Compound Profit Blog

For decades one of the easiest ways for new businesses without start up funds to get the money they needed was to ask family and friends. This is still a great way to get funding for a new business because family and friends can be a little more forgiving than banks when it comes to paying back the loan on a certain date. If you are a day or two late, mom and date will probably waive the late fee.

Money from family is a good way to increase your funding is that those types of loans are usually subordinate to more traditional types of loans. So if you have some startup capital from mom and dad, and you then want to go to a bank to expand your business later on, the bank will need to know about the loan, but won’t count it as heavily against your debt ratio because their loan will take precedence if you fail and assets are sold to recover the loan. At the same time, you should make sure that your friends or family report good payments on your part to the credit reporting agencies so you increase your business fundability over time.

Venture Capital

If you have a big idea, but not much money venture capital may be the best type of funding for a startup. Venture capital can be easier to get because they aren’t looking for a return on investment the same way a lender would. Venture capitalists usually take a percentage of the profit of your business rather than simple monthly payments. Before you strike out on this path, give a lot of consideration to the fact that you will, in essence, be selling part of your business to the VC in exchange for funding. There are many pros and cons to this method, but for a business with a lot of potential for profits it can make a lot of sense.

Traditional Bank Loan

Traditional bank loans are an excellent source of funding for established businesses that need a little extra money to make it through a tough patch or expand on their existing business. Once you have created all of the credibility a bank looks for getting a loan is fairly easy. You can find out how to create business credibility at www.businessfundability.com.

If you have no choice but to get a traditional bank loan right from the start you have to know it will be an uphill battle. As a startup you haven’t had the time to build your business fundability to the point that banks consider you a credible risk. 

Your only option is to take some time before starting out to create at least some of the credibility banks want to see. You won’t be able to show them a record of profits, but you can make sure you have all of the registrations in line, open some vendor accounts and possibly even get some business credit cards to build your credit rating. For the best chances of success getting a new business loan from a bank or other traditional lenders check out the Small Business Association.

accounts receivable funding accounts receivable funding

If you have to wait up to 3 months in order to be paid by Medicare / Medicaid, read the article below to find out how invoice factoring can help you get access to the money in only 24 hours.

It’s clear that with the current economical climate, almost any medical office will go through cash flow problems sooner or later, and these problems can occur even if your medical-related business is growing. And when this happens, many medical office owners will usually try to get access to a business loan, or maybe to a business line of credit.

This sounds like a good plan, but there are quite a few drawbacks. First of all, getting a loan from a bank has become a tedious, time consuming task that doesn’t end well most of the time; in fact, an official report from the SBA administration shows clearly that small business lending has decreased significantly during the last year. And even if you would get a loan from a bank, these loans come with set limits, so if your medical business grows, the loan might become useless because it can’t cover the values of your invoices anymore. This is a key factor that can harm your business, because if this happens, it will be virtually impossible for you to get a new loan for a larger amount of money before paying the older loan.

Medical factoring solves all these problems, eliminating the need to wait for up to 3 months in order to get paid for your invoices and reducing this interval to only 1 or 2 days. It’s the perfect solution for any medical office that wants to solve the cash flow problems for good, offering enough money to cover the payroll, rent, new equipment, and so on. If you have struggled to pay your vendors or your employees, medical factoring offers you a constantly growing financing source – the amount of cash grows automatically, as the value of your invoices grows.

Unlike business loans, almost anyone can qualify for medical factoring; your past credit history really doesn’t matter, as long as you have paid all your taxes and obligations. Getting funding through medical factoring is a very simple process:

- You fax a copy of your claim to the medical factoring company;

- The factor pays you up to 90% from the invoice value right away;

- The factor gives you the remainder as soon as it gets paid by your clients, keeping a small service fee.

