Accounts Receivable Financing

Accounts Receivable Financing and Accounts Receivable Factoring are two terms that are interchangeably used, but there is a major difference between them. Although both refer to the concept of extending cash to an owner of a business in lieu of invoices and other Accounts Receivable, there are differences, no matter how subtle.

Accounts Receivable Financing

Accounts Receivable Financing and Accounts Receivable Factoring are two terms that are interchangeably used, but there is a major difference between them. Although both belong to the concept of distribution of cash to business owners, instead of invoices and other accounts receivable, there are differences, however subtle.

First of all, Accounts Receivable Financing is a loan in which the invoices are used as collateral. But this not the case with Accounts Receivable Factoring. Accounts Receivable Factoring is not a loan. It involves the selling of the invoices to the financing company at a rate less than the face value of the invoices. The financing companies then collect the money at the full face value from the clients. This means the business no longer has the responsibility of collecting the money.

But this is not the case in Accounts Receivable Financing. The process of Financing involves the extension of an advance on the percentage of each invoiceï¿bf½s amount. Also, the responsibility of collecting the money remains with the business house.

Both Account Receivable Funding and Financing companies charge additional fees for services rendered, but in case of Account Receivable Factoring, the fees charged are comparatively higher. This is mainly because the entire responsibility of collecting the money is with the financing company.

Companies providing Account Receivable Financing step in and work with companies who cannot get loans otherwise. Account Receivable Factoring, on the other hand, proves useful to business houses urgently in need of ready cash flow.

This said, both Account Receivable Factoring and Financing prove extremely convenient to companies who urgently require a cash flow to keep their business going.

Accounts Receivable Factoring provides detailed information about accounts receivable factoring, accounts receivable collection, accounts receivable factoring companies, accounts receivable financing and more. Accounts Receivable Factoring is the sister site of Accounts Receivable Collection [http://www.i-AccountsReceivable.com].

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Accounts Receivable Financing - Exporting to Africa

Accounts Receivable Financing: Exporting to Africa explores how to extend credit and get paid for your exports to Africa. The government of the United States of America supports the export of goods and services to Africa with many interrelated programs.




Accounts Receivable Financing - Exporting to Africa

Several agencies of the US government support departments that have mandates to help you increase your export sales and minimize risks with regard to the sales of products and services to Africa. These departments exist within US agencies such as the Export-Import Bank of the United States, the Department of Commerce, and the Overseas Private Investment Corporation. All are supported by a relatively recent law called: The African Growth and Opportunity Act. The African Growth and Opportunity Act (AGOA) was signed into law by President Bush on May 18, 2000 as Title 1 of The Trade and Development Act of 2000. The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets.

The African Growth and Opportunity Act (AGOA) has been modified three times to increase exports to Africa.

In the first modification, AGOA was changed in to substantially expand preferential access for imports from beneficiary Sub-Sarahan African countries in several ways: 1) The term "fabric" was previously interpreted by U.S. Customs as excluding components that are "knit-to-shape" (i.e. components that take their shape in the knitting process, rather than being cut from a bolt of cloth); now knit-to-shape apparel will qualify for AGOA benefits. 2) The definition of hybrid cutting was broadened to include cutting of fabric in the U.S. and/or AGOA countries. 3) The volume cap on duty-free treatment for apparel made from fabric made in AGOA regions or, for lesser developed beneficiary countries from fabric made anywhere was doubled. 4) Botswana and Nambia were specially designated as less developed countries.

In the second modification, AGOA's periods for preferential treatment for African imports to the US were expanded.

In the third modification, known as AGOA "1V" was expanded and liberalized again. In essence, US laws were created to increase US exports to Africa and imports from Africa to the US.

Pursuant to AGOA the US organized a U.S.-Sub-Saharan Africa Trade and Economic Forum hosted by the Secretaries of State, Commerce, Treasury, and the U.S. Trade Representative. The Forum serves as the vehicle for regular dialogue between the United States and African countries on issues of economics, trade, and investment. This fosters a unique cooperation between US agencies, African countries, and US businesses that desire to increase export sales to Africa with minimal risk.

How does this work? It involves the Export Assistance Centers of the US Department of Commerce to assist you with your marketing and sales efforts to Africa and financial support from the Export-Import Bank of the United States to Banks that participate in and finance the export of goods and services to Africa in a variety of programs.

