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  • newbieIn many points in our lives, we’ll start as novices. It’s not a surprise since no one’s really born a master of anything. We all begin somewhere and most often than not we start from the bottom or from scratch as others would put it. There’s completely nothing wrong with that. So what if you’re a newbie? That’s not an issue. Besides, we’re here to introduce to you the world of single invoice factoring and why it might just be the lifesaver you’ve been looking for.

    As its name suggests, it is a type of financing medium that draws cash from a sales invoice or more specifically a single receivable. It is one of the many types of receivables finance that allows for immediate funds even in as fast as twenty four hours. So how exactly does it work?

    It begins with the company choosing an invoice from which to draw the said funds from. It’s value shall be advanced prior to its maturity and therefore before the customer even starts to send in their payment. Cash is then received thus hastening the collection and cutting down the waiting period. The transaction creates a shift in burden. The right to collect and therefore the responsibility towards it shall now be borne by the financing institution. As for the company, it gets to use the resources in whichever way it pleases. Of course, this service comes with a fee as is with most things.

    The reason why it works and why more and more entrepreneurs and business entities have come to use it is because it bears numerous benefits. For one, single invoice factoring is no loan so it’s without interest or collateral. It’s a single or onetime transaction too and involves no lengthy contracts. This means that in terms of fees, costs are minimal. Moreover it can be furnished in as fast as a day’s time which is unheard of in any other financing medium in the market.

    Additionally, single invoice factoring hastens collections which helps in terms of improving financial liquidity and strengthening working capital. It’s also the prefect choice when in need of immediate resources for an emergency or pressing situation.

    Of course, the quality of the receivable is crucial when opting for single invoice finance which is why businesses should make it a point to screen customers to whom credit is extended and that receivables management is upheld thoroughly and throughout.

  • spot factoring creditIn business, alternatives can either make or break you. It’s nice to have them because it allows entrepreneurs to weigh down which would best fit their needs but at the same time it can also be a trigger that sets things ablaze with others failing to acknowledge the option that bests suits their case. That said, we decided to put spot factoring and traditional credit, two very popular options in the financing world, side by side. Let’s get to know how similar or different they are and which situations best call for them.

    DEFINITION

    Spot Factoring – It is a type of financing that involves the use of a particularly chosen sales invoice from which immediate cash is to be derived from. Its value shall be advanced prior to its maturity in exchange for the right to collect against it.

    Traditional Credit – This refers to bank loans, mortgages and similar other arrangements where a certain sum is granted by a financial institution like a bank on the premise that it shall be repaid with interest on or before a pre-agreed time period and shall be secured by a collateral such as real estate properties, corporate and/or personally owned.

    APPLICATION

    Spot Factoring – What makes it a favorite option among businesses lie in its ease of application. There are far lesser requirements to submit given that providers bank not on the company’s creditworthiness but that on the customer to whom the invoice is attached to instead.

    Traditional Credit – Because the risks for the providers are higher, creditworthiness of the business is a huge factor to be considered making requirements and application long and tedious. Things like financial statements, credit score and history shall be taken into account.

    TIME

    Spot Factoring – The application process is so fast that it almost happens instantaneously. Several providers can release cash within a day’s time which is why spot factoring and other receivables financing methods are widely used for cases that cal for immediate cash flows.

    Traditional Credit – Since we’re talking about bigger digits and higher risks, bank loans and mortgages can take as much as several weeks to months before an approval is garnered. Moreover, providers may prove to be particularly strict and picky which is why many borrowers often end up declined.

    But at the end of the day, choosing between spot factoring and traditional credit depends on one’s needs. Just remember that although these two both provide cash, they differ in a number of ways for instance the former is no liability (no collateral and no interest) while the latter is.

  • export-overdraftMany things in business seem to be exclusive. Exportation for instance is believed to be applicable only to established entities but that shouldn’t be the case. Even small to medium scale enterprises, startups and businesses in recovery can do so too with the help of this thing we call an export overdraft.

    So how does this financing medium work? What perks will we enjoy if we choose to use it? Read on and discover the answers to these questions.

    First of all, it hastens collections. Since majority, if not all, importers opt to buy on credit and defer payment until goods have been received or resold, this creates receivables. Despite being assets, the longer they remain uncollected the higher the threats to liquidity. This also keeps the cash locked in and unavailable for use until the invoice matures and is paid up. Because an export overdraft provides an advance of the value of such export sales on credit prior to their maturity, collection is hastened and done almost instantaneously.

    For the same reason, liquidity is improved, cash inflows are better and working capital is strengthened. This brings us to our next point.

    It fosters continuity. With cash and liquid assets at a steady or increasing level, the business gets to have adequate resources for its regular operations and even for its other endeavors. Furthermore, this gives the entity a chance to reinvest in itself and even grow its export ventures.

    Third, an export overdraft helps cut down administrative work and costs. Apart from the advance received, the responsibility of collection is passed on to the financing institution or provider. This saves both time and money as foreign trade no doubt will demand added labor and expenditures for the added market.

