Offering Creative Solutions
A few weeks ago, I polled our Client Team to get a feel for some real life issues that our clients are facing, and how they are using our services to get past those obstacles. What I learned is that many of these obstacles center around the timing of cash flow, and for small businesses, alleviating those timing issues can make all the difference. If you missed that post, read more here.
During that same conversation with our team, I noticed another theme. Although our core business is traditional factoring - which consists of purchasing accounts receivables from a client, advancing funds and collecting from their customers - in our actual day to day business we have many creative solutions to a variety of cash flow issues. Here are some examples of ways that our team's optimism and creativity has led to real life results for our business clients.
Short Term Notes
One of our clients, who was an existing factoring client, found that they needed to invest in some infrastructure for their business. Many companies need to make capital purchases. This could be equipment, software, a vehicle or any additional one time purchase a business might need. We structured a short term note for this client with payback terms that we knew worked with their cash flow. Keeping everything at one place is easier for everyone involved, and the investments in the business often lead to growth. They have successfully grown from that point many times over.
Funding Before Others
Another example is a client who was ineligible for traditional financing because they hadn't sold any product yet! They did have customers, ready to buy, but needed help making the final push to get their products to market. Our team crafted a creative system involving the client's vendors and customers. This allowed the client to get the capital needed to move their goods and start making a profit. We were able to give them start up financing to get their business in business.
Another common deviation from traditional factoring involves financing based on a purchase order that just hasn't quite become an invoice yet. In the case of one of our clients, they needed additional supplies to finish off the products before they could finalize the sale and invoice. In this case, we advanced funds based on the purchase order and sent them to the vendor. The vendor sent the supplies to our client, who finished manufacturing, shipped and invoiced the product. The full circle was completed without any timing or cash flow hiccups.
Although it is not our first choice method of funding, on a case by case basis, we are often able to alleviate one-time or short term issues through advancing more than the typical amount on an invoice. These are called over-advances. Typically these are cash flow issues that will fix themselves within a couple of days. In the case of one client, they had payroll to pay on Thursday, and were expecting a large order to go out and be invoiced the following Tuesday. In this instance, we were able to help them meet payroll and avoid a whole host of other issues those short 5 days could have caused. We generally try to look longer term with clients and smooth out their cash flow issues ahead of time, but occasionally there is a place for these short term fixes.
Overall, each business has it's own set of cash circumstances with it's own limitations. We do our best to put on our thinking caps and arrive at solutions that benefits businesses and allow them to grow. These are just a few of many specialized examples you would find within our client base. While on the surface it may seem that lenders and financing companies offer specific products, the truth is there is a lot of flexibility and a creative answer might be just around the corner.