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Definition Of Working Capital

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Any business that provides a product or service to other creditworthy businesses and is constrained by their day-to-day cash flow situation.

Does your business need:

• Cash to Cover Payroll?

• Working Capital to Fuel Growth?

• Help with Cash Flow Problems?

• Help because of Bank Turn Downs or refusal to extend current lines?

• New Equipment to Grow?

What is factoring?

In a traditional factoring arrangement, a company actually sells its receivables to another company (a “factor”) at a discount. After the sale, the receivables balances are carried on the factor's balance sheet since title has passed. Because the factor then owns the receivables, it generally provides all the required credit, collection and accounting services necessary to collect the receivables, including assumption of the ultimate loss exposure from the client debtor. The important difference between factoring and asset-based lending is ownership. In factoring, the receivables are purchased and owned by the factor. In asset-based lending arrangements, accounts receivable are pledged to the lender as security for the loan, but the borrower retains ownership and complete control of the receivables and the value of the receivables remains on the borrower's financial statement.

Keeping the cash flowing is a challenge for all businesses. Does your company face cash flow challenges because of slow paying customers? Have you been forced to decline new opportunities because of cash flow issues?

As every business owner knows, sales alone do not measure the profitability of a company. For example, sales may be increasing, but a company may have to wait weeks or even months for payment. During that time, your company cannot purchase materials for more orders, meet payroll, or other basic operating expenses. The solutions may be Accounts Receivable Funding provided through Diversified Funding Services, Inc. Accounts Receivable Funding is quickly becoming a popular choice for its flexibility and rapid injection of needed capital.

Why Accounts Receivable Funding is a Popular Choice in Today's Business World

Accounts Receivable Funding or “factoring” has been in existence for several decades. Today, virtually any-sized business that extends credit to other businesses for goods or services can enjoy the many benefits of Accounts Receivable Funding.

Simply stated, Account Receivable Funding is the exchange of creditworthy commercial accounts receivable for an immediate injection of working capital. When an invoice is generated, it may be purchased with an advance of anywhere between 75 to 90% of the net invoice amount. When your customer pays the invoice, you will receive the reserve portion minus a nominal servicing fee.

Why Accounts Receivable Funding Makes Financial Sense

Accounts Receivable Funding offers many Advantages:

• Initial funding is typically available between 5-7 business days upon receipt of completed formal agreements, and then all future advances are funded within 24 hours.

• Accounts Receivable Funding does not create a financial liability on your company's balance sheet and generally no other collateral (outside of the receivables) is required.

• The amount of funding available to you is only limited by the creditworthiness of your customers.

• Accounts Receivable Funding focus on the creditworthiness of your clients instead of your financial history.

• Accounts Receivable Funding allows quick access to working capital, instead of waiting 30, 60 or 90 days to receive payment from your customers, money is immediately available on demand.

Accounts Receivable Funding Programs have been “generally” designed with the following criteria in mind.

• Your company must be providing a product or service to other credit worthy businesses (no consumer sales)

• Your company must be selling on terms

• Your company must be billing in arrears (no pre-billing)

• Your company must have minimum monthly sales of at least $10,000 or annual sales of $120,000

• Your company is not required to be in business for any length of time

• Your company should have the capability to generate financial reports (A/R and A/P aging reports, etc.)

• Your company may have current and/or historical losses or a deficit net worth position

Ideal Candidates

• Start-ups

• Companies suffering financial setbacks

• Service Companies

• Companies with seasonal orders

• Mature companies seeking cash flow support

• Companies seeking credit assistance

• Businesses experiencing rapid growth

• Non-bankable businesses

An example of the application process:

1. Complete the application

2. Provide your most recent and detailed accounts receivable aging report

3. Provide your most recent and detailed accounts payable aging report

4. Provide an actual sample invoice

5. Provide a copy of your Articles of Incorporation/d.b.a. filing

6. Provide a copy of your customer list

7. Some factoring companies require financial statements, others do not.

Preferred Industries

• Service

• Temporary Staffing

• Security companies

• Manufacturing

• Transportation

• Textile/Apparel

• Computer Consulting

• Distribution Companies

• Printers

• Sub-Contractors

• All other Industries

• Any company that provides a business to business product or service to another credit worthy business!

