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5 Ways Invoice Factoring Can Offer Quick Financial Solutions to Your Business

StrategyDriven Managing Your Finances Article | 5 Ways Invoice Factoring Can Offer Quick Financial Solutions to Your BusinessSmall or established businesses need effective cash flow to run their operations. However, maintaining a proper cash flow can prove hectic with the market and economic changes. A business should seek alternative funding to keep its operations active and productive. Besides applying for a loan, businesses can utilize invoice factoring as an alternative financing option. Pointed below are the ways invoice factoring can offer quick financial solutions to your business.

Offers Financial Flexibility

It is prudent for your business to maintain flexibility in cash flow. Your business needs to fund its operations and sustain its workforce despite hard economic times. Invoice factoring financing becomes vital as it offers your business the flexibility it deserves. You can use the unpaid invoices to get the funds you need at any time. You, however, need to find and work with a reputable factoring company to enjoy the flexibility. Remember, invoice factoring makes cash available to your business and helps avoid financial struggles that might affect its operations in the end.

Helps You Save Time and Resources

Note that applying for a bank loan means waiting for days before getting approval. The approval chances are also minimal, and your business can get affected as you wait for the approval. Most banks and credit unions also dictate that you provide collateral to process the loan. This, in the end, can be inconvenient, especially to a struggling business. However, using your unpaid invoices to secure funds saves time and resources. You avoid worrying about collateral and wasting during the application process.

Easy Application Process With Higher Financial Approval

Financial history, credit score, and collateral determine your chances of getting a loan approved by the bank. You must meet the criteria and the requirements for your business to get the funds it needs. This is, however, different when you consider invoice factoring. You don’t need to worry about collateral or your financial history to get approval. You only need to show your financial history to the customers. The factoring company needs to be confident about the payment history before taking your unpaid invoices.

Credit Control

Collecting your payments and managing the credit can have different impacts on your business. You need to be effective with debt collection to keep your cash flow steady. It is, however, hard when you have to deal with sneaky customers. You get quick financial solutions by considering invoice factoring as you avoid the stress of dealing with your customers. Note that the factoring company you sell your invoices to handles the payment collection process and credit control. You get more time and space to manage your business.

You Use the Funds for Any Business Purpose

Unlike other forms of loans, invoice factoring provides you with the funds to use for any business needs. There are no restrictions or conditions on where and how to use the funds. You can improve your working capital, fund expansion, purchase new stock and equipment and add more staff with the funds you get through invoice factoring. You enjoy financial freedom by working with a reputable factoring company.

It is crucial for a business to maintain its cash flow for its operations. However, it can prove hectic when you lack a proper financing avenue. As much as applying for loans can prove beneficial, the process can be overwhelming. You need invoice factoring to get quick financial solutions and enjoy other benefits, as highlighted above.

Everything you want to know about shareholder management

StrategyDriven Managing Your Business Article |Shareholder Management|Everything you want to know about shareholder managementWant to improve your shareholder management strategies? This article explores everything business owners need to know about shareholder management.

Shareholders are an essential asset to a company. They are the ones that can help your business rise to new heights if they have a good reason to get on board with you. But managing these relationships can be a challenging task that is a corporate reality for many business founders.

Shareholders are, in essence, the owners of companies. While a small business can have just one shareholder, the founder, the story is different when it comes to a public company. Public companies can have tens, hundreds, or even thousands of individual and institutional shareholders, like mutual fund companies, pension funds, or hedge funds.

Now, these shareholders play a crucial role in the business’s financing, operations, governance, and control aspects. But, managing them can give business founders a tough time.

This article explains what it means to efficiently manage your shareholders and tips on how to do it!

Shareholder management explained

Capital is essential, making shareholders necessary for a company.

Shareholders are basically investors that give funding to a company in exchange for company shares.

Investment in the company also brings shareholders various rights, including:

  • The right to check the books and records of the company they invest in.
  • The right to vote on critical corporate matters, such as the board of directors.
  • The right to get dividends based on their investment.
  • The entitlement to take legal action against the company for misdeeds of its officers or directors.

Now, as the company grows and its capital needs increase as well, so does the number of shareholders.

