How Accounts Receivable Factoring Can Eliminate Being Underfunded While Waiting 30 Or 60 Days For Your Customers To Pay

Having to wait 30, 60 or even 90 days for customers before you AFTER goods are delivered or services rendered?

Feeling squeezed by having to offer your customers attractive payment terms only to find your cash flow not flowing?

Have you just been refused a bank line of credit, owe CRA or suppliers money or are simply overwhelmed by other expenses?

Putting your business at risk by skipping credit checks on your customers? These are expensive omissions and require expertise.

Nervous about the financial stability of your customers and how their delayed payments affect your business? Growing your baby a lot slower than if your had the correct financial foundation?

These are all very real challenging risky situations. Whether you’re a wholesaler, importer, trucking company, temporary personnel agent or manufacturer, cash flow and customer creditworthiness are major concerns.

With 9 out of 10 of all 2009 (CRA) start ups failing, growing pains in a business can make or break a business. More importantly, 90% of the surviving 10% grow to financial maturity faster with additional financing.

There’s Always Bank Loans

Yes, you could go get a bank loan, but how’s your financial situation? Will you be approved? How long will you have to wait for approval? And then how long till you actually get funded?

How to get a bank loan?

Banks always insist on up to date balance sheets, income statements, revised business plans, cash flows, four consecutive year’s of profit, the maintenance of healthy monthly ratios, positive personal assets and liabilities AND good personal credit.

From your accountant’s point of view, in complying with all your bank’s requirements, there is a lot more work, time (and cost) to secure a bank line.

So bank loans just may NOT be for you.

What About Other Sources of Cash?

How to borrow from so many other sources:

1. Love money – Start Ups begin with family money or personal savings. But this limited form of money can only be used during the start up process.

2. Then Angel Finance starts once all the Love Money dries up. Unfortunately Angel Investors usually want at least 50% of the company's equity and they are most conservative in only accepting1 out of 1,000 applicants. It also takes great effort, expertise and time to meet the Angel’s demands.

3. Mezzanine Finance is another form of initial funding. But this form of money is expensive and also limited to the very early stages of development. It is also very limiting, restrictive and time consuming to obtain.

4. Venture Capital (VC) comes later when the new company has progressed from the initial "Idea" stage to having made some workable widgets achieved some success. Supplies of VC has all but dried up in recent years. Similar to Angel Finance and Mezzanine Finance, VCs fund about 1 in a 1000 applications.

5. Showroom Finance is specifically designed to finance unsold vehicles while they remain unsold on the showroom floor. But this is restrictive and only can be used selectively while unsold vehicles are still on showroom floors.

6. Accounts Receivable Factoring commences with the delivery of goods or procurement of services. This is when large amounts of continuous liquidity is required and made available by accounts receivable factoring.
Factoring’s many advantages apply from the time you deliver your goods or procure your services.

7. Then equity finance and shares may be sold – thus decreasing profitability later. Although this depends on who your buyer is, another downside to selling shares for liquidity is that bank loans are more challenging to obtain. The business also becomes more difficult to sell later on. The dilution is always prevented by factoring. Then there is the new “chemistry” with you and your new partner which you may not cope with.

Except possible for Love Money, a business plan, cash flow and an opening balance sheet must be drawn up for all these forms of financing. Like most forms of funding, you will have to give away a big percentage of your new business.

VCs won’t help startup grow indefinitely – like factoring does.

Having More Cash Available Solves Many Problems

Imagine having cash flowing back into your business only days after issuing invoices, being confident offering customers generous payments terms in order to obtain contracts without having to worry about running credit checks on them?

What if you could take your accounts receivable and turn them into instant cash within a few days, eliminating the need for any credit checks, no monthly payments required and carry on business with a lot less worry and stress…and all for a nominal fee?

Isn’t this better than banks or private investors? Now you keep 100% of the equity in your business. No wonder there is over $20 billion dollars of factoring done in Canada each year!

What could your business do with more cash?

• Expand your operations?
• Take advantage of supplier discounts to more than cover the cost of factoring?
• Open new locations?
• Hire more staff and pay them all on time?
• Do more research and development?
• Become enabled to tender on major contracts?
• Employ the best professionals (accountants, lawyers and computer systems and equipment)?
• Wait for your SRED (Scientific Research and Experimental Development capital from the government?
• Go after bigger clients?
• Become suppliers of choice to all your customers?
• Purchase more fixed assets?
• Do an IPO (Initial Public Offer) and go public
• Advertise effectively for exposure, additional brand awareness and market penetration.

Consider An Accounts Receivable Factoring

Well there is a solution.

Factoring from Money On Tap will give your company immediate freedom from the pressures of inadequate cash flow. Your direct costs and overheads are paid immediately by a factoring company so you only wait a few weeks for your profits.

With factoring, you can continue to offer competitive terms. Your business will grow exponentially, with our cash resources turning your business into a cash-on-delivery operation.

With factoring, we set high credit limits on your customers. This is a vital task in the professional credit checking procedure. There is security in knowing that you are not taking a high risk trusting your customer.

Demanding COD from your customers is the only way to conduct business while suffering from illiquidity. Factoring gives you and your customers breathing space allowing for their terms.

Money On Tap acts professionally to sounding alarm bells when the factor notices any changes to your customers’ credit. By bringing any looming debt problems to your attention, we can save you money. The factor may reduce credit limits if any NSF payments are received. You can remain “the good guy” while we do all of your outside-of-court collections free of charge.

You may delegate this very important specialized collections task to the factor. We will use our professional expertise to collect as many overdue accounts as possible. Any seriously delinquent accounts will be handed over to lawyers for collection or claimed from insurance wherever trade insurance has been taken out.

It is impossible to appear financially secure to your customers without having a factor increase your risk, while maintaining a healthy financial cash flow.

Having Money On Tap remain responsible for your business accounts receivable, you eliminate all pressure on your customers by allowing terms thereby reducing your fear of losing their business.

So your customers can now sell the goods before they have to pay you for it them.

Remember 96% of $1,000,000 (4% factoring cost for 60 days)
Is more than 100% of $100,000

All our clients make more money with accounts receivable factoring than the cost of factoring –otherwise why would they factor?

Thousands Of Other Successful Businesses Are Using The Power Of Accounts Receivable Factoring To Their Best Advantage

"As a start up in a battery recycling business, I knew that I would soon need large amounts of liquidity and ready cash for my suppliers – especially my US ones. Not only did I rely on Martin Charney of Money on Tap for additional working capital, but they were also always there for meetings (some at 9 p.m.) and professional advice.

My company, Battery Recycling was able to increase its sales from $12,500 to accepting orders in excess of $40,000 per month. So the percent increases were astronomical at 220%. MOT also arranged for Purchase Order funding when I needed that to pay my suppliers. All this financial assistance got me going as a start up."

John Kincaid, Battery Recycling

"We were strapped for cash in the trucking business and had only just started our new business. Not only did Martin Charney think of our new company name, "Road Load" but he acted as the principal funder responsible for our growth. Under his guidance and general administration, our company grew to doing $160 000 pm within an 18 month period. I saw why the transportation and factoring industries had been and still are so closely associated.

" Joe Akthar, Road Load