With medical factoring you can concentrate on your business, helping it grow to its full potential. Compound Profit offer medical factoring services for companies of any size, so contact us for a complimentary consultation.

accounts receivable funding, accounts receivables, factoring, medical factoring factoring, accounts receivables, accounts receivable funding, medical factoring

Almost any business owner dreams at having contracts with the government; nevertheless, these dreams can often turn into nightmares, because those high ticket clients are used to paying their invoices in 60 days, and sometimes even more. So you end up being happy because you’ve won a big contract and you know that your customers will pay the invoices in the end, but at the same time you know that you have to manage the company finances with extra care until they do that.

Sadly, it’s not only about your company: your suppliers demand payment for the goods and services they’ve provided, your employees demand their salaries, you need to pay the taxes, and let’s not forget that your family’s needs must be met as well. And as all of these things start to pressure you, the intial dream looks more and more like a nightmare.

Most small and even medium sized companies go through this struggle, because most of them are unable to get a business loan under good terms. And even if they manage to get a loan that covers their immediate needs, they can’t apply for fresh loans again and again, as their company gets more and more profit-producing orders from the big clients.

Factoring the account receivables is definitely the perfect solution for all the companies that have slow paying customers, no matter if they have just started their activity or if they are well established businesses. With accounts receivables financing you can regain peace of mind, so the future will look bright again.

But how does account receivable financing work? This financing instrument, also known as factoring, regards your invoices as precious assets – which they actually are! The factor will give you money in return for your invoices right away, and then it will wait until the slow paying customers take the time to pay them. Accounts receivable factoring allows you to exchange your slow paying invoices for cash, with a service fee rate that’s usually a few percentages from the invoice value, and can go even below 1% for low-risk invoices.

If you are interested in running and growing your business, accounts receivable financing (factoring) is definitely a good solution, especially if your customers have a good business credit record. Contact us for a complimentary consultation and we will help you choose the best financing options for your company.

accounts receivable, accounts receivable factoring, accounts receivable funding, accounts receivables accounts receivables, accounts receivable, accounts receivable funding, accounts receivable factoring

A client (let’s call him John B.) had a small, and yet successful business; however, even though he was making a decent amount of profit each year, he was thinking to shut down his company for good. If you are asking why he wanted to do that, the answer is quite simple: John didn’t have enough working capital.

John’s business was profitable indeed; he only had a few employees, but since the quality of his products were very high and his prices were very good, his customer list included many high profile companies and even a few government agencies. And I’m sure that you know it: those agencies were buying stuff in large quantities from John.

It all sounded good in theory, but he soon realized that something wrong was happening: at some point, he didn’t have enough money in the bank, so he had to delay a payment to one of his suppliers. A few months later, he had to bring some of his own money from home, in order to take care of the payroll. Finally, he chose not to bid for a major government contract because he wasn’t sure that he will be able to fulfill it. He was still making a lot of sales, but something was preventing him from having enough money in his bank account.

John was a “real” entrepreneur, so it didn’t take him too much time to figure out what the problem was: his clients were paying the invoices in 30 days or more, while his suppliers were asking for their money in 5 to 10 days. In addition to that, John had to pay his employees twice a month, and this was denting his bank account quite a bit, preventing him from getting more business.

Fortunately, the solution to John’s problems was very simple: invoice factoring. Through factoring, John is now able to cash his invoices in less than 24 hours, so he is able to pay all his suppliers and meet the payroll in time. The process is very simple: whenever John sends out an invoice to one of his clients, he faxes a copy of it to the factoring company, which gives him up to 90% from the invoice value right away. The invoice factoring company then waits until John’s client pays the invoice and then sends him the remainder, keeping a small fee for its services.

