Compound Profit Blog

Most of us have been there: we had a killer idea, so we’ve started a business, pouring all of our enthusiasm, time and money into it. And most of the time, our company has done well (or even great!) during its first few years of activity, but then it started to decline.

The economical crisis has given us a good excuse, allowing us to have dialogs like the one below with our friends:

“So Ben, how’s your business doing?”

“Hmm... not well, man. Not well at all!”

“I know what you mean... I’m thinking of shutting mine down for good...”

“You can’t fight the current, man. I think I’ll shut mine as well...”

“Gotta hate this global crisis!”

“Yeah... who would have thought that this would happen?”

Fortunately, unlike me and Ben in the dialogue above, other entrepreneurs have learned to adapt to the new rules, reinventing their companies and making tons of money during the process. In fact, many companies are growing “too fast” these days, and this causes problems.

Now how on Earth can growing too fast be a problem? The answer is very simple: many companies are growing fast, but their money is tied up in their accounts receivable, so they can’t take on more businesses: they can’t purchase more products or services, they can’t meet the payroll, they can’t pay the rent, and so on. And remember, we’re talking about a profitable company here, who can’t grow as it should because it lacks the needed working capital.

Having a poor cash flow will definitely hinder your company’s growth. And having to wait for up to 3 months in order to be paid by your customers is definitely a nightmare for any active entrepreneur. Some of the business owners try to get bank loans, but very few of them manage to get a loan under good terms because they don’t have a great credit history.

Getting working capital through invoice factoring eliminates the need to wait for 1, 2 or even 3 months, until your customers pay their bills. You get a big upfront payment (up to 90% from the money that is owed to you) right away, the rest (minus a small service fee) being paid as soon as the invoice factoring company gets paid by your customers. The procedure is very straightforward and consists of only two steps:

- You send a copy of your invoice to the factoring company, getting that big upfront payment in 1-2 days;

- The factor sends you the rest of the money as soon as your customer pays the invoice.

Your credit history isn’t important at all; only your customer’s credit is evaluated. If you’ve got slow paying customers and lack working capital, feel free to contact us for your complimentary consultation – our invoice factoring service fees start at only 0.75%.

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If you run a business you are definitely under a lot of stress, especially if you’re working in a competitive industry. And while having great employees is the key to your success in highly competitive markets, most of the time their salaries are going to be proportional with their skills and results. So how do you manage to meet the payroll each and every month? And how do you pay your suppliers on time?

First of all, you must make sure that you are running a truly profitable business; if your sales are barely covering your expenses, it’s time to stop and think how you can reorganize the activity in order to increase the profit, or at least to cut the costs to a reasonable level. Nevertheless, there are many business owners that are actually making a good profit, and yet they lack the needed working capital.

Let’s consider an example: a company sells pens to the government – and it sells lots of pens to this particular client! However, the government will only pay the invoices after 1, 2 or even 3 months, because they set their own rules and if you want their business you simply have to obey these rules. So now you’re all set up: your suppliers need to be paid as quickly as possible, and your customer wants to pay as late as possible. How do you get out of this?

A possible solution would be to keep lots of money in your bank account, but most business owners prefer to invest it over and over, in order to bring in additional profit. Another option would be to get a business loan, but the banks are more and more cautious these days, especially if your business credit reports aren’t perfect or if you’ve only been in business for a few years.

Getting working capital through factoring is by far the best method; it allows you to get the needed funds in exchange for your invoices in only 1-2 days. The factoring company will buy your invoices, giving you a big advance (up to 90%) right away, the rest (minus a 1... 3% service fee) being paid when your customers pay the invoices.

Invoice factoring offers you access to the needed capital right away and doesn’t take into account your company’s financial strength; only your customers’ business credit is important. And unlike a bank loan or a traditional line of credit, the funds are only limited by the value of your invoices.

If your business is growing and you don’t want to wait 1, 2 or even 3 months, until your clients pay you, contact us; we offer 100% free consultations.

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Many business owners (no matter if they are running a small or big business) are having a hard time trying to survive these days. And it might look bizarre to you, but some of these struggling businesses are in fact profitable, but they lack the needed capital that would allow them to grow faster, meet the payroll, etc.

It’s true that the business owners have a part of the guilt; most times, the need for working capital is overlooked because buying new equipment, paying salaries, and so on, have a greater priority. On the other hand, more and more customers have started to delay the payments because they lack cash as well, or simply because they don’t care too much about others. And having your own in-house credit and collections department is definitely too costly.

