Showing posts with label Factoring. Show all posts
Showing posts with label Factoring. Show all posts

Monday, October 14, 2013

Avoid the Pitfalls in Recruitment by Factoring

When it comes to the labour market there are many opportunities for companies that can provide the staff a business might need on a temporary, contract or permanent basis. There are a few pitfalls as well that you need to consider. Plenty of people who are in full time employment also register with a recruitment agency just in case a better opportunity comes along. There are unemployed people who do likewise believing that a privately run company with contacts is more likely to find them new employment than the government exchanges.

Some others are available for short term contracts in specialised employment and a fourth element are people available for temporary work which comes up in holiday time but also to cover enforced or paid absences within a company. The opportunities are there for someone with contacts and the determination to build up even more. 

Cash flow issues

It is not all plain sailing if you run a recruitment agency and are responsible for paying everyone on your books yet find yourself waiting for your clients to pay you. Your biggest client could be your slowest payer and that will inevitably cause you cash flow problems, which you need to solve. Without a planned and accurate cash flow you can go out of business quickly.

Much depends on whether you specialise. If you have many weekly paid contractors on your books yet get paid monthly, then that alone needs to be taken into account when you are preparing your forecasts and cash flows. One obvious answer is to factor your invoices so that you receive 90% of the invoice total immediately and the balance when it has been paid. 

Factoring an answer

The factoring company specialises in credit control and will take over that function from you, and will likely be more effective. There are fees involved and you can decide whether you want to pay a smaller fee and do your own credit control, but it is hardly ever worth it.

It may complicate things but there is an argument that you may want to do some of your own invoicing and collection because you are assured prompt payment and it has always happened in the past. You perhaps think it is not worth the trouble for the saving you would make. 

Reduce your administration

You can decide to actually use third party services for everything relating to your payroll including the statutory returns to the taxman, the payments to everyone, and all the paperwork that is involved. If you go further and actually outsource your invoicing, you can get the VAT returns done every quarter as well. It is something that would certainly reduce your own administration.

If you are able to concentrate your energies on finding more clients and placing more people then your turnover will increase. That is surely your area of expertise? Knowing you can leave many of the administrative and financial problems to a specialist is reassuring and one less worry for you on a daily basis.

Recruitment factoring allows you to identify your financial commitments and meet your liabilities on time, even if some of your clients are not so responsible.

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Monday, October 7, 2013

4 Tips for Managing Your Cash Flow

Learning to effectively manage your cash flow is the first lesson most entrepreneurs learn after they put their business plan in place and open the doors to their business. In the article, “How to Better Manage Your Cash Flow”, written for, you learn that, “the lag time between the time you have to pay your suppliers and employees and the time you collect from your customers is the problem, and the solution is cash flow management.” If you follow some basic, common sense tips, you'll find that you can better manage your cash flow and meet your financial obligations in a timely fashion.

By considering recruitment factoring as a solution to your cash flow problems your business can continue to operate on a normal basis.

Tip #1-Try to measure your cash flow to prepare for the upcoming period. You’ll need to consider a variety of factors that contribute to your company’s income. Think about what you have on hand, your client’s payment history, any upcoming costs that you know you’ll have, and the amount of outlays that are coming up in your budget. This includes rent, payroll, benefits, any equipment that you need to buy, utility and fuel bills, and any loans that you have to make payment on. This is not an easy task and requires careful thought and planning but it must be done to run a successful business.

Tip #2-Try to create a plan to improve your receivables. This can include offering a discount to clients who meet their financial obligations to you quickly, asking for a deposit on orders made, and developing a cash-on-delivery plan for customers who don’t pay in a timely fashion. You’ll want your staff to issue invoices promptly and note on the documentation that payment is expected upon receipt of this bill. Another way to avoid problems with your account receivable clients is to do a credit check on them before merchandise is exchanged.

Tip #3-You need to effectively manage your payables. Don’t allow your expenses to expand faster than your sales; you must watch your expenses so that you don’t mismanage the funds that you have coming into your company. Use a variety of means to work with your vendors so that you can take advantage of discounts, flexible terms, and electronic payments that can be made on the final day that they are due.

Tip #4-You must manage your shortfalls quickly and efficiently. The wise entrepreneur will be aware of the shortfall early and take steps to remedy the situation. Whether you approach a bank, your suppliers, or a recruitment factoring programme for assistance, you will have a plan in place to help meet your financial obligations and preserve your company’s good credit rating and reputation. If you have experienced this shortfall in funds because of poor planning, you should obtain help with managing your cash flow so that you won’t have this experience in the future.

Keeping your business reputation and honouring your financial obligations are two of the most important aspects of running a successful company.


Thursday, July 4, 2013

How Do You Know If Factoring Receivables is a Good Option for Your Company?


Factoring receivables is something small or mid-sized businesses often use when they are in need of cash flows. This is nothing but selling your purchase orders to someone else and getting cash earlier, and then it is the factor or the purchaser of your orders who collects the amount from your customers. Whenever a firm decides to make use of factoring receivables they sell off their purchase orders to a factor for eighty or sometimes even ninety percent of the value of the orders. Then it is the responsibility of the collector to get the cash from the customers on behalf of the company. After the receivables are received by the factor, they give an amount to the seller. This amount is the total value of the orders minus the advance the factor paid up front.

What’s the Catch?

The factors deduct around two to three percent from this amount as their fee towards offering factoring service. This is two to three percent of the amount that the factor has to receive or has received from the customers. Let us now try to understand if factoring is good for your business or it is not.

LoanIt’s Another Form of Loan

It is important to understand that factoring is just another glorified name of borrowing money and money should not be borrowed under ideal circumstances. In simple words, factoring services should not be availed if there is no need for it. Consider this, with one to three percent that you pay every month towards the services you get your annual fee can be anywhere between twelve to even thirty six percent, which is pretty big. This is too big a fee to pay for just getting a lump sum one month in advance. The businesses can be better off making use of the local banks to borrow the money they need as they offer at much lower interest rates compared to factoring service providers. This would also be a much more cost effective option considering the long run.

It Makes a Great Practical Choice to Maintain Cash-Flow

That being said, the practicality of factoring services can’t be overruled completely. There are cases where this is the only option in front of you. If yours is a small company or business, which has either poor, limited or no credit at all and you need some cash urgently, factoring can be the only option that you may have to resort to. For example, one of the leading trucking factoring companies in USA, Pay4Freight has helped many companies in crunching times. You can learn about Pay4Freight's factoring service by visiting their official website. Similarly, there are many such companies that help small businesses every now and then.

The Best Bet for Small Businesses


Small companies are often unstable and not well established to be self-sustained for all kinds of projects. Then often need one cash injection to get their dices rolling and that is when they approach these factoring companies. With one push of a lump sum they manage to finish some of their initial projects and generate revenue. They don’t necessarily have to do it over and again. As long as these factoring services are availed in a smart way, they can be leveraged to your advantage. But, make sure that you don’t become dependent on these services for your monthly cash requirements.

Author Bio - Robert Beard works for a factoring agency called Pay4Freight and offers his services to leading trucking companies in and around the United States of America.

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