced them to Liquid Capital before that became necessary.

Working with Liquid Capital enabled Dig It to expand, and offer banks the solid projections necessary to obtain traditional financing.

Overcome financial instability caused by seasonal demands

For any type of business that relies on seasonal buying cycles, finding sufficient cash flow to keep you going through the slow months can be challenging. 

For Ridgeline Manufacturing, this was the problem they faced specializing in summer recreational equipment. The winter months brought lean times, and owners Nick and Julie Newman knew that they couldn’t lay off their workforce and close production for half the year. However they also didn’t qualify for traditional funding options.

Though they had previously tried factoring with other providers, but were turned off by the experience. But when they were introduced to their Liquid Capital Principal, they knew working with Liquid Capital would be different.

 

“With a lot of other companies, you go through tons of different people—even just to get an approval. After you’re approved, you still don’t have a dedicated contact. At Liquid Capital, I know who I’m dealing with—and I know he’s looking out for my best interests, and trying to save us money whenever possible.” –  Nick Newman, Co-Owner, Ridgeline Manufacturing

 

With Liquid Capital there were no minimums or penalties for inconsistently factoring their invoices, and Nick liked that he wouldn’t be charged interest on money already collected. With the flexibility Liquid Capital gave them, Ridgeline was able to not only coast through the winter months, but also continue growing during the busy times.

Overcome unforeseen events

When traditional funding options just don’t cut it, invoice factoring can help businesses that find themselves in hard-to-finance situations. For Silani Cheese, they had a quality product and demand was high, however after a series of financial obstacles, they needed an influx of working capital.

Naturally the company turned to the banking facility it had in place for help. Unfortunately, certain margin criteria in the banking arrangement unexpectedly changed resulting in a reduced credit facility, forcing it to negotiate an insolvency/restructuring proposal with its creditors.

During the restructuring process, the company had repaid its bank debt using personal funds as well as financing from Farm Credit Canada, but in order to fully exit the proposal, it needed a broader financing solution—one that factoring could readily deliver.

 

“The other companies we dealt with just weren’t cutting it. Their financing approach made us nervous, and they made promises they couldn’t keep. When Liquid Capital came in and took over the deal, everything changed. We were three weeks into problematic negotiations with the other company—with an irreversible deadline looming—and Liquid Capital team jumped in, put everything together and closed the deal two days ahead of schedule.”

– Joe Lanzino, Silani Sweet Cheese Ltd.

 

Despite arriving rather late in the process, Liquid Capital impressed immediately with their face-to-face approach, deadline-driven commitment and upfront clarification of what was possible in terms of timing. 

In the end, Liquid Capital negotiated the deal, completed due diligence and funded Silani on the timeline it needed—all in less than three weeks—enabling Silani to exit the insolvency proposal and repay the Farm Credit loan as well.

Different industries, same cash flow challenges

overcome cash flow challenges in every industry

These businesses turned their accounts receivables from a daily headache into a tool to help them drive positive cash flow and ensure their companies continue to thrive. 

When you have the right funding partner, you can avoid those ‘wrong notes’ in your business orchestra.

If payment delays from your credit-worthy customers are resulting in missed growth opportunities for you or your clients, Liquid Capital can help you keep your business beat going.

 

“You want your business to be more than it is today. You’re facing the opportunities in front of you but you’re lacking in the cash or the capital… Let us help you by showing you a light at the end of the tunnel — and the best way to do that is to accelerate that cash cycle by replacing your near-current assets with cash.” – Liquid Capital Principal

 

Ready to learn more about invoice factoring? Contact your Liquid Capital Principal –  we’ll take the time to learn about your goals and challenges and will deliver accelerated funding solutions that hit the right note.

top podcasts for entrepreneurs

Discover new ideas, tips and advice with these top podcasts for entrepreneurs

/en , /por

Catch up on all the latest business news, tips and advice – no matter where you find yourself working (or playing) from with these top podcasts for entrepreneurs.

top podcasts for entrepreneurs

Whether on the beach, in the car or during a short lunch break, summer can be a great time for entrepreneurs to catch up on the latest trends, contemplate fresh ideas or learn new concepts that might prompt your next business move.

