Temporary Staffing Agency Benefits From Non-recourse Factoring

imageNon-recourse invoice factoring benefited a temporary staffing agency client when Constar Plastics filed for Chapter 11 bankruptcy. The transfer of risk amounted to over $187,000.00 when Riviera Finance purchased invoices from the staffing company on a non-recourse basis, assuming the credit risk, and subsequent credit loss.

Often times, the value of non-recourse factoring is under estimated, but when extending trade credit to a customer there is a varying degree of credit risk. In this instance, the staffing agency’s customer, Constar Plastics lost a contract with Pepsico and eventually filed for bankruptcy.

With Riviera Finance’s non-recourse factoring program credit management is not taken for granted, but considered a major component of service. A Riviera Finance client will find unparalleled support in the credit management provided to them, including credit evaluation on the customer, automated credit decisions through Fastcredit, invoice collection, and assumption of credit risk. These are very tangible benefits of Riviera Finance’s non-recourse factoring program that demonstrate a vested interest in the accounts purchased, and also a deep rooted understanding on how difficult it is for a small business to absorb a credit loss.

Riviera Finance Appoints Business Development Manager in Ontario

imageWe’re very pleased to announce that Colin Dido has been named Business Development Manager for Central and Eastern Canada.  Effective immediately, Mr. Dido is responsible for serving new factoring prospects and originating business through our Mississauga, Ontario office.  Colin Dido brings a wealth of experience supporting small to medium sized businesses across a variety of industries, most recently as a business development professional for a major logistics company.

To contact Mr. Dido regarding invoice factoring for your business or your client’s business, please call or email him directly for immediate response.

Small Business Lending at Highest Level Since 2007

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The Thomson Reuters/PayNet Small Business Lending Index rose to 120.4 in October, its highest level since August 2007.  This is generally seen as a positive leading indicator for the U.S. economy, as small businesses step up their borrowing to handle growth in orders.  Supporting this trend, PayNet also reports that delinquencies as a percent of loans set a record low in October.

As small businesses continue to lead the economic recovery, Riviera Finance provides financing alternatives to handle short-term, seasonal or ongoing cash flow needs.  Find a local office near you

Image courtesy of dan/FreeDigitalPhotos.net

When Selling Receivables Makes Sense

Invoice Dollar Bill --- Image by © Images.com/CorbisAn alien from an all-cash planet would gaze in wonder at the trade credit system that runs the Earthly economy.  Let’s review:

Jack Brown invests his life savings to open a surfboard manufacturing business, MI Board, Inc.  It does well, attracting the interest of the media, surfers and retailers.  A few small shops in California put his boards on consignment.  They turn some heads, win some competitions, and MI lands $300,000 in initial orders from Becker, RonJon’s and HSN.  Cool.

After celebrating, Jack reads the purchase orders from his new customers.

All three want product delivered in 30 days.  All three want Net 45 Day terms.  Jack ecstatically calls his suppliers.  Because MI Board has no credit history, the suppliers want cash.

So essentially Jack ends up loaning $300,000, unsecured, without interest, to his customers for 45 days.  Meanwhile, he has to scrape together the upfront money for his suppliers and, of course, meet payroll for his suddenly inflated staff.  Until the retailers pay him, which might be 60 days or more, he will have serious negative cash flow.

This phenomenon called “trade credit” is especially hard on small, growing companies.  Their customers demand credit.  Their suppliers demand cash.  The result is a serious cash flow gap that threatens the life of the young business.

A factoring line is an ideal tool to help bridge this gap.  Jack can accelerate his cash flow, meeting the demands of his suppliers and his staff.  By factoring, Jack will sell the receivables (the loans he’s made to his customers) to the factoring company at a discount, receiving much-needed cash flow at the time he delivers his surfboards.  The factoring company then waits the 45 days or however long it takes Jack’s customers to pay.

In some cases, Jack’s supplier will accept an “assurance letter” from the factor.  This says the factor will pass funds directly to the supplier as soon as the invoices are factored.  The supplier’s perceived risk is reduced, as there’s no question of where the funds will go after Jack receives them.  In many cases a factor’s assurance letter will convince a supplier to offer credit terms where he would otherwise require cash.

Each situation requires a careful analysis of the elements of trade credit to determine how to fill the cash flow gap.  A factoring line and the tools a factor can provide will give business owners the flexibility to respond effectively to growth opportunities as they arise.

Riviera Finance Sponsors National Small Business Conference

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From September 10-12, Riviera Finance sponsored and attended the annual conference of America’s Small Business Development Centers, held at the Peabody Hotel in Orlando, FL. Over 1,000 directors and counselors of SBDCs from around the US and other countries attended the event for the purpose of gathering and sharing information to support small business. For more information on the conference and the ASBDC, click here.

For information on local Small Business Development Centers in your state, visit our SBDC page.