This makes the equity in financial management in a company both crucial and challenging at times.

Shareholder management involves communicating with shareholders and keeping them updated on all ownership changes, documents, or other corporate decisions.

Tips on how to manage shareholders efficiently

Keeping shareholders informed about everything new about the company doesn’t sound that complicated. But this is only true if your business has a handful of shareholders. When you need to manage your relationships with a significant number of shareholders, this can turn into a time-consuming and overwhelming task.

Use these tips to manage shareholders efficiently:

Prepare well

The way you’ll manage your investors can be set right from the beginning, depending on how well you prepare to attract shareholders. More precisely, if you prepare well, you won’t struggle with disagreements caused by unrealistic expectations from your investors.

Selling your business plan well is also key to attracting the best investors out there. You may have the most innovative business idea. If you don’t sell it well, you may end up with a couple of shareholders that can prove to be very difficult to do business with. In contrast, if you present your idea perfectly, you may get an extensive list of investors to choose from, allowing you to select the ones you resonate well with.

Use a shareholder management software tool

Managing your shareholders shouldn’t take all your time and nerves. The good news is that you can stop wasting time and brainpower by managing your company investors with a shareholder management tool. Such a tool allows you to quickly onboard team members, import company data, and immediately benefit from having all the necessary information in just one place.

Build a communicative relationship

Besides using the right tool that simplifies your tasks in terms of managing shareholders, you also need to build a solid and open relationship with your investors. This way, shareholder engagement in corporate matters will indeed be beneficial and create a mutual understanding of the company objectives.

Be honest

When communicating with shareholders, you also need to be honest to leave no room for surprises. Like all businesses out there, yours will have its ups and downs. But even in those bad days, communicating openly and honestly will help you build confidence from your shareholders in the long term.

Good results will always satisfy investors, but even when there are troubles, an honest answer on why is that will help your shareholders see that you’re aware of the problem and have a plan to fix it, which will encourage them to trust you.

Add a personal touch

Building trust in the business world goes beyond offering honest data and statistics about your company. Sure, your investors aren’t there to make friends. They are there to make money. Yet, they will value a personal touch added to your relationship because it will help them build trust easier.

What’s more, when you make your investors trust you as a person, not just a company founder, they are more likely to also trust you with other project ideas you may come up with. For example, suppose you have an innovative business idea that you need financing for. In that case, if you’ve done well with gaining your shareholders’ trust so far, it’s very likely to find at least one interested person to follow you to your second business as well.

Stay silent when you’re down in the dumps

Every entrepreneur ever knows the emotional ups and downs of the” entrepreneurial roller coaster.” You probably do too. Now, while going through ups and downs is normal in the business world, it may affect your relationship with your investors if you’re not careful.

More precisely, investors expect you to be clear and level-headed when presenting your ideas and thoughts. And, this can be a bit hard when you’re down in the dumps, going through a business crisis.

So, to make sure that you don’t say the wrong thing or make the wrong choice, it’s always better to stay silent and find a way for you to gain some clarity over what to do and say next. Your investors will better appreciate a clearly formulated plan for a crisis than a chaotic meeting that only makes them wonder if they made the right investment choice with your business.

Small Business Cash Flow Management: Why It’s Important and How to Deal With Problems

StrategyDriven Managing Your Finances Article | Small Business Cash Flow Management: Why It’s Important and How to Deal With ProblemsThe businesses that fail to manage cash flow effectively are often doomed to failure. Put simply, you need to have more cash coming in from sales than you have going out for expenses. Being able to pay your debts on time and ensuring you have enough reserves to cover all expenses is key to success. Read on to find out why cash flow is so important and how you can manage it effectively.

Why Is Cash Flow Important to a Small Business?