If you’re looking for a new source of information or inspiration — either via bite-sized tidbits or longer form food for thought — here are a few business-focused podcasts worth checking out this season:

Wisdom from the Top with Guy Raz

top podcasts for entrepreneurs - Wisdom from the Top with Guy Raz

For business owners interested in the inspiring stories of how leaders of some of the world’s biggest brands have dealt with challenges head-on, Wisdom from the Top, hosted by NPR journalist Guy Raz should leave companies of all sizes with some valuable insights. 

The weekly hour-long podcast features interviews with guests sharing accounts of crisis, failure, triumph and turnaround, such as IBM’s Lou Gerstner, discussing the issues he faced head-on when he took over as the company’s CEO in 1993, and how Carnival Corporation’s Arnold Donald turned the cruise company into a valuable industry brand following public relations challenges.

The 10-Minute Entrepreneur

top podcasts for entrepreneurs - The 10-Minute Entrepreneur

If you’re looking for business ideas and tips in more of a snack-sized format, The 10-Minute Entrepreneur, with several short episodes posted each week, features interviews with investors, CEOs and founders, as well as tips from host, ‘seasoned serial entrepreneur’ Sean Castrina, on everything from the roadblocks to scaling your business, to how to make inflation work for you.

Perfect for when you find yourself with a short break to fill between meetings, dips in the pool or as you’re out and about.

HBR IdeaCast

HBR IdeaCast

Showcasing leaders in business and management, this half-hour weekly Harvard Business Review podcast is hosted by two senior editors and features guest speakers such as professors, business leaders and authors, weighing in on topics ranging from ‘the case for embracing uncertainty’ to going inside companies that get the ‘purpose-profit’ balance right.

CEO School

CEO School

On her weekly podcast – one of the top 20 business podcasts in Canada on the Apple podcast charts – CEO School host Suneera Madhani aims to mentor and inspire female entrepreneurs by showcasing the 2% of women business founders who have reached $1 milllion in revenue – and those well on their way. Through her ‘Wine Down Wednesdays’ episodes where she discusses topics like ‘establishing a culture that drives business success’ to interviews with successful CEOs about building million-dollar brands and raising capital, Madhani’s show is sure to provide important lessons for women business owners.

Odd Lots

Odd Lots

Posting episodes each Monday and Thursday ranging from 30 minutes to an hour in length, Bloomberg’s Odd Lots podcast dives into financial, economic and market issues, analyzing complex issues and market crazes. Hosts Joe Wiesenthal and Tracy Alloway interview investment professionals, analysts and industry experts to give you the big-picture perspective on issues like why the bond market has been so volatile and what’s next for the future of air travel.

The Knowledge Project

The Knowledge Project

Aimed at helping listeners seize opportunities and master decision making, The Knowledge Project, hosted by Shane Parrish, takes a deep dive (some episodes are two hours long!) into topics like the essentials of leadership and making better decisions, as guests including top business leaders, sports icons, entrepreneurs, educators and authors give you insights you can use in business and in life.

Access these podcasts and get growing

All of these podcasts are available for download on Apple Podcasts, Google Podcasts and Spotify, so choose your favourite platform and consider fitting some on-the-go learning and inspiration into your day during the summer season.

how much does invoice factoring cost

How much does invoice factoring cost? The answer to this and other top asked questions

/en , /por

Invoice factoring is a powerful funding tool for growing businesses or companies that need an alternative source of funds. But how much does invoice factoring cost? Get the answer to this and other top asked questions.

how much does invoice factoring cost

Have you considered using invoice factoring to increase capital for your business – but aren’t quite sure how it works? Or perhaps you have a client who is struggling to find funding through traditional channels?

