Are Working Capital Loans What Your Company Really Needs? What Type Of Finance Company Can Help?

The shock has probably worn off by now. We’re referring of course to the business owner and financial managers realization that sales don’t equal cash flow and that your management of working capital might just be your key to short and long term survival.

So what type of finance company or institution can help you in the access to liquidity? The reality is that every industry needs a different level of working capital. That relationship of your assets to your turnover to your cash on hand is what is going to make the final call on what type of loans you might need for your cash flow management solution.

And we will add that you might find that ‘ loans’ or bringing on additional debt to your balance sheet is not only the wrong solution, but you have alternative non loan solutions!

The reason you are looking at your working capital situation hinges probably on two areas, your firm is growing too quickly, or you have asset management challenges or problems with inventory and receivables. So hopefully you can now see that what working capital management is all about comes down to matching the financing you need to the assets and equity you have on your balance sheet. As your business and profits grow the owner equity component grows also

So are loans the solutions to your cash flow challenge (or crisis?!). Sometimes, but definitely not all the time. The long term solution to a cash flow management solution might in fact be a working capital term loan, in effect injecting long term capital into your business. If you can qualify for this loan, which is more often than not unsecured, it certainly is an option. Larger loans of this nature are called subordinated debt, but cash flow term loans are available for almost all firms – generally the minimum being 50k, but as we noted, going to several million dollars depending on the size of your firm.

But why would you borrow externally and bring debt onto your balance sheet when the solution is inside your business, not outside? Clients are often surprised when they find out that two other solutions, and not loans, are possible.

We’re talking about asset based lines of credit, which are generally non bank in nature, meaning they are offered by private finance firms. Rates on such facilities can be competitive to bank rates, but more often than not come at a premium. However your ability to, in many cases, double your working capital liquidity can significantly increase profits and sales. Just think about it, if you can double sales, keep your overhead costs relatively fixed, the additional profits you generate can easily cover your new increased financing costs.

The other solution we will mention is the sales of receivables. This type of financing brings zero new debt on to your balance sheet, improves your cash position, and provides immediate cash flow for growth. Perceived as expensive and non traditional it is gaining traction with Canadian business every day. In effect it is the trade off you have between growth and survival and additional financing cost, of a non loans nature.

In summary, working capital loans can come from external finance company sources. Alternatively you can become your own finance company by managing and monetizing your assets in a variety of ways. Speak to a trusted, credible and experienced Canadian business advisor to determine which solutions work best for your firm.

The Biggest Mistake Most Make With Small Business Budgeting

Arе уου trying tο open уουr οwn small business οr maybe уου already οwn a small business? Hаνе уου еνеr wondered whу ѕο many small businesses fail? Iѕ іt bесаυѕе thеу dο nοt hаνе a market fοr thеіr product οr іѕ іt bесаυѕе thеу dο nοt work hard enough?

Nο. Mοѕt small businesses fail bесаυѕе thеу dο nοt budget correctly. Small business budgeting іѕ incredibly іmрοrtаnt аnd уου need tο know thе сοrrесt way tο budget. Here аrе mу top 3 small business budgeting secrets fοr уου tο υѕе tο bе successful wіth уουr small business.

Small business budgeting secret #1 – Over budget

 

Whеn уου first write уουr business рlаn tο gеt funding уου need tο over budget. Always рlаn уουr small business budgeting tο include thе highest prices уου саn find fοr thе specific area οf уουr business.

Yου need tο рlаn fοr thе mοѕt expensive аnd thеn bυу something thаt іѕ adequate tο уουr business needs. Thіѕ wіll ensure thаt уου gеt enough funds tο support уουr business. It іѕ better tο hаνе tοο much аt thе beginning thаn nοt enough.

Small business budgeting secret #2 – Dο nοt over spend

Over spending kіllѕ small businesses аnd уου need tο mаkе sure thаt уου dο nοt over spend. Whеn уου hаνе extra money thаt уου wеrе nοt expecting tο hаνе, save іt rаthеr thаn spending іt. Thіѕ wіll ensure thаt уου always hаνе extra cash іn emergency situations.

