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Posts Tagged ‘Line of Credit’

Perhaps one of the few good things that have come from our recession is the dropping of lending fees. The cost of borrowing has gone down for many Commercial Lenders and a great place for you to trim some fat off your Profit and Loss statement is in reducing your Working Capital Lending costs.

Whether you are using a traditional Business Line of Credit or Discount Factoring, with the reduction in rates across North America, should your business be looking at renegotiating your Working Capital Line?

Absolutely Many companies are locked into an agreement and even with termination fees that may arise; the net result will often be to switch from your current provider to a new Low Cost Factoring facility.

There are many places to find AR Factoring, but the best place is the internet. You will be able to research the Best Factoring Company for your business.

One word of caution though the shear number of Commercial lenders out there will seem like a myriad of options for you and which one to choose is very difficult to determine unless you are up on all the newest trends and you know which Commercial Factoring Company specializes in what. Many businesses are turning to Commercial Finance Brokers to assist in this task of screening through the various lenders.

Your best bet is to not deal directly with Factoring lenders for the simple reason that unless you are up on who does what type of Factoring and which ones they specialize in, you are setting yourself up for many applications and several hours going through the various lenders out there. The Professional Finance Broker will know which Funder will be best for your company. To find these Commercial Finance Brokers it is as easy as going to your computer and search ?AR Factor Quote? in Google and you will find several great sources.

Your business may not even be using Factoring right now, but it would not be a bad idea to take a look. Many banks are calling their Operating Lines of Credit now forcing companies to look into other options very quickly. Perhaps it is not a bad idea to take a look at your options. After all, Commercial Factoring has taken on a whole new look since President Obama is now heading up a Factoring division in the US Government by buying up all the outstanding Invoices from the auto suppliers to the Auto Manufacturers in the Detroit area. Factoring is now more accepted and accessible than ever.

Recently I had a client contact me looking to take out a Factoring Loan. It has been some time since I had heard it referred to as this, but what he was referring to was Accounts Receivable Factoring.

Technically, Factoring is not a real loan; it is an advance on money that your company is already owned. While the accounting guidelines can be argued one way or another, the fact is, when a Factoring Loan is done, the Receivables are verified with the party that owes the money and further verifies that they are going to pay the invoices.

Like this, the company that raised the invoice has confirmed the money is owed by the end customer and the Factor merely advances the payment to bridge the gap.

Some of the other terms Accounts Receivable Factoring is referred to as are Invoice Factoring, Receivables Factoring or Invoice Discounting amount many others. Likely the most common term to substitute for Accounts Receivable Factoring is Accounts Receivable Financing.

On big plus for the Factoring Industry is the fact that the US Government has decided that it is going to start Factoring the Invoices issued to the Auto maker by the Automotive Suppliers in Detroit Michigan. Not that Invoice Discounting was an unheard of financing method before, but now that President Obama is now endorsing it, many companies that may have passed on this finance opportunity will now take advantage of it.

It has been a long hard road for many manufacturing companies over the last few years and the cash flow which is available to them to make payroll, pay suppliers and cover other operating expenses does not come too soon.

Unfortunately several companies in the manufacturing industry have not been able to make it through our recession, many of which were generational family businesses and they suffered to the point of closing down. I know of one such company that was started in 1937 by the Great Great Grandfather of the owner that had to close the doors of the family business due to cashflow problems.

You can call it a Factor Loan, Invoice Discounting, Invoice Factoring what ever you like. It is a method to help with you cashflow. Be sure to speak with a Commercial Lending Broker in regards to your Business Financing needs as they have the expertise to know where to go with your application to get you the best deal in the best time frame and it will not cost you a thing for the Broker as they are generally paid by the lender so put one to work for you it truly is the best way to find the best program for you.

During these difficult economic times, homeowners have been having a tough time making mortgage payments. Much of the difficulties are due to an increase in job losses and high health care costs. Because of the increased number of home foreclosures, the government and lenders are now offering great refinance deals to keep people in their homes. This may be the best time to refinance your mortgage.

Deciding if it is the best time to refinance your mortgage depends on your current financial situation and if there is a refinance option that is better than your current mortgage. It is important to remember that if you refinance, there will be fees associated with the deal that can include title fees, legal fees, and other processing fees. You have to take these fees into consideration to ensure that the refinance is an economically beneficial deal.

If you currently have a high mortgage rate, this is a great time to refinance because lenders are offering very low interest rates in order to keep people in their homes. The high number of foreclosures has resulted in great mortgage rates. When considering a refinance, you should check to see what the value of your home is because if there are a high number of foreclosures in your area, the value of your home may have dropped. It is important to make sure that you do not owe more money than the home is worth.