Below, we’ve answered the top questions we get asked about invoice factoring. You (or your client) may be asking some of these questions, and the answers will help determine if invoice factoring is the answer.

Many of these questions are about invoice factoring companies in general, since who you partner with is, in many ways, just as important as the funding itself. When you’re meeting and evaluating potential invoice factoring partners, they should be able to answer all of these questions to your satisfaction.

Invoice Factoring 101

Before we get started, let’s do a quick recap on what invoice factoring is (or, you can skip straight to the questions below). Factoring essentially means selling your open invoices to a factoring company, called a “factor.” It allows businesses to generate immediate cash flow and access capital that would otherwise be held up by slow-paying customers.

You’ll get paid most of your invoice upfront, while your factoring partner holds back a “reserve” as they wait to collect the full payment from the end client. Meanwhile, you can move forward with your business. It’s a powerful way to accelerate funding, and it’s not a loan.

 

“I used to hate doing invoicing because I would send off all my invoices and just cross my fingers that they’d get paid. Now, my invoices get paid the day I issue them—I’m in control of my cash flow and able to focus more on growing my business.”
– Brett Haskill, President, Performance Repair Services

 

Now – let’s get to those questions…

Q1) How long have you been in business?

Before placing your trust in any factoring company or lender, it’s important to know if the company has proven and substantial experience working with businesses like yours. It’s also critical to work with a factoring company that understands your industry and has credibility with its clients. Take the time to probe a bit deeper – it’s well worth it. (Here’s a resource we created that can help you do that.)

Did you know?

At Liquid Capital, we’ve been in business since 1999 and have deployed over $3 Billion in working capital across North America. Our Principals have extensive experience in a variety of industries and are always happy to work with our clients to give them a clear, unbiased picture of their business funding options.  Read our Liquid Capital success stories to see how we help businesses.

Q2) What are your terms and cancellation policies?

A reputable factoring company will never lock you into a lengthy contract. When selecting a lender, ensure they offer you flexible terms and conditions and that there are no auto-renewals in place. They should also offer a 30-day cancellation policy, so if you are no longer in need of funding, you are free to end your contract with them.  

The best agreements are those that are structured like those at a bank. Look for factoring companies that offer agreements without clauses that lock you in.

 

Learn more on how invoice factoring works.

Q3) How much are the charges?

Understanding the fee structure is crucial, especially because many factoring providers entice customers with lower upfront costs. You need to be on the lookout for hidden fees and add-ons that can really rack up your borrowing costs. It becomes especially important to take the time and review everything before you sign on the dotted line.

A good factoring partner will give you a clear outline of the fees so there are no surprises and you are in a better financial position as a result. At Liquid Capital, we’ll discuss these details with you, walk through the numbers, and ensure you have confidence that this solution will work for your business.

how much does invoice factoring cost - and other FAQs

Q4) How are the reserves calculated?

A “reserve” is a percentage of the invoice the factor keeps until the end customer pays the invoice. Discuss these reserves, fees and associated timelines with your lending partner.

For example, let’s say you are selling a $10,000 invoice, and the factoring company holds a reserve of $1,000. Once the end customer pays the invoice in full, the factoring company will forward you the reserve fund of $1,000 minus their fees.

Q5) Do you outsource your operations?

Some factoring companies outsource payment collections to third-party vendors. These arbitrators may not give customer service the same level of attention and importance as you would when dealing with your clients. 

Because these vendors are more concerned about getting paid, they may be less dedicated to the customer experience during payment recovery.

 

“It helped to get an introduction to Liquid Capital from someone I trusted. Thousands of dollars were on the line. We had to basically bare our souls to a company that isn’t regulated like a bank. To move to a factoring company, you need trust and a solid introduction to a reputable provider.”

– Claudia Harvey, CEO and Co-Founder, Dig It Apparel

Q6) When will a security be registered against my business?