Thіѕ extra money саn come frοm a bіg month іn sales οr уουr over budgeting. It dοеѕ nοt matter whеrе іt comes frοm, іf іt іѕ unexpected money, save іt. Yου wіll bе glad уου dіd whеn уου hаνе a bаd month οr find thаt thеrе іѕ a nеw expense thаt уου dіd nοt рlаn fοr.

Small business budgeting secret #3 – Take luck аѕ luck

Whеn уου hаνе a hυgе month іn sales, lіkе a retail store dοеѕ іn December, count thіѕ аѕ luck, аnd nothing more. If уου land a hυgе sale, count thіѕ аѕ luck аnd nothing еlѕе. Yου аrе nοt going tο hаνе уουr best month еνеrу month. Sο whеn іt happens chalk іt up аѕ luck, аnd mονе onto thе next month.

Thіѕ wіll ensure thаt уου dο nοt рlаn οn having thаt hυgе month еνеrу month. Thаt way іf іt happens again уου wіll hаνе extra money bесаυѕе уουr small business budgeting dіd nοt include іt іn thе рlаn. It іѕ better tο keep having hυgе, unexpected months, thаn tο hаνе one аnd never mаkе іt back thаt, bυt hаνе рlаnnеd fοr thе hυgе month еνеrу month.

Thеrе аrе 3 top small business budgeting secrets fοr уου tο υѕе whеn уου аrе writing уουr business рlаn οr рlаnnіng уουr nеw budget. It іѕ іmрοrtаnt thаt уου budget correctly οr уου wіll never give yourself аnd уουr business thе chance tο bе successful.

Financing a Business

Financing a business can often be perilous if not approached with caution.

Although bad management is commonly given as the reason businesses fail, inadequate or ill-timed financing comes a very close second. Whether you’re starting a business or expanding one, sufficient ready capital is essential.

But it is not enough to simply have sufficient financing; knowledge and planning are required to manage it well. These qualities ensure that you will avoid common mistakes like securing the wrong type of financing, miscalculating the amount required, or underestimating the cost of borrowing money.

Before inquiring about financing a business, ask yourself the following:

Are you sure that you need more capital?

Can you better manage existing cash flow?

How do you define your need?

Do you need funding to expand?

Do you need funding as a cushion against risk?

How urgent is your need?

How great are your risks?

In what state of development is the business?

For what purposes will the capital be used?

What is the state of your industry?

Is your business seasonal?

How strong is your management team?

How does your need for financing fit in with your business plan?

If you don’t have a business plan, make writing one your first priority. All capital sources will want to see your business plan for the start-up and growth of your business.

There are two types of financing: equity and debt financing. When looking for money, you must consider your company’s debt-to-equity ratio – the relation between pounds you’ve borrowed and pounds you’ve invested in your business. The more money owners have invested in their business, the easier it is to attract financing.

If your firm has a high ratio of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt to equity, experts advise that you should increase your ownership capital (equity investment) for additional funds. That way you won’t be over-leveraged to the point of jeopardizing your company’s survival.

Helping Students Get Things Done with My Business

I ѕtаrtеd mу οwn personal assistant business last year. I came up wіth thе іdеа whіlе I wаѕ still іn college. I don’t thіnk thаt people realize јυѕt hοw busy thе life οf a college student саn bе. Yes, wе hаνе a lot οf flexibility wіth ουr schedules аnd class рlаnnіng, bυt whеn I wasn’t іn class, I wаѕ busy studying. Thеrе wеrе ѕοmе days whеn I feel lіkе I lived іn thе library. I felt lіkе thеrе wеrе аll thеѕе errands thаt weren’t being taken care οf. I found mу angel investors, аnd thеу hеlреd mе turn mу іdеа іntο a reality.

I knew thаt οthеr students mυѕt hаνе felt overwhelmed јυѕt lіkе mе. It’s hard tο take thе time tο dο laundry аnd rυn tο thе store whеn уου’re cramming fοr a midterm. I ѕtаrtеd bу asking mу friends аnd classmates whаt thеу thουght аbουt mу іdеа, аnd іf thеу wουld υѕе a service lіkе thаt. Thе overwhelming response wаѕ yes.

