Ask any business owner; what is the single most essential component of a successful company, most would say adequate cash flow.   How do most companies shipping goods and services on terms access working capital to improve cash flow? They almost always use some type of account receivable financing. 

There are several ways to secure funding, however small business lines of credit are most popular method financing when using a traditional banks.   Unfortunately in today’s difficult business climate banks are not lending, and when they are credit standards are much more restrictive. Businesses successful in establishing a small business credit line will have to pledge collateral, assets, such as accounts receivables, inventory, equipment, and fixtures to get financed.

In general, covenants come in two flavors: affirmative and negative covenants.

Affirmative covenants require a borrower to meet certain standards such as discharging contractual obligations and reporting information at regular intervals. Affirmative covenants usually require the borrower to pay the bank interest and fees, maintain its business, pay taxes, and so forth.

Negative covenants restrict the borrower from spending more than a specified amount on capital expenditures, increasing dividend payments, and they stipulate specific financial variables must satisfy certain minimums.

Covenants are being checked more frequently in today’s market place and many customers are finding themselves out of compliance with their banks.

Businesses finding themselves in this situation can look to Asset Based Lenders and/or Invoice Factoring companies as an alternate form of account receivable financing.

Asset Based Lenders will set up a very similar funding arrangement as your traditional bank with one exception, banks lend money and asset based lenders do not. The tag line is deceiving, however an asset based lender will purchase a companies invoices out right. They will advance funds against the purchased invoices, and typical initial advance rates are 80%.   In addition, due to the size of the funding arrangements they will ask for additional collateral, such as inventory, equipment and fixtures.

Asset based credit lines look and feel very much like a small business credit line provide by a traditional bank with a few exceptions. First, asset based lenders require much more reporting and will require a remittance report for each and every advance. Second, the interest rate charge on the outstanding advance rate will be a few points more that a commercial bank line. Third, customers must remit payment to the asset based lenders lock box, and finally if sales slow your access to working capital slows. 

The reason for this, the factor has already advanced on the company’s invoices, and as payments come in they will be used to pay down the outstanding balance. 

The third type of account receivable financing is invoice factoring. This is the oldest form of financing and over many years has assisted small and mid-sized business to grow. Companies offering extended credit terms and wanting to grow will sometimes run into cash flow problems. They have too much money out on the streets and not enough in their bank accounts to pay suppliers, payroll, taxes and alike. 

Invoice factors will step in and purchase a companies invoices at a small discount and provide immediate cash so the above expenses can be paid immediately. 

Whether you elect to use a traditional bank, an asset based lender, or an invoice factoring company, businesses acquiring adequate account receivable financing will find managing cash flow much easier.

By: Darren Grady

For beginners, the first step in growing your new business is to find the customers. For those of you who are already up and running, the next step (now that you have clients) is that you must continue to generate new business every month, even if you have dozens of clients and no time for marketing! Why? Because there might come a day when the clients are not there, a VERY lean month when the phone doesn’t ring. This is not the time to begin marketing; the time to market is now.

Here are some cost-effective tips on where to find clients. Please note that not every tip will work for everyone. It really depends on both the type of service you have and who you are marketing to. Persistence is the key here! Don’t give up after only one or two tries because it might take more. Remember that you are selling an intangible service that everyone needs, but none of them think that they need it, so it is up to you to convince them of its value — and this takes time.

1) E-mail signature – most email software programs allow you to put an automatic signature at the bottom of your emails. You know . those few lines of contact information at the bottom of an email. People love it when you make information easy to find. In fact, e-mail is such a part of our lives now, that most people are more likely to grab your phone number off your latest e-mail than to dig up your business card. So what should go on your sig file? Your name, title, company name and your company tagline. You should also include your address, phone, cell phone, fax number, e-mail address and your Website address. Now, also consider putting promotional info in your sig file, such as an offer for a free report or product, a free consultation or trial offer, company announcement (new client, new product, award won, etc.), a hyperlink to your latest press release, article, or Web site feature or an invitation to subscribe to your free e-newsletter.