A security is a form of asset that a lender uses to secure a loan. For businesses wanting to gain funding through invoice factoring, the most common form of security is accounts receivables or invoices. 

When you fill out an initial application form with an invoice company, they may register a security against your business. Some may do this even if you don’t do business with them, which is not a reputable practice and could impact your ability to secure funding elsewhere. (If you submit multiple applications to different factoring providers, there could be security registrations filed on your business that you are not aware of.)

Q7) Is there a ‘consent judgment’ in the legal documents?

This question is applicable only to companies in the United States. Some lenders that have predatory practices ask for a consent judgment in their legal documents. Upon signing, you’re giving consent that in case of disputes, future judgments will be ruled in favor of the factor. Avoid these clauses.

how much does invoice factoring cost, consent of judgment and other FAQs

Q8) What jurisdiction is your choice of law?

If you happen to get into a dispute with a lending partner, choice of law dictates what jurisdiction your case will be defended in. 

You might want to work with a company that has a choice of law closer to where your business is located, so you both have a fair chance in any dispute. You don’t want to travel all the way to Panama to defend yourself, if the other party chooses that jurisdiction.

Q9) Is there a charge for reporting?

Working with a factoring partner should be a relatively stress-free process. Part of this is being able to see reports on your accounts receivable, collections, credit limits, reserves and any timelines.

This information should be fully transparent and accessible so you’re always in the loop, and so you can hold your factoring partner accountable. It should always be included.

Q10) How are you funded?

The last thing you need to ensure is that the factoring company has adequate funding available so they can offer you capital when you need it. 

Have a conversation with the factor about their experience deploying large amounts of working capital, and ask for reviews from existing clients.

 

Learn more about how Liquid Capital accelerates business funding.

Quickly identify and correct financial missteps with a cash flow audit

/en /por

Conducting a cash flow audit can help you spot areas of weakness in your business so you can correct any issues before they become a bigger problem. It can also highlight areas of opportunity for growth.

conducting a cash flow audit

In nearly every aspect of running a business — whether marketing, sales or finance — knowledge is power. Knowing the ins and outs of your company’s cash flow is one of the keys to success, particularly for entrepreneurs and small business owners. So, too, is a regular review and assessment of the state of your finances. This ensures you will have enough working capital to pay your staff, keep up with operating expenses and grow your business when opportunities arise. 

A cash flow audit or cash flow analysis is an invaluable tool for taking a closer look at your business’s working capital over a certain period. The result gives you a bird’s eye view of areas of opportunity and weakness. It will help you take all inflows and outflows into account to ensure you have a clear sense if your company is meeting its goals or if it’s time to find new solutions.

To conduct a cash flow audit, follow these steps:

1. Start with your cash flow budget

Ideally, you’ll have a cash flow budget in place, but if not, here are a few tips for creating one. 

Once this is created, review your forecasts. Look for months where you may have fallen short in the past, and analyze potential for the same to happen in the future. If you’ve reviewed this in the past, now is the time to take a deeper dive to see what’s going on.

If your business buys or sells inventory on account, you’ll also want to calculate your cash conversion cycle (CCC), which measures how long it takes to convert that inventory into cash. The variables impacting the length of your CCC — such as days payable outstanding — can hurt your cash flow.

 

2. Gather your information

You’ll need data to conduct a cash flow analysis that delivers valuable information about the state of your business. 

First and foremost, look at your income statement – which will set out your company’s performance, including your sales revenue minus the cost of goods sold and other expenses. The income statement shows your bottom line (or net income) for the period.

Next, and perhaps most importantly, as Harvard Business School explains, you’ll need a cash flow statement to give you a clear picture of how your business received and spent cash during a specific period. The cash flow statement takes the net income from the income statement and adjusts it to include cash flow from your operations. This includes your accounts receivable and payable, and cash flow from investing and financing activities, to show you how your cash and cash equivalents have changed over a specific period.