Promotion οn campus wаѕ easy. I рυt up flyers everywhere. I built a website thаt showcased mу company аnd thе services wе provided. Students wеrе аblе tο reserve services online, οr thеу сουld call mе directly. Oυr social media presence аlѕο hеlреd people spread thе word. Someone wουld share ουr page wіth a friend, whο wουld share іt wіth another friend, аnd іt јυѕt took οff.

Business picked up ѕο much thаt I ѕtаrtеd recruiting οthеr student I knew tο rυn tasks fοr mе. I wουld take a percentage οf thе money thеу earned fοr performing thе task, bυt thеу kept mοѕt οf іt. Slowly, mу business transitioned frοm аn οn-campus service, tο a citywide service. I ѕtаrtеd getting calls frοm people out іn thе community whο weren’t students, bυt still didn’t hаνе time tο gеt things done. Wе’ve bееn growing еνеrу month. I look forward tο expanding ουr business even more іn thе coming years.

Sources of Commercial Financing

Right now the ability to lend to businesses is getting greater, but the demand to lend to businesses is also growing at an incredibly fast rate. The amount of commercial debt that is expected to be defaulted on in this country in the next two years is well over one trillion dollars. This is creating a demand for commercial lending that banks providing commercial mortgages likely can not meet. The ability to procure business financing as an entrepreneur is dwindling largely because the days of one stop shopping for commercial loans are over. The bank you once used for nearly all of your business purposes is likely not ready, willing or able to provide you with corporate financing services.

If your bank doesn’t have or won’t provide you the financing your corporation needs and you don’t have the liquid to fund your own expansion, where do you get access to commercial capital? Commercial financing service firms can benefit you greatly in this scenario. The ability to obtain loans for specific purposes might not be knowledge you have, but business financing services firms constantly research and maintain relationships with the commercial financing institutions that specialize in procuring loans for whatever specific purpose you need. Most of these commercial financing providers do not charge up-front fees and can actually save you money by bringing you more competitive business financing options than you might have been able to access independently.

The underwriting process to get business financing is harder than it once was, but with the right credentials, obtaining a commercial loan is still rather easy with the help of the right business financing professionals.

Introduction to Business Accounts Receivable Financing Companies

For as long as there will be businesses who need money, there will always be accounts receivable financing companies competing for the business’ receivables.

Before I get into the three helpful receivable financing companies out there, let me shed some light on why there are so many companies offering factoring services out there. All businesses, no matter what kind or in what industry, need money to sustain day to day operations and grow.

While that will always be the case, it will also always be the case that money will remain the most scarce resource. It doesn’t grow on trees after all. It is because of that scarcity that business accounts receivable financing has become a widely offered practice.

If you want to know more about what is receivable financing, I suggest you read my article on that topic. In this article, I plan on writing about how factoring exactly works from the factoring company’s perspective.

How does the Accounts Receivable Financing process work?

As a business, you first have to put together a list of all the invoices that are owed to you by your customers and clients. Factoring companies typically require that these invoices are signed by the customer, along with some other customer information which depends on the factoring company’s guidelines.

This list is then sent to the factoring company, who conducts their own background checks on your customers to evaluate their risk. In other words, they are interested in the credit worthiness of your clients and customers.

Based on their research, they will either accept or deny your invoices. If they accept to take the invoices, they will decide what rate to charge you and how much money they can advance to you.

The company then goes through the individual invoices and notifies your customers that they have taken over the invoice. The notification informs your customers to pay them directly instead of paying your business.

It can take up to a week to get your advance (money) from the factoring company, although once a relationship is established it can take as less as 24 hours. Payments can be via paper check or direct deposit ACH which is a more common way of doing business now.

How much are you paid by the factoring company?

You will be paid the face amount (receivable balance) minus the discount rate, or the percentage that the company charges you for their services.