The Export Assistance Centers are part of the U.S. Trade in commercial services is to promote the International Trade Administration (a part of the U.S. Department of Commerce). Their mission is to provide 1) market research in the form of country specific commercial guides; 2) industry sector analysis; and 3) internal market insight reports. They provide trade counsel and advocacy through every step of the export process. They sponsor trade events that promote your product or services to qualified African buyers. They provide introductions to qualified buyers and distributors. They will help settle disputes and negotiate tariff issues. Once described as "glorified matchmakers" they will go as far as possible to help you export safely to Africa- even to the US Ambassador to facilitate these objectives, if appropriate.

And they help with the nuts and bolts of exporting to Africa such as setting up meetings for you with up to 5 prospective buyers per day, selecting drivers, translators and hotels. When you go to Africa to sell your goods or services you will not be making a cold call; you will be meeting with pre-qualified people when you participate in this program- all at a nominal cost to cover the agency's expenses.

It is necessary for you to actually travel to Africa and meet face to face to successfully export to Africa. This is a cultural necessity. African businesses do not operate like American businesses where we trust negotiations conducted over the telephone and internet, and often transact without ever meeting the buyer or seller.

What exports are needed in Africa? You can read the research reports to find out specifically what is in demand. At the top of the list you will see products that purify water. Africa has a huge water infrastructure need. There is also a great interest in security related devices such as high tech devices to prevent theft of vehicles and increase recovery of stolen vehicles. Textile manufacturing equipment and telecommunications equipment also head the lists. Certain medical devices are also in demand.

What are some of the challenges regarding creating or increasing your export sales to Africa? It is difficult to qualify buyers; there are limited credit reporting facilities in Africa; African companies' auditing and accounting systems are not "world class". And it is difficult to ascertain who will actually pay as promised in you negotiations. To minimize these risks it is prudent to work with the Export-Import Bank and their correspondent banks and insurance brokers for international trade transactions to Africa.

There are specific Export-Import Bank standards for short-term and medium term credit; these may be located on their website at exim.gov. Financing guarantees and insurance are available for short term financing in 44 Sub-Sarahan African countries. They facilitate more competitive terms for African buyers. After the US correspondent bank has reviewed and approved you for financing, you can use these guarantees and insurance to minimize your accounts receivable financing risk when extending credit to African buyers. This applies to transactions wherein you have successfully delivered your products or services to African purchasers.

Unfortunately, there presently is no way to insure against contract frustration, also known as transactional risk. In other words, you take the risk of default if a prospective African buyer cancels the transaction before it is completed. You are at risk regarding disputes such as delivery or product specifications until they are resolved. And you cannot avoid devaluation of currency as a political risk either.

On the other hand, commercial risks such as insolvency, bankruptcy and protracted default are covered risks utilizing these programs; also covered are political risks such as war, revolution and insurrection.

The bottom line: you can use accounts receivable financing to export to Africa to increase your sales, minimize risks, and increase your working capital when you work with the appropriate US agencies, their correspondent banks and insurance brokers.

Mr. Eberg is a licensed attorney and licensed real estate broker. Gregg Financial Services is a full service brokerage for commercial finance companies and banks that fund B2B businesses. Mr. Elberg arranges funding from $25,000 to $50 million per month at competitive pricing, and works to reduce your financing costs as your company grows. For more information about GFS, please visit our website: http:http://www.greggfinancialservices.com

Copyright � 2007 Gregg Financial Services

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Accounts Receivable Financing - Secrets

Explores the little known world of factoring and purchase order financing. Many businesses and their bankers are unaware of the potential for exponential growth when these financing techniques are revealed to supply the missing capital needed for businesses that sell goods or services to other businesses.




Accounts Receivable Financing - Secrets

The Merriam-Webster Online Dictionary defines "secret" as:

"1 a: kept from knowledge or view : hidden b: marked by the habit of discretion : closemouthed c: working with hidden aims or methods : undercover (a secret agent) d: not acknowledged : unavowed (a secret bride) e: conducted in secret (a secret trial)2: remote from human frequentation or notice : 3: revealed only to the initiated : esoteric 4: designed to elude observation or detection (a secret panel)5: containing information whose unauthorized disclosure could endanger national security".

As used in this article, secret means: revealed only to the initiated; kept from knowledge or view; and designed to elude observation or detection.

