Factoring - An Old Idea for Modern Times

“It’s what you learn after you know it all that counts.” – John Wooden, Legendary College Basketball Coach

Factoring receivables is one of those old ideas that has enjoyed new life in this ever-changing and unpredictable economy. A long time ago, there was a bit if a stigma associated with factoring. Only those companies who couldn’t get financing any other way would consider factoring their receivables.

These days, factoring is a wonderful option for a broad spectrum of companies who need creative ways to bridge their cash flow gaps.

Receivables factoring allows companies to get cash right away for their invoiced work. The factoring company fronts the money and waits to get paid by the customer. In exchange, the factor will charge a fee and hold some percentage of the receivable until the amount is paid.

For startup companies, this is a great way to speed up cash flow, especially if you don’t have the ability to get the credit you need from a bank. The factor bases its arrangement on the creditworthiness of your customer, not on your company. So if you’ve hit a snag in your cash flow and the banks won’t help, factoring may be for you.

Factoring is also a good option for seasonal business who do large orders only a few times a year. They can smooth out the cash flow cycle by factoring those receivables that create large spikes in their revenue stream.

Different factors have different requirements, and it’s important to ask a lot of questions before you choose a factoring company. A non-recourse factor will assume the liability if your customer doesn’t pay due to financial reasons, and they will not charge you back for unpaid receivables because they carry insurance on those invoices. Some factors allow you to pick and choose which invoices you want to factor. Fees and advance percentages vary across the board, so be sure to do some homework.

Finally, consider the intangibles when you analyze the cost of using a factor. If they collect on your receivables for you, you can virtually eliminate a lot of your back office receivables function. You also do away with bad debts on your balance sheet. And most factor fees are deductible as a business expense.

To learn more about factoring and to get some advice on whether or not it’s right for you, I suggest you contact Cheryl O’Neill at Amerifactors. Find out if factoring is a winning strategy for your business.

Are you ready to win?

The Science of Luck

“I’m a great believer in luck, and I find the harder I work, the more I have of it.” – Thomas Jefferson

Nothing is more depressing that putting a lot of effort into something that does not yield results. Quite often, the sales game seems like a futile practice – people don’t answer your calls, don’t show up for appointments, and don’t buy. When we’ve done our homework, our groundwork and scheduled the time to consistently make sales – when we’ve done everything right and we’re still not selling, that’s a lonely place to be.

It’s easy to say “It’s not working, so why bother?”, or “It’s the economy.” We’re tempted to give up, or tempted to blame our lack of success on circumstances beyond our control. We’re especially prone to looking at people who are selling and saying, “They have all the luck.”

Some people may be inherently lucky, but chances are they ascribe to the ancient proverb that “Luck is where opportunity meets preparation.” My boss reminded me of this recently when I made a sale based on a good referral from a colleague. I felt like I didn’t deserve the credit; she had pre-qualified the prospect and told them I would be a good fit as their coach. All I had to do was put the bow on the package – she had already wrapped it for me.

While I’m always happy to make a sale, I felt a twinge of guilt at having this one come so easily. I felt I hadn’t earned it. My boss reminded me that I had indeed been hard at work on all the sale and marketing activities that go into being ready to capitalize on opportunities. I made the sale due to my preparation and being ready when the deal came along.

The key is constant, diligent preparation. Keep scheduling sales into your calendar. Stay on top of your marketing and stay in the game. Maintain an optimistic attitude and always be on the lookout for a good opportunity. Sales may come from places you don’t expect, but constant practice and an open mind will definitely yield results. Winners practice their skills every day. Come game time they can make the clutch plays that edge the competition. It may look like luck, but it’s a direct result of the unseen hours of preparation that will seal the deal every time.

Are you ready to win?