When Selling Receivables Makes Sense

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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 Welcomes 190 New Clients in the Third Quarter of 2013

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Riviera Finance is excited to welcome 190 new clients during the third quarter of 2013. Whether you have chosen Riviera Finance because we offer non-recourse factoring, provide the highest advance rates in the industry, offer the most competitive rates, or have been highly referred, we aim to provide you with the best customer service in the industry. Riviera Finance has been dedicated to factoring small businesses since 1969 and we understand your cash flow needs.

Here is a sampling of the new companies funded for the quarter.

A $200,000.00 account limit for a trucking company in Texas.

A $100,000.00 account limit for an auto glass repair company in California.

A $200,000.00 account limit for an oil & gas service provider in Alberta, Canada.

A $100,000.00 account limit for a trucking company in Ontario Canada.

A $1,500,000.00 account limit for a crane company in North Dakota.

A $100,000.00 account limit for an industrial manufacturer in Illinois.

A $100,000.00 account limit for an oil & gas service provider in Colorado.

A $1,000,000.00 account limit for a construction company in Georgia.

A $100,000.00 account limit for a pallet manufacturer in North Carolina.

A $100,000.00 account limit for a food processor in Florida.

A $100,000.00 account limit for a demolition company in Pennsylvania.

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.

Riviera Finance’s Trucking Clients Benefit from Non-recourse Factoring

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12 transportation clients benefited from Riviera Finance’s non-recourse factoring programming when the transportation broker, Argo Transportation in El Paso, Tx went out of business. The transfer of risk amounted to over $60,000.00 when Riviera purchased invoices from the carriers 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 credit terms to a customer there is a varying degree of credit risk. For a trucking company, evaluating a customer’s credit worthiness is often difficult to navigate because most of the arranged freight comes through transportation brokers and it is estimated that there are over 10,000 transportation brokers that exist in North America.

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 Welcomes 171 New Clients in the Second Quarter of 2013

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Riviera Finance is excited to welcome 171 new clients during the 2nd quarter of 2013. Whether you have chosen Riviera Finance because we offer non-recourse factoring, provide the highest advance rates in the industry, offer the most competitive rates, or have been highly referred, we aim to provide you with the best customer service in the industry. Riviera Finance has been dedicated to factoring small businesses since 1969 and we understand your cash flow needs.

Here is a sampling of the new companies funded for the quarter.

A $200,000.00 account limit for a courier service in Ontario, Canada.

A $50,000.00 account limit for a temporary staffing company in Alabama.

A $600,000.00 account limit for a catering service in California.

A $250,000.00 account limit for a commercial sealing and plowing service in New York.

A $250,000.00 account limit for a trucking company in Illinois.

A $700,000.00 account limit for a logistics company in Colorado.

A $100,000.00 account limit for a metal fabrication company in Texas.

A $150,000.00 account limit for an IT consulting company in Oregon.

A $250,000.00 account limit for an electrical contractor in North Dakota.