The first secret- "revealed only to the initiated" relates to the fact that most schools, even business schools, do not teach the subject of factoring or purchase order financing; most banks do not offer these financing facilities as products. Therefore, it is not surprising that many businesses are unaware of the cash potential that lays dormant in their business invoices.

Let's suppose you own a small to medium business and you depend on customers paying invoices within a 45-60 day period for your working capital. In essence, you are extending credit like a bank to your customers. For that period of time your cash is tied up in your invoices- your accounts receivable. This limits growth and may create problems regarding meeting payroll and paying your suppliers. Accounts receivable financing is the process of selling your invoices for cash as soon as they are issued which allows you to make more effective use of your assets. Purchase order financing is the process of obtaining a third party commitment to pay your suppliers as soon as products are received by your clients (in advance of payment by you or your client), based on the surety of an accounts receivable financing arrangement.

All businesses are limited in their growth and profits by the amount of capital and cash flow available to take advantage of business opportunities. The availability of virtually unlimited cash creates a powerful paradigm for potential growth. It also can expand your thinking about what business is possible and how you might go out and develop new business.

The second secret- "kept from knowledge or view" relates to the practice of non-notification factoring. Some business people are concerned that working with a factor, an accounts receivable financing company, may not be viewed favorably by their customers. In many cases it is possible to structure a transaction legally so that the accounts receivable financing is transparent to the ultimate customer.

The third secret ", designed to elude observation or detection" has to do with your business plan and how the thinking about the world can affect your success. In 2006 Prime Time Productions produced a film and a book called "The Secret". The film dramatically describes the "Law of Attraction" which asserts that people's feelings and thoughts attract real events in the world into their lives. Can your feelings and thoughts attract more business and success? Is the visualization of what you want an aid for manifesting your business goals? Is The Secret "just a new spin on the very old (and decidedly not secret" The Power of Positive Thinking (a book by Norman Vincent Peal written in 1952) wedded to 'ask and you shall receive' -as opined by Karin Klein, editorial writer for the Los Angeles Times? Did The Secret fail to discover the real roots of powerful thinking?

In the book, "The Diamond Cutter", Geshe Michael Roach examines The Budda on Managing your Business and your Life. Roach graduated from Princeton University with honors, studied the ancient wisdom of Tibet and traveled to the Tibetan Lamas at the seat of His Holiness, the Dalai Lama. In 1983 he took the vows of a Buddhist monk.

His teacher encouraged him to enter the world of business. Mr. Roach choose the diamond business. He hid the fact that he was a monk and maintained a façade of a normal American businessman on the outside. The business developed from nothing to a one hundred million dollar per year business.

The original book, "The Diamond Cutter" is the "oldest dated book in the world that was printed rather than being written out by hand. The British Museum holds a copy that is dated A.D 868." It is a written record of Buddha teachings from over 2,500 years ago. In brief, the central principles are: 1) business should be successful and make money in a clean and honest way; 2) you should enjoy the money and stay in good health; and 3) you should be able to look back ay your business and say your years of doing business had some meaning leaving some good marks in the world. I highly recommend "The Diamond Cutter" vs. "The Secret".

The bottom line: accounts receivable financing and purchase order financing may be the secrets to your business' financial success. If you read and follow the principles of "The Diamond Cutter" you can expand your opportunities for exponential growth based on the 2500 year old teachings of Buddha, as explained by Mr. Roach.

Copyright © 2007 Gregg Financial Services

Mr. Elberg is a licensed attorney and licensed real estate broker. Gregg Financial Services is a full service brokerage for commercial finance companies and banks that fund B2B businesses. Mr. Elberg arranges funding from $25,000 to $50 million per month at competitive pricing, and works to reduce your financing costs as your company grows. For more information about GFS, please visit our website: http://www.greggfinancialservices.com

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Fund Your Business With Accounts Receivable Financing

Discover how to improve cash flow using accounts receivable financing. 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.




Fund Your Business With Accounts Receivable Financing

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 establish a mechanism very similar funding your traditional bank with one exception, the banks are lending money and financing based on assets not. The slogan is disappointing, however, a lender based asset purchase invoices from a business right. They will advance funds against invoices purchased, and the rates are typical initial advance of 80%. In addition, because of the size of the financing agreements they will ask for additional guarantees, such as inventory, equipment and accessories.

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.

Darren Grady has over 25 years of private business funding experience, and maintains http://www.smallbusinessfactoringanswers.com as a resource for small business owners. You will find additional information on Accounts Receivable Financing can be found there.