This story has a happy end: John’s company is now thriving. He was able to confidently bid and win a huge government contract, knowing that through factoring, he will always have quick access to the needed cash. If you are facing similar problems, Compound Profit’s Advisors have created customized solutions for each business owner, so make sure to contact us for your free consultation.

accounts receivable funding, accounts receivables, factor, factoring, invoice factoring factoring, accounts receivables, accounts receivable funding, factor, invoice factoring

Working Capital Factoring can Solve Small Businesses’ Problems

It’s sad but true: many business owners are having a hard time growing their small businesses to their true potential. In fact, I have just closed a browser window that was listing several successful online businesses for sale, some of them bringing their owners at least a few thousand dollars per month! And what is the main reason for all these turnkey business sales, despite their profitability? The lack of funds, according to most of the owners.

So here we are, looking at a strange picture: the owners plan to kill the goose that lays the golden eggs, hoping that they’ll get enough money to buy a regular ostrich and turn it into a gold-producing ostrich. Let me rewind that a bit: we’ve got a website that produces (let’s say) 1,000 dollars per month, and you are trying to sell it for 5,000 dollars or so. If you have a house that can be rented for $1,000 / month over an indefinite period of time, will you sell it for $5000? I don’t think so...

So now that we’ve seen what the problem is, do we have a solution for it? Enter working capital factoring. Some of my colleagues have sold their own businesses for good amounts of money, but now regret it because working capital factoring would have helped them keep their businesses and make a much bigger profit. Sadly, they didn’t know that working capital factoring existed back then.

Getting working capital through factoring is a simple process: you sell your receivables to a factor such as Compound Profit and they give you a big advance payment (up to 90%) from their value right away. Then, when the factor gets paid for your invoice, you get the remainder, minus a small service fee that’s usually in the range of 1-3%, depending on the amount of money on your invoices, the amount of risk taken by the factor, and so on.

You might have heard about the small business lending plan, but trust me: it’s very hard to get loans from the banks these days. The feds are putting tighter and tighter strings on the banks, and the banks themselves are much more cautious now. Have you just started your business or don’t have enough collateral? Then don’t even bother to go to the bank – they’ll refuse you for sure. Is your credit score less than optimal? Then you’ve got very few chances to get your loan request accepted by a bank.

Factoring works in a totally different way: your credit score, collateral, or the number of years you’ve been in business simply don’t matter! The factor will only check the payer, trying to make sure that it will be able to get cash for your invoices. And what is the best news of all? It doesn’t matter what sort of business you run; as an example, Compound Profit can provide working capital factoring even for a restaurant that has opened its gates this morning.

So there you have it: through working capital factoring, you don’t have to kill the goose that lays the golden eggs; instead, you get powerful nutrients that allow you to grow it, eliminating the risks and turning it into a gold-producing ostrich – Your ostrich!

Feel free to contact us for a 100% free, no strings attached consultation. We look forward to helping you discover all the benefits offered by working capital factoring.

About the author: George Pirvu aka PsychoDude blends psychology and marketing, working as an internet marketing dude for Compound Profit.

accounts receivable factoring, accounts receivable funding, factor, factoring, working capital factoring, working capital, accounts receivable funding, accounts receivable factoring, factor

Compound Profit designed to help small businesses get working capital

The Compound Profit Business Model requires a customer oriented Profit Advisor who is passionate about helping businesses get financing even in this tough economic climate.  The philosophy of founder James Penny is that small businesses must help themselves. 

Getting a small business loan has become harder and harder; the government is not going to help, and in many cases continues to pass laws that make it tougher to run a company and keep it in the black.   Here in Florida and around the country, we are seeing the decline of many businesses who are laying off employees just to stay alive with the hope that they can outlast the economic downturn and ongoing government interference.  Banks are finding it increasingly difficult to provide capital as regulatory guidelines tighten.

At Compound Profit, Franchise Owners such as myself want to provide assistance to businesses.  I have had the pleasure of meeting many hard working business owners who put in many long hours to provide services and products for their customers.  Some have already experienced success; others are just starting out, but have a dream and a passion.  Some were successful, but are now experiencing the impact of the economy.  Every one of those companies wants a way to increase their bottom line and / or have access to working capital.  At Compound Profit, we have services that can help increase revenue and decrease expenses as well as provide working capital. 