  • Business expansion – You can’t grow without having cash reserves on hand. Keep money set aside for opening new premises, buying new stock, and marketing to new clients
  • Manage emergencies – You never know when disaster might strike; having enough in the bank to cover emergency kit repair, economic downturns, and other unforeseen circumstances is vital
  • Cover debts and protect your business credit – Proper management of your cash receipts means you’ll always be able to pay your debts and suppliers on time. This means your business credit score will stay healthy and you won’t get trapped in a disastrous debt cycle
  • Negotiating power – Being able to pay suppliers upfront can often lead to more favorable terms and discounts. Plus, not needing to take out credit can give you more flexibility to negotiate

Common Small Business Cash Flow Problems

  • Not holding enough reserves – You should always aim to have cash in the bank to cover at least three to six months of expenses. Small businesses that fail to do this can get hammered by unforeseen costs, go into steep debt, and potentially close completely
  • Growing too fast – While this seems counterintuitive it’s actually incredibly common for new businesses. For example, you could take on 100 new orders in one week but won’t receive payment for these for at least 30 days. Meanwhile, you still need to cover the cost of those sales. Without adequate cash reserves, you’ll fail to meet your orders
  • Late payments – Almost every single small business, freelancer, and entrepreneur in America has faced the problem of late payments of invoices. You’ll almost certainly need to dip into cash reserves to cover costs until you get paid
  • Bad pricing – Sell your goods and services at too high a price and you’ll scare off customers; going too low can lead to business failure. Many brand new small businesses struggle to hit this balance and can find cash reserves taking a hit

Examples of Cash Flow Management Problems in Business

Let’s take a look at a typical cash flow statement to use as an example. Remember cash flows aren’t like your income or profit and loss statement. A cash flow simply records when cash goes in or out of your business for any reason. Any movements in red represent cash going out in our example below.

Cash flow from operations for XYZ Company
Net income $50,000
Additions to cash
Depreciation $4,000
Increase in accounts payable $3,000
Subtractions from cash
Increase in accounts receivable ($40,000)
Increase in inventory ($15,000)
Net cash from operations
$7000
Cash flow from Investing
Purchase of equipment ($3,000)
Cash flow from financing
Notes payable $1,500
Cash Flow at 31st August 20XX
$5,500

Looking at XYZ’s performance it seems we have a clear victim of overtrading. With a huge increase in accounts receivable it looks like the organization has taken on a big order and has spent a significant sum of cash on inventory and equipment to fulfill it.

However, all of those sales have gone into accounts receivable, meaning it won’t receive this cash for at least a month or more. This leaves the company on dangerously low cash reserves of just $5,500 to cover any emergencies this month.

In addition, there’s always a risk that these clients come up short or pay late leaving a very risky $40,000 the company might not receive any time soon.

Plus, looking at the low increase in payables it seems like XYZ company is paying its debts on time or early. It might want to negotiate better payment terms to improve cash flow or it may even need to miss payments if cash runs out.

Finally, with the large purchase in inventory to cover the order at almost half the cost of sales, it suggests XYZ might be pricing its goods far too low and might want to up prices.

Effective Cash Flow Management Tips for Small Businesses

  1. Don’t be too lenient with customers – You’ll want to strike a balance between giving your clients enough time to pay but not being too charitable. Don’t be afraid to chase unpaid invoices and know you’ll always have the option to take formal action where necessary. If you’ve built a good relationship from the start with clients and suppliers this shouldn’t be much of an issue, though
  2. Build a cash reserve – Always try to put some of your profits aside each month into your emergency cash reserves. Having liquid cash on hand is absolutely essential for the survival of any small business. This should be around three to six month’s worth of your average expenses. You can use the rest of your cash to invest and grow
  3. Get good accounting software – The larger your business gets the more complicated the transactions become. If you’re still using simple spreadsheets it can be easy to lose track of invoices and payments. It’s almost always worth the extra cost to get a good piece of management software in to keep you on track
  4. Cash flow is more important than profit – Your business can show a profit on paper but if you don’t have the cash in the bank to back it up you could still end up failing. Liquid cash should always be your number one priority when managing any business. If you check your earnings against your break-even point, but money still feels tight, it’s likely you need to fix your cash flow
  5. Encourage early repayments – You’ll want your clients to pay you as soon as possible so you might want to put early repayment discounts on your invoices to encourage faster receipt of cash. Plus, if you have a large invoice it’s worth splitting it up over several payments to make it easier for customers to pay back and you’ll be guaranteed some cash every month
  6. Reduce or delay expenses – Conversely, while you want customers to pay quickly, you should be trying to extend your own payment deadlines as long as you can. Try to negotiate extensions where you can and opt for Net 30 vendors where possible. Plus, you should always be looking for ways to boost efficiency and decrease expenses
  7. Manage your inventory – If you run an e-commerce store or retail business that needs a lot of stock you’ll need to manage it carefully. Buying too much can mean your cash flow takes a hit while buying too little means you’ll struggle to fill orders. You might want to consider buying some stock management software to track seasonal variations and other fluctuations

Conclusion

While small business cash flow management might seem a little confusing at first, with a little time and effort you can really start to see where you can make some savings. If it’s not something you’re actively managing right now, we highly recommend making it your number one priority.