2) Include a return envelope — If you’d really like a response from a personal letter, include a return envelope in it with a live stamp on it. It will increase your response or it’ll drive them nuts.

3) Post advertising circulars on all the free bulletin boards in your area, especially the coin-operated laundries, grocery stores, and beauty and barber shops.

4) Always acknowledge when something nice is done for you with a thank you letter. No, a call is not the same.

5) Write articles for magazines and newspapers. Each time your articles are published, you gain credibility and visibility.

6) Develop a “small town” marketing approach . Send out congratulatory notes for weddings, graduations, and birthdays.

7) Stand-by space — many publications will give you a contract for “stand-by” space. In this arrangement you send them your ad, and they hold it until they have unsold space, and then at a price that’s always one third or less than the regular price for the space you need, insert your ad. Along these lines, be sure to check in with the suburban and neighborhood newspapers.

Headlines — Use headlines on your website, brochure and sales kit. Talk about how customers will benefit from your services, not simply a list about what services your business offers. An excellent way to get attention is to boldly give the 5 or 6 key benefits of your product or service. Put the biggest benefit on top and list off the rest in descending order of importance. The best formula for creating headlines in marketing is “New product offers benefit, benefit, benefit.” Use this to create the headline of your press releases and advertisements, for envelope teaser copy, and for the beginning lead of your brochure. For example: How Would You Like To Get: Biggest benefit, Second biggest, Third biggest benefit. You get the idea.

9) Become a guest on as many of the radio and television talk shows or interview type programs as possible. Actually, this is much easier to bring about than most people realize. Write a letter to the producer of these programs, then follow up with an in-person visit or telephone call. Your initial contact should emphasize that your product or service would be of interest to the listeners or viewers of the program — perhaps even saving them time or money.

10) Provide GREAT customer service — this is the key to your success. If you tell people that you are going to give them more time, then you must take it one step further and value their time. Return ALL telephone calls and emails in 24 hours or less. This one thing has done more to grow Triangle Concierge than anything else we’ve done. Our reputation for fantastic customer service has given us more referrals than anything else.

11) Proof – nobody wants to be a fool, or get robbed. Before buying anything, everyone wants to know if the money they’re paying is worth the product or not? In this case, the proof is in the testimonials from your clients. Nothing works better than word of mouth because people want to know how the other person has benefited from your product.

12) Have no doubts! Want to know the secret of growing your business? The REAL secret? Change your words. I’m serious, change your words and you will change your life. Don’t listen to the negative people who are telling you that your business will fail in today’s economy. Turn your back on people who tell you that perhaps you should consider a 9 to 5 job. KNOW that can do this! Have no doubts about it and turn your thoughts to “I am going to succeed!” and “I can do this.”

By: Katharine Giovanni

The concept of loaning money is as old as civilization itself. Even though there have been some technological advances; things haven’t really changes that much in all these years. In order to borrow money, we still need to have a good credit history and/or a sizable amount of equity to be used for collateral.

The traditional method of loaning money puts a lot of merchants at a disadvantage. What happens to those that have either had credit problems or don’t have enough collateral? Is this really a case in which the strong survive without even giving the little guy a chance?

Thankfully for many, there is a method of getting funded without the need for collateral and without the need for good credit. That method is called a business cash advance (also referred to as a merchant loan). Not only is it much more accessible; it is much faster and easier than traditional lending as well.

What sets this type of funding apart from traditional methods is the manner in which they are approved and processed. Rather than relying on your good credit or the amount of collateral you have; they look at your credit card sales history to determine your projected sales and then advance you money based upon those projections.

Paying it back is unique as well. Because they are advancing you money based upon your credit card sales; you pay it back by using a small percentage of your Visa/MasterCard sales. They don’t touch your AMEX sales or your cash sales. And because a percentage is used; you end up paying back less when business slows down. This relieves a lot of the stress associated with paying back your business loan.

Getting working capital for your business has finally caught up to the 21’st century. Use the following link to see how a BUSINESS CASH ADVANCE can help your small business.

By: Christopher Ronk