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account receivable financing

Is Accounts Receivable Financing Right For Your Business?

With banks and other lenders making it more difficult for businesses to get cash these days, entrepreneurs have to look at other financing options. One area that is often overlooked is accounts receivable financing.




Is Accounts Receivable Financing Right For Your Business?

With banks and other lenders making it more difficult for businesses to get cash these days, entrepreneurs have to look at other financing options. One area that is often overlooked is accounts receivable financing. Basically accounts receivable financing involves using your outstanding invoices as collateral for a short term loan. If you want to stop waiting for slow paying customers and get your money fast, then this may be an option for you.

Many commercial clients have become accustomed to paying in 30, 45 and 60 days. It can be difficult for a growing business to extend such long terms. Borrowing against your receivables will allow you to get money for your business right away. This is an excellent source for companies that are experiencing growth that they do not have the cash flow to keep up with.

There are two main types of accounts receivable financing. The first is to actually get a loan against your receivables. Newer receivable are worth more money, and many companies may not even be willing to loan against debts that are over 90 days. This type of loan is repaid, plus interest, when the accounts actually pay.

The other option is called account factoring, or invoice factoring. Instead of loans receivable and invoice on the grounds you actually sell receivables factoring company at a discount. The lender will pay a percentage of the receivable upfront, about 80% on average, and the balance, less the factoring fee, when the account is paid. This can be a valuable tool for a small business. Not only do you get the money you need right away, but also it does not show up as a liability on your balance sheet. This can be a huge advantage if you are looking to get other types of loans or credit extended to your company.

There are several advantages to using your accounts receivable for collateral. It allows a company to reduce resources previously spent collecting on debts and generate fast cash to grow the business. Accounts receivable financing also frees up capital that previously was tied up in inventory. Lenders generally do not require a business plan or tax statements so it may be easier to obtain this type of loan than some more traditional financing methods. There are of course some drawbacks. Cost can be high, so it is important to shop for the best rates. If your company is experiencing a lot of growth and is having trouble accommodating all customers because of a lack of funds, then accounts receivable financing may be the perfect solution.

Find out more about financing your business through accounts receivable factoring. Karen Morgan works for Business Funders, an online broker that specializes in all types of loans including fast merchant loans, accounts receivable loans, commercial mortgages, and hard money loans.

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The Many Advantages of Accounts Receivable Financing

There are many accounts receivable financing advantages. Businesses the need capital will be hard pressed to find a much better or faster option. Such financing is not dependent upon a businesses' credit or the length of time that they have been in business. As long as a company has clients with good credit and outstanding invoices, then accounts receivable financing is a viable commercial financing option. Below, we will go into a little more detail about only a few of the many advantages of generating capital in this manner.




The Many Advantages of Accounts Receivable Financing

There are many accounts receivable financing advantages. Businesses the need capital will be hard pressed to find a much better or faster option. Such financing is not dependent upon a businesses' credit or the length of time that they have been in business. As long as a company has clients with good credit and outstanding invoices, then accounts receivable financing is a viable commercial financing option. Below, we will go into a little more detail about only a few of the many advantages of generating capital in this manner.

Fast money

Accounts receivables financing is a really great way to get money fast. Most factors are able to provide payment for invoices in about 24 hours. This process may initially take more time. However, after a business has established a relationship with a factor, the process goes really quickly. Unless a company has an open line of credit, it is difficult to think of a faster way to raise commercial capital. Even in cases where a credit line used a company has to pay interest can be extremely costly. There are no such costs associated with receivables financing.

Easy money

Accounts receivables financing is easy money. When a business desires to get a bank loan, they must be willing to jump through hoops. They will need to have all of their financial documentation in order. For a small business, this might require an unpleasant trip to the accountant. They then must also be ready to answer any questions a bank has. If they are unable to satisfactorily do so, then they won't qualify for the loan. Also, many banks won't loan money to new businesses, these are often the companies that need it most.

Today, it is even more difficult then in the past to receive bank financing. Banks simply aren't willing to part with their money right now. They are turning down loan applications from businesses with good credit and that have been in business for a long time. Commercial financing has become more difficult then ever to secure, though not in every sense. Accounts receivables financing is a pretty easy way to get money. As long as a business has outstanding invoices owned by clients with good credit, they may be able to qualify for monies.