If applicable, seek out the help of your accountant or bookkeeper to streamline the cash flow auditing process — some accounting software programs and tools will also be able to provide you with your cash flow statement within a specified period. Rather than waiting until tax time or until problems arise, reconcile your accounts monthly so that you are able to address any discrepancies quickly.

 

3. Analyze your data

Once you have these numbers, you’ll be able to see specific areas where your business is experiencing cash flow shortfalls. Perhaps you have more outstanding accounts receivables than you thought, for example. Ultimately you will be able to identify exactly where you are experiencing leaks in your cash flow pipeline.

cash flow audit

4. Take action and prepare for the future

With your newfound information in front of you, you can better align your cash flow and business processes with your goals.

For example, if your cash flow audit identified a noticeable gap in working capital, specifically, a large number of outstanding invoices with credit-worthy customers, invoice factoring may be the ideal solution to turn your near-term assets, or invoices, into cash.

Address any cash flow obstacles

With alternative funding options from Liquid Capital, you’ll be able to quickly address any shortcomings in your cash cycle. You’ll be working with a Liquid Capital Principal who is a business owner like yourself, so they understand the challenges and opportunities you face daily.

Want to learn more? Contact your Liquid Capital Principal today.

Growing food security

3 next-gen companies innovate to combat food insecurity

/en , /por

Here’s how three businesses are leading in sustainable, innovative business practices to help feed North America and combat food insecurity.

Growing next-gen initiatives to combat food insecurity

When an industry has operated and created products the same way for decades, it can be difficult for companies to break free from tradition and forge their own path forward.

While being innovative can be time-consuming, costly and bring on additional challenges, the long-term impacts can increase a company’s sustainability, profits and overall success. In the food and beverage industry, many companies are taking the initiative to implement better, more sustainable and more efficient business practices. 

Even if you aren’t operating in the food and beverage space (as are the following companies), you’ll find inspiration in their stories — and they may even spark an idea for how you can improve upon your own operations.

Next-level farming

Elevate with vertical farming to combat food insecurity

When you think of farming, the image of a red barn beside endless acres of crops blowing in the wind might come to mind. But what if that sprawling land was turned sideways? 

That’s the idea of vertical farming — growing crops upwards instead of across fields and completely altering the traditional approach to growing produce. And Elevate Farms is at the forefront of the industry as one of the first vertical farming facility manufacturers in North America, founded in 2018. 

Their state-of-the-art facilities can achieve impressive results in growing farm-fresh food while limiting water usage, all by combining proprietary LED light technology with photobiology and robotic automation. This has allowed Elevate Farms to redefine what a “traditional” farm not only looks like, but what they can produce. 

For example, while traditional farms take an average of 10 gallons of water to grow one head of romaine lettuce, Elevate Farms can do it with one gallon. This innovative technology allows for a higher crop yield per square foot of land. And this higher productivity can move us towards eliminating food insecurity in isolated areas such as northern communities in Alaska and the Yukon.

With 80% less labour needed compared to a traditional farm, 100% traceability due to blockchain technology and a 73% higher capacity than their competitors, it’s no wonder that Elevate Farms has made such a name for itself in the agricultural space.

Growing fresh food anywhere

Growcer is working to combat food insecurity

Isolated areas often don’t have the suitable soil or growing conditions for vibrant, sustainable farms. As a result, they often face issues of food insecurity — forcing people to ship food in from elsewhere. This leads to extremely high grocery bills, lack of access to fresh and nutritious food, degradation of health in remote communities and other negative spinoff effects.

Enter Growcer, an agri-tech company founded in 2015 with a mission to reduce the issue of food insecurity in isolated areas, regions with poor soil quality or locations experiencing droughts. As a manufacturer of hydroponic (soil-less) container farms, Growcer can grow local produce anytime and anywhere. Whether in the Arctic or the desert, these container farms can grow fresh produce in as quickly as six weeks. 

The company has also implemented an innovative new program with the goal of revitalizing gardening in remote Indigenous communities. This has given people access to fresh foods to which they wouldn’t have otherwise had access.