Here are some of our services that can provide or save working capital:

• Equipment Leasing
• Accounts Receivable Financing
• Purchase Order Financing
• Merchant Card
• Cash Equivalent Dollars (CEDA Program)
• Commercial Real Estate Mortgages

Here are services we provide that can increase revenue and / or decrease expenses:

• Accounts Receivable Financing
• Cash Equivalent Dollars (CEDA Program)
• Merchant Services
• Employee Leasing
• Collections Services
• Medical Billing

Each Profit Advisor / Franchise Owner has been trained in these services and can help the local business owners get small business loans and thus take their company to new levels.  Why not contact us today let us learn about your company, and let us offer creative, alternative methods to get the capital you need and grow your business?

Doug Linder, Compound Profit Tampa Bay, dlinder@cprofit.com

Phone: 877-386-3716 Ext 218, http://www.cprofit-tampabay.com

accounts receivable funding, equipment leasing, merchantcard, purchase order financing equipment leasing, accounts receivable funding, purchase order financing, merchantcard

The need today in small business: working capital through account receivable funding

In today’s business climate, there are really only three ways to get working capital: debt, equity, and what has been called, “Do It Yourself Financing.” Depending on your strategy and business cycle, any one of these might be right for you. Here are some pros and cons of each.

Debt

Debt requires a bank or funding source to lend money. On the positive side, it is relatively cheap. On the other side, it is debt and as such, the loan will show up as a liability and make future requests for funding more difficult. A loan requires a substantial amount of paperwork and personal time. Then, it takes time for the loan committee to review your request. If approved, you will make regular monthly payments over the term of the loan. A critical issue right now is that banks are most often unable to make business loans because of the regulations imposed on them. This is a key reason why working capital has all but dried up for today’s business owner.

Equity

Equity is provided by investors who get part ownership of the company (and the profits!). There seems to be a great deal of capital available these days as investors are looking at areas other than the stock market to increase their ROI. However, they often want a certain measure of control. In the long run, equity funding is very expensive - especially if your company does well. If it does not do well, equity funding can lead to loss of control of your company. Suffice it to say, “Angel Investors” require a huge return on investment.

Do it yourself – Account Receivable Funding

To qualify for this type of financing, a company must be involved in business-to-business or business-to-government commerce and have accounts receivables (AR). In either of these scenarios, the company sells their AR to a ‘Factor’- like Compound Profit - who buys the company’s AR at a small discount. The Factor pays the company and then collects the funds from the company’s customers.

Some of the positive elements of such transactions include:

- Needed capital is available quickly (no waiting for payments);

- No debt on the balance sheet;

- No qualifying based on the business or owner credit;

- No loan committees;

- The factor will check the credit of your customers at no charge.

Account Receivable Funding is a great way to maintain control AND have substantial cash to grow your business. This immediate cash can be used to pay suppliers, get discounts on current or future purchases, hire more staff, or pay for materials for future orders.

To be eligible for Account Receivable Funding, a company must deliver a product or service to credit worthy customers (which can include the government). Once the product or service has been delivered, the company can submit the invoice to the factor for immediate payment. Payment usually occurs in 48 hours or less. Compare that to 30, 60, or more days for payment!

Account Receivable Funding, although relatively unknown, is a wise way to build a business without incurring debt. Doing it yourself, using the funds and expertise of a Factor and their advice can radically change the trajectory of your business.

For more information on Account Receivable Funding feel free to contact:

Doug Linder, Owner / Advisor, Compound Profit Tampa Bay - dlinder@cprofit.com

http://www.cprofit-tampabay.com  / Phone: 877-366-3716 Ext. 218

accounts receivable, accounts receivable factoring, accounts receivable funding, accounts receivables, factoring, working capital factoring, accounts receivables, working capital, accounts receivable, accounts receivable funding, accounts receivable factoring

Business lending solutions – who can help?