A business credit score doesn't matter

If a business has any chance of receiving a bank loan, they must have a good credit score. In this day and age, they just might need an excellent credit history with no blemishes. Fortunately, businesses that utilize accounts receivables financing don't have to worry about this. A factoring company is more concerned about the credit history of the invoiced clients then the company that owns those invoices because that is who they will be collecting their money from.

Accounts receivables financing has many advantages over traditional capital financing options. Generating capital in this manner is fast, easy, doesn't require that a company has been in business long, nor do they need to have good credit.

Paragon Financial is a full service factoring company. Factor your receivables and improve cash flow without additional debt with our experts in invoice financing, po funding, and accounts receivable factoring.

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Accounts Receivable Financing - The India Connection

Accounts Receivable Financing- The India Connection explores the vast growing marketplace in India and how you can benefit from this trend by importing goods or exporting goods to this ginormous economy with accounts receivable financing.




Accounts Receivable Financing - The India Connection

India is one of the oldest civilizations in the world. Their history goes back over 10,000 years. India is the largest democracy in the world. As of July, 2007, the Central Intelligence Agency for the United States Government estimated that the population of India is over one billion, one hundred twenty nine million people. In contrast, the population of the United States is estimated to be a little over three hundred two million people. That's 129,000,000 versus 302,000,000 people; India has over four times the population of the U.S. in a geographic area lightly more than one-third the size of the U.S.

India has the third largest economy and the second fastest growing economy in Asia. It has a vast pool of professional talent and an enormous reservoir of intellectual capital with a growing middle class.

India's dense population creates economic opportunities and pressing internal social problems such as overcrowding, environmental degradation, poverty and social unrest. The economy and society are in a state of rapid transition. There are pressing environmental issues because of overpopulation such as air pollution from industrial effluents and vehicle emissions, water pollution from poor sanitary conditions and soil erosion.

According to the World Bank, about 380 million people in India live in poverty on less than $1 a day; this is about one-third of the population. Nevertheless, middle and upper class Indians have created immense wealth in an economy bursting with opportunities. India's business climate is changing rapidly.

This social paradox is in some ways similar to the controversy in the U.S. over big box stores and their effect on smaller retailers. The same issue is debated in India regarding Western style supermarkets versus mom and pop stores. India has a child labor problem; the U.S. has a problem with illegal immigrants who tend to take the lowest paid jobs in the U.S., performing jobs that most legal Americans do not want to do. We live in a world of conflict, change and opportunities.

There are 14 official languages in India. Hindi is the national language. English is a secondary language used for national, political and commercial communication. India is the largest English speaking nation in the world. India's legal system is based on English common law.

India's economy is growing over 10% per year with a labor force of more than 500 million people. The Indian retail sector is growing at a rate of 47% per year. Manufacturing is expanding. There are large numbers of well educated people skilled in the English language. Today India is a major exporter of software services and software workers. Other major industries include textiles, chemicals, food processing, steel, transportation equipment, cement, mining and machinery.

In 2006 India exported over $123 billion dollars of textile goods, gems and jewelry, engineering goods, chemicals, leather items; only 17% were exported to U.S. partners. Imports the same year were $184 billion dollars; less than 6% of this import business originated with U.S. partners.

What does this all have to do with accounts receivable financing? The expertise of a commercial finance company can be invaluable with regard to helping you succeed in India's enormous marketplace. If you want to export goods to India, a commercial finance company will control credit in India, which they sell, which may facilitate the exponential growth of capital for creditworthy customers. If you want to import goods from India, purchase order financing combined with accounts receivable financing can help you to achieve the same goal of increasing cash flow to grow your business.

Albert Einstein said: "We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made". Mark Twain said: "India is the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend, and the great grand mother of tradition. Our most valuable and most instructive materials in the history of man are treasured up in India only".

The bottom line: India is a land of great problems and great opportunities. Accounts receivable financing combined with purchase order financing can help you succeed in this vast democratic, English speaking marketplace.

Mr. Elberg is a licensed attorney and licensed real estate broker. Gregg Financial Services is a full service brokerage for commercial finance companies and banks that fund B2B businesses. We work with all industries and can arrange financing transactions throughout the US and Canada, Mexico, Australia, India and several areas of Europe including the UK, Ireland, France, and Poland. Mr. Elberg arranges funding from $25,000 to $50 million per month at competitive pricing, and works to reduce your financing costs as your company grows. For more information about GFS, please visit our website: http://www.greggfinancialservices.com

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