    They even take care of documentary and legal matters. Business owners need no longer worry about the meticulous documentation or about the set of rules and regulations, tariffs, duties and taxes and other legislative restrictions of each foreign market they wish to export to.

    Last and definitely not the least, an export overdraft helps reduce if not eliminate financial risks. Exporting and trading internationally comes with risks. It’s not all honey and roses. It comes with a price and one has to face threats. For instance, we have currency, interest rate and credit risks that pose threats to profitability and returns. By using the said financing medium, companies get to avoid their deadly grip.

    workingcapitalpartners.com

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  • ZerodebtEven the slightest hint on the topic of “business financing” can lead anyone to an immediate episode of anxiety and dread. It’s no secret that money matters can be complex, challenging and an absolute sore. They’re hard to come by and very sensitive in terms of spending and management. One wrong move and one’s beloved business goes down the drain. But this should not always be the case. Lucky for us, some alternatives were born out of need. Such was the case for spot factoring.

    Today, discover why this method might just change the way you see business financing.

    1. Zero Debt – Surprise! This method is no loan. In fact, it’s not a type of debt and does not fall under the liability category. In other words, it comes free of interests and collateral. Spot factoring is rather an asset transaction that allows businesses to derive cash out of a specific sales invoice thereby ultimately advancing its value prior to its maturity and collection.
    2. Quickie – Unlike other financing methods, it’s pretty fast. Businesses need not wait for weeks or months to complete the application process, get an approval and have cash released. Spot factoring can be arranged within a day’s time (the fastest possible) and we’re not even kidding.
    3. Free for All – Majority of funding methods available in the market are exclusive. They’re limited to more established entities with adequate capital and sterling credit score. This method begs to differ. It can be used by everyone from startups to small and mediums scale enterprises to conglomerates and even to recovering entities. The secret lies in the fact that the provider banks not on the company’s creditworthiness but rather on that of the buyer to whom the invoice is attached to.
    4. Cash Flow – Because of its “advancing” nature, there is a quick injection of cash into the system. This paves the way for better liquidity, increased cash that is readily available and a stronger working capital.
    5. Onetime Deal – As the name suggests, spot factoring is a onetime transaction. This is also the reason why it is likewise known as single or selective factoring. It does not involve lengthy contracts and only requires a onetime fee, a value agreed upon by all parties and can be anywhere from 5% or less of the invoice’s total value. Moreover, businesses can choose which receivable to use and when allowing for full liberty and flexibility.
  • exporttradeAsk any entrepreneur this: Do you want to go global? Chances are they will scream yes in unison. The lure of international trade is too good to resist and why not? It offers so many opportunities and with a bigger market, a lot of potential is within reach. Plus, risk diversification can better be addressed. This is also the reason why export finance has become a go-to tool among dreamers.

    You see, exporting isn’t as easy as it sounds. Sure, the benefits seem endless and abundant but it also comes with challenges and not to mention financial hiccups. For instance, bringing one’s brand to a new country means having to look into that territory’s market potential. It also means fine-tuning the products to best fit the culture and taste of the people. Let’s not forget about marketing either. It takes a lot to introduce a new offering. All of these require funds. Immediate cash.

    There’s also the challenge of keeping cash flows at a healthy level. Majority if not all importers choose to defer their payment. They’d often wait until the goods are fully delivered or until they have been sold. This creates a slowdown in terms of collection thereby trapping cash within export sales invoices. Over time and when in bulk, this can pose threats to liquidity and cash levels.

    Add to this list the challenge of collection. Apart from the time lag, exporters will have to dedicate a new team to cater to the specific region it targets to penetrate. Administrative costs will have to increase as it will entail more labor hours and matching assets and equipment for said duties.

    And how can we forget about documentation requirements and the financial risks. Exporting comes with meticulous paper trail and not to mention legal requirements which are country specific. It also opens up credit, foreign exchange and interest rate risks which can prove to be very costly.

    The good thing is export finance helps address all of these concerns. It allows business entities that wish to trade globally to advance the value of their export sales invoices and therefore receive cash prior to maturity. This reduces if not eliminates liquidity issues, cash flow dilemmas and financial risks. It likewise provides immediate cash accessible for urgent use. Moreover, the provider shall assume the collection function and with it the labor, documentation and legal work, country-specific requirements, equipment and expertise needed to fulfill such tasks.

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  • single-invoice-factoringSingle invoice factoring is one of the many methods that allow companies to draw additional cash and capital. It works by advancing the value of receivables prior to their maturity and therefore collection.

    It is deemed popular especially for immediate use and where cash is needed within a short amount of time. It is likewise chosen for its zero debt and no collateral requirements.

    But to truly benefit from single invoice factoring, one has to have a firm grasp about its proper use. That said, here are some do’s and don’ts to help one get by.