I have heard the question asked lately “when will banks start lending to small businesses again like they used to”.  The answer I hear from many recognized experts on the subject is “probably never.”

Now before you cringe, stop and think about this for a minute.  During the bull markets of the 80s and 90s, when our economy was supposedly sound, money was relatively cheap and easy.  And while some may have seen these as the “glory days”, in truth it did nothing more than mask some bad decisions and practices by both borrowers and lenders.

We saw people pour money into the stock market without any thought as to the instruments they were buying.  The thought process was their money would continue to grow at ten to twenty per cent a year and their retirement strategy was built on this myth.

We all know how would be non qualified buyers actually obtained mortgages for homes they could not afford, putting nothing down and paying interest only.  How’s that working for us?

So it is easy to point at the banks today and say “see what you did”.  But the fact is there is plenty of blame to go around.  Just like an uneducated decision in personal investments for many had catastrophic outcomes, so too did the borrowing practices of many businesses.

Loans came easy and the more money one “needed” for their business the more they would get.  Business growing through the roof?  Take on more debt to pay for the inventory.  Your fleet of trucks not as shiny as they used to be?  Take out a loan and buy some more. Money was cheap and money was easy.

But were those the good old days?  Not at all! Today the business person must be calculating and intelligent about how he or she finances the business.  With banks lending practices significantly altered, the popularity of alternative financing is booming and financial instruments long overlooked are moving into the forefront.

Take AR factoring for example.  Often viewed as a tool for less successful or desperate businesses, now thriving companies are leveraging their invoices for growth.  By selling their receivables to a reputable third party for a discount, these businesses now have cash in hand to invest back into their business without taking on additional debt or selling a part of their business.  Born out of necessity, this practice is proving to be a far better alternative to high growth companies.

Leasing and micro-leasing is also becoming more and more prevalent. Businesses, in order to survive, are looking to protect their cash reserves.  By leasing equipment, signage, or any asset they can they are able to take full advantage of available third party money to grow their business.  Even if the rates are higher, if an investment in an asset shows a positive return (say a new truck) the prudent owner is leasing that product.  As long as the return on the investment is greater than the cost of the lease, it is a wise choice.

Of course positioning yourself properly is always the most important way to secure the financing you need.  Know your numbers, have your house in order, and be able to articulate your needs.  As a start up, try to keep six to eight thousand dollars in your account for six consecutive months to give lenders the confidence you can repay your debt. 

The bottom line is funders, as investors, do not want risk.  They want a guaranteed return on their money.  The better job you can do to assure them their investment in you is safe, the better you will be at attracting the financing you need for your business.

Alex Cherlin is a Cash Flow Expert with Compound Profit of Virginia. Contact him - acherlin@cprofit.com - for more information.

accounts receivable, accounts receivable factoring, accounts receivable funding, accounts receivables, business financing, equipment financing, equipment leasing, factoring, line of credit, small business financing, working capital business financing, small business financing, factoring, accounts receivables, equipment leasing, line of credit, working capital, accounts receivable, accounts receivable funding, accounts receivable factoring, equipment financing

Small business loans stimulus – will it work?

There may be some relief in sight for small businesses across North America. If the U.S. Senate passes the Small Business Lending Bill, a 30 billion dollar fund will be allocated for small business loans stimulus. This will hopefully spur a rush of new lending inquiries from the small business community.

While funds may become available, there is no indication that the regulations imposed on banks recently are going to be eased. I spoke with a banker today about this, and he stated clearly, “No way”. These regulations have forced banks to look closely at every request for capital. Any minor issue a business owner might have could be cause for a rejection on the small business loan request. Thus, it does not appear that most small businesses will benefit from this move.

B2B Companies needing working capital should consider Accounts Receivable Factoring. It is a viable option that frees the business owner from the requirements of loans and lines of credit, and allows them to get the funds they need much sooner without the paperwork, loan committees, and delays. Requirements do not depend upon funds in the bank or the credit of the business or the owner; rather, the credit worthiness of the company’s creditors is the key to becoming fundable.