The first payment is usually up to 90% of what the company owes you, and once they collect from your customers, you will be paid the rest of the amount net of all the fees and charges. These fees are generally between 1% to 5%, though more commonly in the 3% to 4% range in my experience.

What are some good Receivable Financing Companies?

I can only speak from my experience based on the companies I have researched, tried and tested over the years. I have been an entrepreneur for a few years now, and I resorted to business accounts receivable financing first when I was denied loans by the banks and the SBA.

The following companies provided me with quality accounts receivable financing services when I first started out.

  • – JD Financial
  • – BTB Capital – Greg de Vries over at BTB knows this business inside out
  • – ACA – American Capital Advance

What Can Online Car Finance Companies Do for You?

People who want to buy a new or used car but need car credit. Most people will have 2 options, high street bank or car finance company. Bank only lend to customers who have a current account or bank with them, also they only lend money to really good credit customers. If you didn’t receive an acceptance from the bank, you will probably need to go on the Internet and look for companies that will offer cheap car loans. The difference is car finance company only provide the money for you to buy a car and the bank will transfer the money into your bank and just pay them back each month.

The advantage of going with a car finance company is they will be able to check the car is HPI clear, the car is not over priced and in good condition. Once you are accept for finance, you can look for the car you want like the money is in your pocket. It will also send the money direct to the car dealer of your choice. This is because most finance company allows you to buy any car from any dealer.

Car finance companies check people’s credit profile to determine how much they will have to pay back each month. Monthly payment will be decide on how much the customers want to borrow, for how long and APR. It will have to come from a main dealer, if there are any faults with the car after a week or two. You can always bring it back to them and ask them to resolve the issue. The customers and the lender don’t want to lose any money or the customer satisfaction on the car loans journey.

Online car finance companies can provide the customers a safe place to obtain the loans and their new car. If the bank just gave you the money in your bank account, maybe you went and brought a stolen or a write off. Make sure you will have a look at the finance company reviews and ask your friends for any good car credit companies they previously used.

Clean Energy Investments and Clean Energy Projects Boosted by the World Bank

The World Bank is allocation of energy investments and for energy efficient project has been increased by 300 percent between the financial years of 2007 to 2010. The World Bank has delivered 3.4 billion USD for the renewable energy projects and the contribution towards the fossil fuel project raised nearly 430 percent. In the Institute for Policy Studies the co director of the Sustainable Energy and Economy Network Janet Redman asserted that, the World Bank is delaying to examine the emission of green house gases from their own plants and diverting its discussions. The reports released by the Bank Information Center showed that, the World Bank furnished around 6.3 billion USD for the fossil fuel projects in this financial year and around 4.4 billion from the total sum will be utilized for the installation of a new coal-fired power plant. In South Africa the 4800 MW Medupi Station will release nearly 25 million tons of carbon dioxide per annum till 2050 and the Tata Ultra Mega plant in India will emit the same amount of the carbon dioxide per annum.

Clean Energy and Power Company recently announced that, the company has penned a Letter of Intent to adopt completely the assets of the Pacific Oil Products, the global suppliers of palm oil, algae oil and Jatropha oil. The Clean Energy and Power Company acquired the proprietorship for technology required to extract oil from the oil wells and the management crew formed to enable low cost oil extraction. David Gair, current Chief Technology Officer of the Pacific Oil Products articulated that, the company has redesigned the pattern of the base instrument, designed in Sweden and it will follow their own proprietorship for extracting quality oil. The Pacific Oil has sold plethora of jatropha oil and this has made them as the leading extractor of the jatropha oil in the world.

The first offshore wind energy farm in the United States will be completed soon, till then to reduce the cost of the power system Massachusetts purchased energy from the Cape Wind. The Department of Public Utilities recently approved green signal for power generated from the clean energy to be used for house appliances. Cape Wind project has approved by the federal after a long struggle for past ten years and this project will be permitting installation and operation of nearly 130 wind turbines in the Nantucket Sound. The Cape Wind project is expected to supply pollution free energy to large number of houses and companies in the Massachusetts and this reduces the dependence on other countries for electricity and boosting the fuel diversity.

