Invoice Factoring as a Backup Source of Cash

Share

How to Use Invoice Factoring as a Backup Cash SourceConsider invoice factoring with Riviera Finance as a backup source of cash flow.

“Waiting to get paid” is the not-so-new normal in the world of business.  In the U.S., companies take an average of 38 days to pay their bills.  In some industries, the wait is much longer.

But to the business owner, the waiting isn’t the hardest part.  Guessing when the customer will actually pay is the real challenge.

Among the many reasons businesses don’t get paid on time, here are a few:

  • customer cash flow issues (yes, customers have them too)
  • customer cash flow management (float on your money)
  • seasonal workload issues
  • customer staff changes
  • invoicing errors
  • lost or misplaced invoices
  • insufficient or inaccurate backup documentation
  • vendor preferences
  • disputes

Most likely, none of the above show up in the business plan!  Uncertainty of getting paid is one of the most common variables in small business, and a major cause of critical cash flow shortages.  But the only real way to avoid the impact of payment delays is to have a backup source of cash available.

Many businesses use non-recourse invoice factoring as a backup cash flow source.  It’s easy to get set up, and extremely flexible to the needs of the business.  When cash flow is needed, customer invoices can be submitted for payment and funded within 24 hours.  No debt is created, and there are no minimum funding obligations.  As a backup source, the invoice factoring line puts control back into the hands of the business owner without taking any payment flexibility away from the customer.

Take the stress out of guessing.  Set up an invoice factoring account with Riviera Finance today.

Riviera Finance Attends Ohio Valley Oil & Gas Show

Share

Riviera Finance was excited to attend the Ohio Valley Gas Oil Expo on April 28 & 29, in St. Clairsville, Ohio. It was a well attended event. Here Jason Smith is discussing Riviera Finance factoring program with a couple of attendees. Jason offers “What was realized from Riviera Finance attending the trade show is that there is a growing demand for contractor services by the energy companies as they increase production. While this is good news for the industry, many contractors are having a tough time with cash flow to run their business when waiting for payment from the energy producers”.image

Riviera Finance believes it can provide a solution to the contractors servicing the energy producers by factoring their accounts on a non recourse basis. Factoring accounts can increase the cash flow to the contractor allowing them to meet the increased demands of the energy producers.

 

Temporary Staffing Agency Benefits From Non-recourse Factoring

Share

image

Non-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. Read more

Riviera Finance Appoints Business Development Manager in Ontario

Share

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.

When Selling Receivables Makes Sense

Share

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.