Thanks for reading!

Definition Of Working Capital

In a recent commercial loan report, we described the increasing use of fake articles about working capital loans on a variety of internet sites. In our prior AEX Commercial Financing article, we provided two practical strategies to avoid the publishers of fictitious information concerning commercial mortgages and other business financing. To avoid repetition, please contact us directly regarding recommendations which were previously discussed. In the current report we will provide more detailed suggestions for avoiding this growing problem.

The use of reputable publication sites is an effective and important way to avoid fake articles about business cash advances and commercial real estate loans. Such sites will employ their best efforts to eliminate articles for which the author does not have ownership rights. These responsible and high-quality sites will require review of articles by a human editor prior to publication. Most of these websites will provide detailed contact information for the author, and some will even require that authors submit sample articles to demonstrate their professional capabilities before publication.

For articles not published on a site well-known for quality content, a little detective work might be necessary. The absence of detailed phone and email contact information will suggest that the site is possibly focused on having visitors click on advertising links rather than actually talk or write to someone associated with the website. The worst offenders will typically steal content published originally on a high-quality site (such as those described above) and remove the resource box which provides contact information for the author.

Often on these ethically-challenged sites, the best indicator of their questionable value is prominence of articles which do not always make sense if you read them closely. This occurs because many such sites use software to scour the internet and to publish an article based on some random combination from a variety of sources. The resulting content is not designed to make sense but rather to provide certain keywords which will bring search engine traffic.

The bulk of these low-value sites probably prefer that the content itself will be virtually unintelligible to an actual reader because their game plan depends on visitors clicking on paid advertising links. In their minds, the less sense that the actual content makes, the more likely a visitor is to click on a paid link that appears to make sense.

There are also a growing number of commercial loan sites which provide only their contact information along with an article originally published elsewhere by an expert for small business loans. These sites will represent the article(s) as their own and also remove the legitimate resource box for the actual article. There are several strategies which can help with this situation.

First, a detailed conversation with the indicated author will be helpful. Ask them where other articles they have published about commercial loans can be found on the internet. We have always emphasized the critical importance of such interactive discussions between commercial borrowers and business financing advisors. After all, business owners will eventually need very personalized help with their working capital cash management, and this provides an excellent opportunity to assess the likelihood of getting such individualized attention from this particular source.

Second, use a prominent search engine to perform your own review of other commercial financing articles published by the author. If articles can only be found on the one website, at a minimum this suggests that the author is certainly not a small business loans expert. This is in itself an important finding, because commercial mortgage loans and business cash advances are more complex than they might appear, and most business owners simply cannot afford to work with inexperienced commercial funding advisors.

Third, we previously described the value of using established article websites. Many of these are now providing an author widget which is very helpful in providing a practical overview of work published by a specific author. Those sites without such a widget should nevertheless provide a summary index of articles by each author. The widgets or other summaries will help provide an accurate assessment of how many articles a particular author has written as well as the subject matter.

An author well-versed in commercial loans is likely to have published many articles about diverse relevant topics such as business opportunity financing, SBA loans and credit card processing. Regardless of how many articles an author has published or how many subjects they have covered, commercial borrowers should read some of the most relevant articles in their entirety to obtain an initial comfort level as the basis for determining whether to contact the business loan advisor for individualized discussions.

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About Author

Both Mark Little & Steve Bush are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Mark Little has sinced written about articles on various topics from Finances, Legal Matters and Finances. Mark Little is President of Diversified Funding Services, Inc. He can be reached at 888-603-0055. His company website can be found by and the Company blog. Mark Little's top article generates over 12100 views. to your Favourites.

Steve Bush has sinced written about articles on various topics from Business Plan, Business Loans and Finances. Avoid mistakes with and small business loans. Steve Bush is a. Steve Bush's top article generates over 60500 views. to your Favourites.

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