Accounts Receivable Factoring involves Compound Profit purchasing a company’s accounts receivable at a small discount. Funding occurs quickly; most of the time, the entire process can be completed and funds allocated within 10 business days. As part of the process, the creditworthiness of the company’s creditors is checked. As funding continues, Compound Profit will check creditor’s credit on an ongoing basis allowing the business owner to be the first to know if a creditor is having problems.

Following are some of the industries Compound Profit has provided working capital to through Accounts Receivable Factoring:

- Produce

- Graphic Design

- Cleaning                   

- Transportation

- Garment

- IT Service

- General Contracting

- Maintenance Supply

- Marketing Consultant

- Oil Field Service

- Import / Export

- Manufacturing

- Staffing 

If you own a company that does B2B or B2C commerce and want to know more about this powerful tool - accounts receivable factoring - that allows you to grow your business, you should consider calling us so we can get you the cash you need to radically change the trajectory of your business.

Doug Linder - dlinder@cprofit.com

Advisor / Principal - Compound Profit-Tampa Bay

877-386-3716   Ext 218

accounts receivable, accounts receivable factoring, accounts receivable funding, accounts receivables, business financing, factoring, receivable finance, working capital business financing, receivable finance, factoring, accounts receivables, working capital, accounts receivable, accounts receivable funding, accounts receivable factoring

Accounts receivable factoring, also known as accounts receivable financing, helps small businesses acquire capital without incurring debt.

If you are a business owner with a growing base of customers and sales, or you are just “hanging in there” but are still looking for ways to strengthen your operation, cash flow is probably one of the key issues you have struggled with at one time or another.

Businesses often suffer from “cash flow drain” simply because they offer terms to customers in order to remain competitive. A business that offers payment terms to its customers often must pay its suppliers and overhead well before it receives payments from customers. As sales grow, so does the problem. Every month, a larger portion of working capital is absorbed by meeting these obligations. Businesses become artificial bankers and suffer from shortages of cash needed to meet payroll, pay bills and make investments to help generate growth.

Accounts receivable factoring helps reduce “Cash Flow Drain” for growing businesses

“Accounts receivable factoring essentially converts commercial receivables to cash”, says George Douvas, CEO and Managing Partner of Compound Profit of Southern California (CPSC). “For a small fee and in as little as 24 hours we advance up to 80% of the value of invoices our clients choose to finance. When the customer pays an invoice we send the remaining 20% to the client, less our fee.  There is no debt involved; the client sells the invoice to us at a discount and the customer pays Compound Profit Corporation directly. Many of our customers are able to negotiate better terms by paying their suppliers faster, making the cost of factoring accounts receivable negligible”.

Raj Gupta, Co-CEO of CPSC says “accounts receivable factoring is a no-hassle way for businesses to meet current or future obligations and service new orders and contracts. Many of our clients enjoy our support in checking, monitoring and reporting the credit worthiness and payment history of their existing and prospective customers at no additional charge”, says Gupta.  “And, we make routine collections calls on past due invoices at no additional charge”.

Compound Profit of Southern California, located in Anaheim Hills, CA, provides complimentary evaluations of the key aspects of a company’s business and specializes in providing working capital, cost reduction and marketing solutions for small and medium size businesses. Additional information regarding the firm and contact information is available at http://www.cprofitofsoutherncalifornia.com

Compound Profit provides working capital and equipment to companies. With decades of experience in finance and business, Compound Profit's team empowers clients with the know-how to make their companies profitable and healthy. Launched in Texas, Compound Profit has expanded nationwide and operates under a successful franchise model. For more information, visit Compound Profit's website: http://www.cprofit.com

accounts receivable, accounts receivable funding, business financing, factoring business financing, factoring, accounts receivable, accounts receivable funding