What is the solution, then? Working capital factoring allows any business owner to access the cash the he or she needs right away, getting the money that are tied up in the company’s accounts receivables without any delay. As an example, if your accounts owe you (let’s say) $50,000 you could have a factoring company purchase your invoices and give you an upfront payment of 90% ($45,000) right away, the remainder of 10% being paid as soon as they get paid by your customers. The typical service fees range from 1% to 4% and can even go below 1%, depending on the amount of money and the risk that is taken by the factor.

Selling the invoices for cash eliminates the need to wait for 30, 60 or even 90 days in order to get paid; it’s an effective, inexpensive method that allows you to get the working capital you need without having to come up with additional collateral or to give away equity. In addition to that, working capital factoring can be used without any problems even by startups, small businesses that are usually turned down by the banks because they’ve just started their activity. With factoring, all you need is a credit-worthy customer; the cash can be obtained in only 1-2 days and the amounts of money can grow naturally, as your business expands.

Through working capital factoring, your business can get access to cash on a regular basis, thus improving its cash flow and growing its profit without any trouble. In addition to that, factoring improves your business credit score and allows you to get better offers from your suppliers and pass them on to your customers, thus attracting more business and increasing your company’s profitability even more. Contact us to discover even more working capital factoring benefits – we offer 100% free consultations.

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Quite a few business owners struggle to pay their suppliers and payroll these days. Sometimes, this might be good news: the company is growing and it doesn’t have too much liquidity at its disposal. Unfortunately, many times this situation has to do with the customers taking way too much time to pay their accounts. It’s true that your company can also grow by offering better terms to its customers, but this could lead to serious cash flow problems.

On top of that, the banking regulations are more and more severe, so many businesses are struggling to survive and grow, mostly because their owners aren’t aware that there are other alternatives. One of them, receivables financing, is offered by the “factoring” companies. The company sells its business to business / government receivables to the factor and gets close to 90% of the dollar value right away, receiving the remainder (minus a small service fee) about a month later, when the factor gets paid for those invoices. This financing method doesn’t depend on your personal or business score, the amount of year in business, collateral, etc – what really matters is your customers’ credit.

Why isn’t this financing method much more widespread, then? Believe it or not, many companies don’t even know that it exists! And other people think that it is a costly financing method, when it fact it is very cheap – here’s an example:

An entrepreneur has got a $1,000 invoice in January and receives 80% ($800) from the factor as an advance payment. Thirty days later, the factoring company, who has a (let’s say) 3% rate for its factoring services, pays the business owner another $200 – 3% from the invoice value, so the business owner gets a total of 970 U.S. dollars in exchange for his / her $1,000 invoice.

This is a plain 3% service fee, and it is clear that the business owner will pay the same small amount of 3% if he / she decides to sell the invoices each month of the year; the total service fee for 12 invoices of $1,000 each = $12,000 will only be $360 (3% from the 12,000 U.S. dollars). Quite a few business owners believe that the percentages add up and thus believe that the service fee is 3% x 12 month = 36% -> nothing could be more wrong!

Other alternative financing companies offer rapid credit card payments and similar services, but the service fees add up quickly and easily reach 5%, being bigger than the ones used by the factoring companies. In addition to that, factoring doesn’t add any debt to your balance sheet and offers you a free customer credit check.

Working capital factoring and purchase order factoring are just a few of the business financing services offered by Compound Profit; its highly trained Profit Advisors are looking forward to offering you a complimentary business analysis, in order to find ways that will help you grow your business. Christy Giroux is a Regional Director of Compound Profit of Arizona and can be reached at 1-877-386-3716, ext. 249. Visit http://www.cprofit.com for more information.

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The financial crisis has determined the traditional lenders to raise their credit standards, as well as their commissions, making it harder and harder for many business owners to get bank loans. This happens because the banks aren’t willing to risk their precious finances by handing them over to a company that has less than perfect business credit records. What surprises me, though, is the fact that very few business owners, especially small business owners, have heard about working capital factoring; this article will hopefully be a good introduction.

The first myth that has to be debunked is the information that factoring is a financing option used only by the struggling small businesses. Nothing could be farther from truth: huge companies use factoring on a monthly basis because they can access financing instantly, without affecting their cash flow, and get to benefit from tax advantages as well.

On the other hand, it is true that small businesses can get the maximum benefit out of this financing instrument because they can’t grow properly (or even survive!) when their money is tied up in their accounts receivable, since they don’t usually have a lot of cash at their disposal. It’s depressing, but many clients, be them huge corporations or tiny businesses, prefer to pay using checks or simply decide that your company has to wait for 1, 2 or even 3 months before receiving the payment for the delivered products and / or services. Now that’s sad news!