Turning food waste into profits

Loop Mission repurposes rejected food - Combat food insecurity

Every year, North Americans waste about 50% of all edible food produced. While some of it is unavoidable, the majority of the waste is due to stock management issues and consumer “pickiness.” 

So what can be done to mitigate the waste? 

That’s exactly what Loop Mission’s founders asked when they started the business in 2016 to repurpose rejected food. That journey started by turning unwanted fruits and vegetables — what they call the “outcasts of the food industry” — into delicious cold-pressed juices.

As a self-proclaimed “food waste fighting powerhouse,” Loop Mission has created a successful e-commerce business by selling their products direct to the consumer on their website. Meanwhile, they’ve also been gaining popularity in local brick-and-mortar stores, gaining another route into the competitive marketplace. 

On top of creating an innovative product for consumption, Loop Mission subsequently became a leader in food waste management, saving more than 6,872 tons of fruits and veggies, 446 million litres of water and avoiding the emission of 5,483 tons of GHGs.

Innovating to fuel business growth

For any company looking to evolve, innovate and compete, they have one thing in common regardless of industry: the need for working capital and healthy cash flow. 

All next-gen companies still need to meet the demands of payroll, R&D, manufacturing, supplier payments, promotion and distribution of their products. But if they don’t have incoming cash flow, stuck waiting for their customers to pay invoices, it can lead to cash cycle disruptions — holding them back from new ventures. 

If that sounds familiar, there are ways to improve cash flow and keep innovating. With alternative funding solutions such as invoice factoring, Liquid Capital can help you unlock the power of your outstanding accounts receivables and access the working capital you need to disrupt, innovate and grow stronger.

To learn more about invoice factoring, contact your Liquid Capital Principal today.

leading with innovation

Supercharge growth by leading with innovation

/en , /por

Only 18% of execs have the skills needed to lead. As markets, technology and workplaces evolve, leaders will meet significant challenges and will need to brush up on their foundational skills. Get ahead by leading with innovation in all areas of the business.

leading with innovation

As a business leader, it can be hard to know exactly where to focus when everyone and everything demands your attention. For those in charge, schedules are very tight, multiple problems can arise simultaneously and unforeseen challenges can derail even the most rock-solid plans. 

The most successful leaders rely on their foundational business skills to tackle these challenges—but the problem is that many leaders are missing these skills. In fact, 82% of leaders lack all the abilities to effectively steer their organization.

What skills do strong leaders need?

Today’s leaders must be able to build trust, be transparent and communicate clearly with their teams. Motivating and engaging employees is also important for driving outcomes and overcoming challenges or adversity. And they must be able to make productivity-based decisions.

Ultimately, the most successful executives have a strong mix of communication, interpersonal and executive-functioning skills.

To gain clarity and provide direction to your teams, start with the foundational basics. Successful business leaders should focus on three areas as their baseline:

  • Create a shared vision
  • Set strategic objectives to achieve specific performance outcomes
  • Offer strategic direction to create value in innovative ways

As challenges arise, these three areas can be your North Star, guiding you and your teams forward. If you start to feel lost or if new challenges arise that can sway you in a different direction, revisit your intended visions, objectives and strategic direction to recenter on the original priorities.

Ushering in a new era of leadership styles

“Traditional” leadership styles are becoming outdated and massive transformations are happening at breakneck speed. Consequently, leaders must pursue new management methods to better facilitate:

  • Employee engagement
  • Resolving internal disputes
  • Improving productivity and efficiency
  • Change management
  • Making better choices
  • Encouragement of ethics, inclusivity and respect
  • Promoting a goal-oriented culture

As industries evolve, business leaders can innovate in all areas of the business. It’s not just about technology alone, but as a leader, you can push forward new products and services, define innovative workflows to improve operational efficiency, revise and refine internal processes or completely evolve the business model.