    THE DO’s

    • Understand that there are two types to it. Yes and they are factoring and discounting. The two offers the same benefits but they differ by a thin line. Factoring is selling the rights to collect against the invoice while discounting uses them as a form of security, both in exchange for an advance of its value. The former transfers the collection burden to the provider while in the latter, the company retains it.
    • Know your receivables. One has to choose the invoice to use. After all, this is a single or spot procedure that only involves one specific receivable that has been chosen by the company themselves. Therefore, it is one’s job to assess and determine their creditworthiness so as to get an approval.
    • Do remember that you’ve got responsibilities too. In discounting, one has to still perform collection and then repay the provider once the customer pays their dues. When choosing a recourse factoring arrangement, keep in mind that one has to buy back the receivable in case the customer defaults at maturity date.

    THE DON’Ts

    • Don’t jump at the first provider you see. Like anything else, perform adequate amounts of research to find out which providers offer the best services at a fraction of the cost. Read feedback about them and don’t be afraid to inquire.
    • Don’t use it one after the next. It is a onetime transaction which makes the fees very cost-effective as they apply to only one invoice at a time. However, if the company finds the need to use the method repeatedly to the point that majority or all of invoices are factored or discounted, a bulk arrangement would be better.
    • Don’t assume that it’s the same for all providers. There are standards to what single invoice factoring is and what it does. However, certain terms and policies can differ from one financial institution to the next for instance when it comes to rates and fees.


    Learn more from workingcapitalpartners.com.

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  • export-financingExport finance is known to have helped so many companies who only then dreamed to expand and bring their brands to the international scene. If you’re planning to tap export financing to make your expansion dreams come true, here’s a little rundown on what you have to get ready for. Like any other financing option, providers will demand a number of prerequisites. Check out the list of requirements that most providers will have you prepare for.

    1. Books and Financial Documents

    Because receivables are involved, specifically export sales invoices, providers will want to take a look at the company’s books. They may want a rundown on credit sales procedures and terms to ensure that the business practices strong, efficient and reliable controls. At some point, certain providers may also want to see the financial standing of the business through its reports and statements.

    1. Goods and Services

    Exporting sounds exciting but it’s not all bread and butter. There are challenges and one of that would be making the actual sale. Will your offerings be marketable enough to garner profits? Will an importer be interested? Moreover, can you really render the goods and/or services that you promise you would? Because export finance involves providing an advance to the sales invoices, providers will first want to know if you can deliver. Because if you can’t, why would the importer pay?

    1. Customer Creditworthiness

    It is important that your client actually pays or has a good credit history. Do they take too long to pay or don’t they pay at all? Unlike traditional loans where the financial institution will look into your credit score, financial standing and require collateral, this medium will necessitate that customers possess a good credit score.

    1. Customer Financial Standing

    Can they really pay their dues or will they ultimately lead to bad debts? Providers will want to know. After all, they’re the ones collecting from them and buying the rights thereto. It would be a huge loss on their part so it’s no surprise if they will demand for a background check on the customer to whom the invoice is attached to.

    1. Export Receivables

    Of course, export finance will not be possible if there are no international or foreign credit sales to begin with. These receivables will have to be validated and double checked to ensure that they are indeed binding, particularly on the owing client’s part.


    Check out http://workingcapitalpartners.com/solutions/export-finance

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  • spot-factoring-companiesCash is required to run a business. After all, you can’t expect to do so with liabilities alone. That would be a recipe for disaster and it sure wouldn’t make your venture look pleasing in the eyes of investors. This is why entrepreneurs take time to carefully study their options when it comes to raising financial resources. For a good number of entrepreneurs, this is accomplished with the help of spot factoring companies. But what do they do and when will you need their services? Here, take a look.

    When traditional loans are too expensive and restrictive…

    Not all companies can afford traditional credit options like bank loans and mortgages. They’re not only expensive and hard to apply for but they also come with low approval rates for many startups and small to medium scale enterprises. Moreover, the funds to be issued, if approved, are often restricted in terms of use which can be very limiting for a lot of borrowers.

    When collateral is required…

    Majority of financing options in the marker will require some sort of collateral, oftentimes a property or similar other valuable asset. Most companies wouldn’t want to risk both their commercial and personal assets if the worst happens. Spot factoring is a method that does not require any collateral as the invoice itself will suffice as a form of security.

    When there’s a need to hasten collections…

    Companies will want cash earned from sales to be reinvested back into the entity. But this cannot happen if trade receivables are left unpaid or at least hasn’t matured yet. In a usual scenario, a customer buys on credit which will bring about an invoice. This invoice will mature on a specific date and it comes with terms by which the customer is legally bound to pay. It therefore delays the actual receipt of cash thereby also deferring its reinvestment and use in the business. With the use of spot factoring, collection is hastened by virtue of the advancement of the invoice’s value.

    When cash flows need to be improved…

    Just because your sales are high doesn’t mean more cash for the company. Oftentimes, cash is locked up in customer invoices. This creates a negative impact on cash flows as more disbursements compared to what flows into the system. With spot factoring companies advancing the value of the said invoices, cash flows levels are improved and so are liquidity and working capital.


    Visit http://workingcapitalpartners.com to learn more about spot factoring.

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