There was a recent survey asking successful business owners what they personally think affects the success or failure of a startup business today. 549 founders of organizations were gathered as respondents to this survey; the sample is a mixture of people from different industries including computing, electronics, health care and aerospace, to name a few. The chief most critical success factors included learning from their mistakes and their successes, previous work experience, a strong management team and good luck. Moreover, 98 percent of them mentioned the significance of prior work experience. Interestingly, a strategy known as invoice factoring was mentioned by a few of these respondents.
On the government’s Small Business Administration (SBA) website, many questions were posted; among them is “how do I get a small business loan or grant?” What is the finest way to launch a business? What are some tried-and-tested tactics that can help me attract investors for my business? What type of interest rate, terms or charges does the SBA require on its Guarantee Loan program?
Following are some real tried and true financial aids that can help any business grow, as small business entrepreneurs head into the year 2010.
The first reason is do not waste money! Have fine financial options prepared - those that can help minimize operating expenses - and stick to them. Be conscious of your expenses, make sure that you are not paying double for anything. Look at the year in quarters, then set aside time every quarter to review your expenses. By doing so, you are more likely to find areas where you can save on costs. Do you lease or rent a company car? Did you know that a company vehicle is best purchased because they can be depreciated on your company tax returns. You’ll get a higher return on your investment after the company transport has been paid off, than if you lease. It is another story when it comes to company computers: leasing them is a better alternative since it can be treated as a tax deduction and later on, you can exchange them for newer technology.
Another financial business tactic is to begin invoice factoring your outstanding invoices. An invoice that won’t be paid for 60 to 90 days is not doing your company any good today. However, if you come across a factoring company to factor one or more of your outstanding invoices, you can use the money wisely to invest in your business and make it flourish. Many factors today do what is called “single invoice factoring” where they’ll spot one invoice at a time.
Accounts receivable factoring is particularly useful if you need cash in a hurry because once a factor receives your application and reviews your invoices, you can receive payment within as little as 24 to 48 hours after they have pre-qualified the vendor that owes you the money. In this financial option, your credit history isn’t evaluated, but your clients will be - so make sure they’re as creditworthy as they can be.
Factoring companies, just like a bank or any commercial financial institution, charges a fee for its services. First, the factor would want to review your invoices and check the creditworthiness of your customers. Also, get ready with these documents because the factor would need these: a current financial statement, an accounts receivable aging report, a certificate of incorporation or partnership agreement, proof of insurance, invoices as well as other pertinent documents.
A factor shall take charge of collecting your receivables, so they’ll want to ascertain that your customers pay their invoices on time. Once it’s clear which invoices will be due for factoring, then the factor will advance you the funds, say 80 percent now and 20% later, when the customers pay their invoices.
Charges for this kind of service range anywhere between 3% and 7%. Factors’ fees vary depending on the size of your invoices, your customers’ creditworthiness and the number of days (30/60/90) until the invoice is due.
You can visit www.ifgnetwork.com to learn more about invoice factoring.