If your future plans include staying in your home for the life of the mortgage, this can be a great time to refinance. With interest rates so low, you can end up with very affordable mortgage payments. You should calculate the amount of money you will save. Most lenders will have a mortgage calculator online to determine monthly mortgage payments. You can then figure out how much the cost will be over the life of the mortgage. It is important to compare your current mortgage rate with the advertised rates. If your current mortgage rate is higher than the advertised rate, you may want to consider refinancing.

If you have more than one mortgage, you may be having a difficult time paying on both of them. Paying the interest rates can be a terrible expense. Refinancing to combine both mortgages can lower your payments and interest rates significantly.

Saving money and acquiring better terms and conditions, are good reasons why one should consider refinancing their mortgage. Make sure that you shop around with several different lenders to compare costs and terms as well as to negotiate the best refinance deal.

The current low interest rate trend is a very good reason to refinance, however, it is important to remember that most experts say they will not last. In fact, in the last few months there has been a slight increase in mortgage rates being offered. If you are worried about high interest rates, making your mortgage payments, or home foreclosure, refinancing is one option that should be considered. Talk to a mortgage consultant to see if it is a good time to refinance your mortgage. The real benefit is that you and your family will stay in your home.

Banks and Credit Unions are financial institutions that offer a number of services to their customers such as loans and money accounts. Many people do not realize that there are a number of differences between a bank and a credit union. When deciding if you should do your banking at a credit union or bank, it is important to understand the differences so that you can choose the financial institution that meets your needs.

Credit Unions

When credit unions were first established, they were cooperatives that helped workers with financial troubles. Now, credit unions are community based institutions which operate as a non profit institution. According to Bankrate.com, “Credit unions have topped the consumer satisfaction ratings in American Bankers annual survey for 12 years in a row.” Anyone in the U.S. can join a credit union. If you want to have an account at a credit union, you are required to have a membership. Members are equal part owners and receive shares based on their contribution. The more one contributes the more shares and profits they receive. The Credit Union Board of Directors are made up of volunteers or elected members from the community. Credit unions promote saving and spending money carefully.

Credit unions will often offer finance education programs to their members. They are also exempt from most state and federal taxes. Credit unions will normally finance community development projects. Interest rates tend to be lower than bank rates. Since every member is an equal owner, service is more individualized and friendly. As well, because of the tax savings and no highly paid administration, they are able to provide such services as: free checking accounts, savings accounts with high interest rates, and low rates on auto loans, mortgage loans and credit cards. Up to $100,000 of a members money is insured and regulated by the National Credit Union Association, which is the same as the Federal Reserve Banks coverage. One downside of a credit union is that there are not as many as traditional bank branches.

Banks

Banks are owned by a private company and are publicly traded for-profit institutions. The Board of Directors is appointed by the company or shareholders. They are locally based but have numerous branches across a broad region. Rates, fees, and penalties are generally higher than credit unions. They tend to have more of a selection of products and services. Bank account holders will receive some interest on a particular account. Their services are customized to all of their customers and not individualized. The interest rates on loans are generally higher than credit unions. Banks have more ATMs, branches, and investment products and services. Banks tend to finance projects that will give them a big return on their investment.

Both banks and credit unions have government guarantees on a certain amount of funds in a customers account, making them safe. When choosing between a bank and a credit union, customers have to consider their own unique current and future needs.

Another term for Accounts Receivable Factoring is Invoice Factoring, the terms are essentially interchangeable.

When you evaluate the statistics of the number of days your invoices are waiting to be paid and how many are over due. This is simply data about the likelihood of collections. It has nothing to do with sales and how to increase sales.

Do you consider a large Accounts Receivable as a bad thing? Most people do. To determine if this is a bad thing, or good, it will depend on how the Accounts Receivable is made up. Here is an example.

If you have an abundance of Inventory and you are nearing the end of your season for a particular type of goods. You will have to pay for warehouse space for the next several months until the season comes back. You can have an opportunity to sell a large portion of your goods at a discount and clear out your warehouse. What would you do?

If it is a new customer and you have never dealt with them before, you will review their credit. You come to the expectation that it will take a few months to collect your invoice. Will you accept the order from the client?

If you look at the opportunity strictly from a credit perspective, you would likely not take the order.

However if you consider the cost of the goods sitting until next year, you may think otherwise. To make the deal even better, use Invoice Factoring so you can clean out your warehouse and collect on the payment within 48 hours. True the financing will cost you a few points, but in the end, what would you have otherwise? Either goods sitting in the warehouse costing money or cash in your hand using Invoice FactoringWhich do you prefer?

This is just some brief comments based on an Invoice Factoring System. In many ways it is considered the latest revolution in the management of credit and collection and would certainly assist many companies that are facing Working Capital constraints.

Besides the facts that this can stimulate new sales, you can also help out your current customer base to grow this opportunity. As you are aware, it is much more costly to originate new clients than it is to keep existing relationships in tact. Not only will Invoice Factoring help you with this, but it will off set Cashflow constraints when invoices do get a bit extended. Speak to your Commercial Finance Broker about the programs that best fit your business.