For two well-known examples in the modern era, innovative leaders at Uber and Amazon modified processes at the very core of their operations. By doing so, they not only rose above their competition, but they redefined their industry and innovated completely new ways of doing business. 

By considering how to innovate across all departments and in every process, companies like this are shifting business—and the world at large.

 

Did you know?

Organizations with skillful leaders and higher employee engagement have a higher bottom line (as much as 147% higher earnings per share) than competitors.

organizational success - leading with innovation

You must be compelled to innovate

Naturally, leaders have an innate desire for growth, and many already see “innovation” as the way. To truly succeed, they must not only recognize it, but then implement it.

According to The Boston Consulting Group, 79% of executives rank innovation in their top three business initiatives. They also made a critical observation that the highest ranking companies have a shared focus on research, technology and development, which helps them stay one step ahead of competitors and fuel growth. 

Tesla is a perfect example of a company whose investment in innovation has led to unprecedented growth, having surpassed $206 billion in 2020. Through a carefully crafted and deliberate innovation strategy, the company has quickly risen to new heights of success and notoriety. In this instance, strong leadership, vision and innovation drove them forward.

Extinction of Fortune 500s? Innovate to stay relevant

Of course, businesses have to adapt to stay relevant and profitable. If they can’t (or won’t) adjust, they’ll eventually perish. This sounds obvious, but it could catch some of today’s “big fish” off guard. 

A recent study of C-suite executives in the US and Europe see digital disruption as one of the biggest threats, predicting that 40% of Fortune 500 companies will be “wiped out over the next decade.”

Leaders who embrace technology will make their businesses more agile, able to disrupt industries and compete against top-industry players. Likewise, leaders will need to adapt to social and cultural shifts—and leadership can’t just stay the course and operate the same way for decades on end. 

The oil and gas industry, as one example, has increasingly come under fire for the environmental repercussions of its practices. However, despite these criticisms, many of the top producers continue operating the way they always have. While there are many other factors at play, there will always be opportunities to innovate, adapt and improve a company’s social and environmental impact.

For Civitas Resources, Colorado’s first carbon neutral energy producer, leadership saw an opportunity to do things differently, and have done so with their orphaned well project. The company’s Chairman, Ben Dell, announced that Civitas would plug dozens of wells that were abandoned by other operators in and around Colorado. By making a commitment to do the right thing, they are improving their environmental footprint and taking responsibility for mitigating their lasting effects.

Innovate to differentiate

Innovation is about pushing into new territories—and when done effectively—can support your efforts to differentiate from your competitors. This can help you improve processes and products, which can help you stand out in an oversaturated market.

A great example in the notoriously competitive retail industry, Bombas has been shaking up the athletic apparel industry with its premium-made, cost-conscious socks. Their “sell one-donate one” mission dictates that the company donates one item for every item sold to homeless organizations across North America.

To date, Bombas has made $100 million in profit and has donated 35 million pairs of socks to those in need. This has allowed the online retailer to compete against big industry players while also making a difference in people’s lives.

working towards a future - leading with innovation

Working towards a brighter future

For long-term organizational success, leading with innovation is vital. But it takes time, persistence and investment. When done well, it can help build trust and fuel ‘innovation thinking’ that is adopted further down the organization.

Innovation can also require increased working capital to keep up with manufacturing, inventory, payroll, R&D, operational expenses and to launch new strategic initiatives.

If you or your client have an opportunity to take a step towards innovation, but need additional cash flow, alternative funding such as invoice factoring can help. By turning open invoices into positive cash flow, you can continue innovating while being assured you’ll have the funds to meet the demands of the business.

Get in touch if you’d like to learn more about funding options as you take the next steps in your business growth.

 

UP NEXT: Discover how these companies are leading with innovative business practices.

facility management

A business owner’s guide to facility management

/en , /por

Do you have a strong facility management strategy? Is it being overlooked? Do you need to invest in updating your current one? This guide will help you get started.

facility management

Facility management, also known as facilities management (or FM) is all about the details regarding buildings, facilities, assets, and even how employees work within a space. However, for many business owners, CFOs, and business advisors, this critical component of operations is often overlooked.