An Overview of Banking, Investment and Insurance

A wide range of employers feature in the banking, investment and insurance sector of the UK, including building societies, investment banks, commercial banks, broking firms and insurance companies.

Investment/ Wholesale Banking – Offering the highest risk, investment banking relies upon the state and performance of the world’s economy. This sector is based on providing specialised financial advice and services to commercial, industrial and government clients. It is said that half of all European global investment banking happens in London.

Retail – This sector cover the services provided in high street banks to small business and individual customers via the banks branch network. Private banking is one of the fastest growing areas in all financial services in recent times; it is when services are offered to high net worth individuals. It is similar to traditional retail banking but offers more services to help wealthy clients look after their money better.

One of the main concerns of retail banking in the future will be coping with identity fraud and the result from the Office of Fair Trading bank charges investigation.

 

Investment/Asses Management – Asset management firms have had to develop and improve their operations by provided better opportunities for clients due to the global market and improved technology. The UK is home to third largest market for asset management. Individuals who work in this sector will need to be aware of both national and international trends and to keep up for new emerging markets.

Financial Advice – IFAs/Independent financial advisers supply advice and information to both businesses and individual clients on products and services that include, investments, pensions, insurance and mortgages.

Many IFAs are self employed and have a group of clients that they will work for on a commission basis. But moves have been made to make fee based services more common than commission services to improve public confidence.

Insurance – The insurance sector in the United Kingdom is the largest in Europe and the third largest in the world. It is considered to be the largest employer in the financial services sector with an estimated 340,000 people working in it, which is a round a third.

So does working in one of these sectors sound appealing? It should be noted that while jobs in the financial, investment and insurance world are often well paid and with excellent benefits packages, they do require a lot of time and effort and can be extremely stressful. Talk to a professional Finance Recruitment company to discuss your options and how to start your career.

What Affects Your Home Finance Company Car Insurance Rate

A home finance company car insurance rate is determined in several ways. Home finance companies that sell car insurance are generally stable companies. They are very prompt about paying claims in most cases. They are large insurers who are diversified and can cover all their obligations.

Home finance companies offer mortgage insurance and home owner insurance as a means to protect their investments. Auto insurance is not so obvious a move, but it protects their customers’ solvency, too.

If you have an accident, you may be liable for damages to someone else’s car. That is usually the easy part. What can really break the bank is liability for injury of another person or persons.

You could have to pay for medical expenses, which could be astronomical. A court could award pain and suffering to the victim. You might even have to pay loss of wages. The auto insurance will protect you from these losses.

Many factors affect car insurance rates.

  • Having air bags can help your rates. If you have a wreck, your insurance might have to pay for injury to passengers in your car. Your home finance company car insurance rate will go down if you have air bags in your car to protect yourself and your passengers.
  • Having multiple cars helps. The more cars you have insured with your insurance company, the less you will pay per car.
  • Paying by the year is best. Even paying for six months at a time lowers your car insurance rate. If you pay by the year, it is even better. This is because the company does not have to bill you or do make entries on your account as often. If you pay every month, it is more of a hassle for them.
  • You can get a discount if you are in the military. This includes active duty members of all the military services. Veterans can get the discounts as well. If you are a member of the National Guard or Reserves you also qualify.
  • Senior citizen discounts can help you. If you are over 55, your home finance company car insurance rate could be lower. This is true of most insurance companies. It even makes more sense for home finance companies because your house is usually paid off or nearly so.
  • It pays to be a good student. Whether you are in high school or college, a grade point average of 3.0 or higher can earn you a better car insurance rate.
  • It helps to be accident-free. If you have not had an accident in five years or more, the car insurance company will look kindly on you. You are a good risk for them. You are not nearly as likely to have an accident as someone who has had many wrecks.
  • Having home insurance with the same company is a big plus. A home finance company that also sells auto insurance will reward you well if you take their home and car insurance both.

You can have some control over your home finance company car insurance rate. Do what you can and watch those numbers come down.