Working capital factoring is the process through which an alternative financing company, also known as a factor, provides the needed financing to these companies by purchasing their creditworthy invoices at a discount. This gives the small business owner quick access (in only 1-2 days) to the needed money and has a 100% success rate, provided that the invoices are issued by a trustworthy company. Your company’s credit score, the number of years in business, and so on aren’t important; it’s not a surprise then that more and more company owners prefer to use factoring instead of trying to get loans from their banks.

Compound Profit’s factoring rates start at only 0.75%, so feel free to contact us for your free consultation.

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It’s not a secret that many small business owners aren’t happy with their banks. In fact, according to a recent study from J. D. Power and Associates, the business owners tend to be less and less loyal to their banks, especially to the big banks. And it didn’t surprise me at all to hear that while the big company owners continue to trust their banks to a certain degree, the small business owners aren’t happy at all and are actively looking for other financing alternatives.

Now why does this happen? Let’s start by saying that the banks don’t really trust small businesses that much these days. While many business owners have seen their companies grow lately (and they’ve got the papers to prove it!) the banks are much more skeptical and unwilling to give away their precious, well guarded cash. I have to admit that it’s a reciprocal love / hate relationship, though; many times the business owners will want to stay away from the banks for good because they were hit hard with so many hidden fees they didn’t know about.

So what do you do under these conditions? Some of the business owners continue to depend on their banks, being forced to adapt to the tighter and tighter rules and regulations, and thus limiting their growth and profit; nevertheless, more and more companies have learned to look for business financing elsewhere.

Take the customer satisfaction research report produced by J.D. Power and Associates, for example; only 1 out of 5 small business owners is happy with the services offered by his / her bank.  So where do all the other business owners go when they need funds to help them survive and / or thrive? There are several companies that offer alternative financing, and a few of them, such as Compound Profit have a nationwide presence. If the clients delay the payment of your invoices, sell them to us for a small discount (rates start at only 0.75%) and get the money right away. Chasing one of those big contracts, but lacking the needed funds? Purchase order financing is the answer, because it allows anyone, even if they’ve only been in business for a month, to get the funds that allow them to grab that dream contract and thus pave their way towards financial prosperity.

I could go on and on, but I’ll only throw in one more benefit: as your business grows, you can instantly access more and more cash, allowing your business to expand at a faster rate, and thus getting access to even more cash... you’ve got it, right? Now this is a highly beneficial snowball effect!

We’ve got hundreds of highly trained people here, at Compound Profit, and we are looking forward to helping you discover the best ways in which you can use the most powerful options offered by the alternative financing industry. We offer 100% free consultations and, unlike the banks, we don’t have any hidden fees – it’s a promise! Contact us and discover why more and more people really like us :)

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It might surprise you, but very few business owners try to get loans from the banks these days; they have learned (the hard way) that the banks are much more reluctant to give away money to small businesses, especially if they’ve just been founded or if they don’t have a strong business credit value. We can’t put all the blame on the banks, though; they were hit hard during the last few years, so they aren’t willing to take more risks these days.

Fortunately, other financial institutions are willing to take on higher risks and they are thriving nowadays, because the small business owners will always need funds, be them for inventory, business growth, and so on. In fact, the capital that they are receiving today might make THE difference in ensuring their success tomorrow.

Take working capital factoring for example; it’s the process of turning your accounts receivable into working capital or plain, hard cash to cover all your company’s expenses, no matter what they are. You send the factoring company the existing or ongoing invoices, receiving up to 90-95% of their value right away, depending on the amount of money, the risk taken by the factor, etc. The remainder of the money will be sent your way as soon as the factor gets the money for your invoices and the factoring company will keep a small percentage from the value (1...2%) for its services.

No matter if you want to meet shorter or longer term goals, working capital factoring is a great solution, because the funds that are at your disposal grow instantly, as your company grows. Try to get that kind of service from a bank! No matter if your company is expanding or if the clients are paying your invoices way too slow, a factoring company can get you the needed working capital in less than 48 hours.

Unlike the banks, the alternative financing companies have the liberty of tailoring their financial solutions, adapting them to their clients’ needs. This is all good in theory, and yet many factoring companies only offer a small variety of options when it comes to working capital factoring. We at Compound Profit understand that each business is unique, so we assign a highly trained account executive to each one of our clients, helping them get the most benefits out of our highly customizable working capital factoring solution. And the good news doesn’t stop here: our consultations are 100% free, so don’t hesitate to contact us.

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