This guide to facility management will help you understand the importance of having a strong facility management strategy, as well as provide tips for creating and updating your company’s.

The fundamentals of facility management

According to the International Facility Management Association (IFMA), facility management is “a profession that encompasses multiple disciplines to ensure functionality, comfort, safety, and efficiency of the built environment by integrating people, place, process, and technology.”

It encompasses all the systems, tools, and services needed to ensure the proper functionality, safety, and integrity of the built environment, including its infrastructure, surrounding grounds, and allied physical assets.

One of the unique aspects of  facility management is just how diverse and complex it is. FM typically encompasses everything from property management-related services, to risk management, cleaning, security and more. 

The sheer extent of the FM function can be seen in the diagram below:

FM management

Facility management is not only about assets and the physical or built environment. It’s also about the health, safety and productivity of employees and others within a given facility, be it a factory or commercial building.

The management of facilities is as much about the wellness and comfort of employees and occupants, and optimized space usage, as it is about the maintenance of heating and ventilation systems or landscaping of corporate gardens.

 

The importance of a management system focus in FM

Taking a management systems-based approach to your facility management strategy creates focus and a clear path forward. Since facility management can be multi-disciplinary and extend across an entire organization, it will typically interact with other systems in the company, such as finance, health and safety, logistics, or maintenance.

You may decide to formalize your facility management by aligning it to the international management system standard, ISO 41001, which was first introduced in 2018. It allows a company to benchmark its FM to an internationally-respected standard and, once audited by an external, ISO-accredited audit team, receive a formal certification.

FM management

Whether or not a company aligns to ISO 41001, a comprehensive management system will provide the formal structure needed to plan, implement, check and correct, and review facilities-related objectives and targets, action plans, policies, and procedures. 

Standard operating procedures (SOPs) should also be included as part of your company’s FM strategy. These management-mandated documents provide maintenance personnel with detailed instructions on how to perform specific (and often highly technical) maintenance tasks. These documents ensure that maintenance work is easily replicated, consistent, safe, and risk-appropriate.

Why invest in a facility management strategy?

So why is having a strong FM strategy important? Aside from strengthening operations, it can also have far reaching financial benefits. 

Here are the top reasons you should be investing in yours:

  1. Preserves the functionality and lifespan of physical assets, including buildings, machinery, equipment, and infrastructure
  2. Prevents malfunctions or breakdowns of physical assets and systems
  3. Allows management to attend to building-related and allied issues in a timely manner
  4. Allows for optimal, sustainable energy usage and utility management
  5. Optimizes the space usage and flexibility
  6. Ensures the health and safety of everyone within a facility
  7. Improves the productivity of employees in the workplace
  8. Facilitates the wellness and morale of employees
  9. Encourages smooth operations and processes
  10. Contributes to lower operating costs and can have a positive impact on your financial bottom line

Funding your facility management strategy

For many manufacturing and distribution companies, finding the funds to allocate to their FM strategy and execution can be challenging. When traditional funding options (bank loans and LOCs) are not available, an alternative is needed.

Invoice factoring can be an excellent way to leverage the power of your outstanding accounts receivables to access funding sooner.

 

Invoice Factoring guidebook

Learn the critical questions you should ask any invoice factoring provider in the Invoice Factoring Guidebook

Access the complete guide.

 

 

Facility management teams have a lot on their plates, as theirs is an ever-changing, complicated, and evolving world. Investment in proper FM strategic planning and execution can add significant business value for any business owner or CFO.

Do you (or your client) need access to accelerated cash flow to invest in your facility management strategy and execution?

Liquid Capital works with many manufacturing and distribution companies. Contact one of our Liquid Capital Principals to discuss how to accelerate funding for your business.