Those organizations that successfully manage cash flows are much more likely to succeed and turn a tidy profit. Remember to keep chasing your invoices, ensure you always have a healthy cash reserve, and reduce your expenses as much as you can.

Emergency Loans: 4 Tips to Consider

StrategyDriven Practices for Professionals Article | Emergency Loans: 4 Tips to ConsiderAlthough rush financial decisions should not be a norm, emergency loans can save your day in times of crisis. These are near-instant financial arrangements that have concise disbursement timeframes.

Emergency or instant personal loans come without any restrictions, allowing you to use the proceeds with unbeatable freedom. Thus, you can apply for emergency loans to fund any financial crunch, including medical emergencies, urgent home repairs, or other personal needs.

Another exciting feature of instant personal loans is that you do not need a lot of collateral or a lot of verification processes. The eligibility criteria for these loans are pretty straightforward, and the application process is simple with minimal paperwork. Besides, platforms such as Maxlend loans can facilitate the approval and disbursement within the same day of the application.

Essential Tips for Accessing Instant Personal Loans

These tips will help you apply for an instant loan and get out of your financial crisis!

Review Your Credit Score

Since instant loans do not require any collateral, your most excellent means of eligibility is a strong credit score. A high credit score comes with higher chances for approval, higher loan limits, and better terms. Of course, some lenders allow you to negotiate interest rates for these loans, with applicants with a credit rating of 750 and above having the upper hand.

You will need to build your credit history over time to give you a better chance of getting emergency loans when you need them. A high credit rating establishes an applicant as a low-risk borrower, which necessitates high loan limits and instant approvals. You can also pay your mortgage and other outstanding loans to improve your credit rating.

Confirm Your Eligibility

A good credit score is just one aspect of making yourself eligible for an instant personal loan. However, each lender may require that you meet other demands such as age limit, employment status, and bank account statements.

Ideally, meeting these demands is a show of responsibility. Since these demands vary from one financing partner to another, consider transacting with a facility with simple needs and requirements. The essence of considering personal loans is to meet an urgent demand, and it would help if you could choose lenders whose conditions you can provide within the shortest time.

Avail the Necessary Documents

Although emergency loans do not involve paperwork, many lenders have a simple online application process with a short application form. However, some lenders may ask you for specific documents.

Most of the documents may be those that will help the lender verify your identity, employment status, income, and address. Skim through the application requirements beforehand and avail all the necessary documents. Submitting all the required documents will ensure that you get everything right on your application for faster approval.

Choose the Right Lender

A suitable lender should be pretty straightforward with whatever they do. Transparency comes at the top of the list of what you will need to consider. Transact with a financing partner who is open about all the funding conditions. Inquire about the loan amount, commissions, and monthly repayment amounts.

An ideal lender should also process, approve, and disburse your funding faster. Expediting the processing of your loan ensures that you can meet your urgent financial needs in time. Also, opt for lenders that allow you to handle the entire application process online.

Emergency loans are an excellent way to sort out urgent financial needs. However, you have to stay vigilant in choosing a lender. Communication, eligibility thresholds, documentation, and loan processing duration are some tips you should consider. You will also need to look out for loans that offer value-added incentives.

Business Management Tips to Help You Boost Profits in 2020

StrategyDriven Entrepreneurship Article |Business Management Tips|Business Management Tips to Help You Boost Profits in 2020Company profits are derived partly on hard work, and partly by the decisions made about the direction and focus of that hard work. This article focuses on the latter, inspecting how you, as a manager of a business, can make better decisions, and manage your resources more wisely, in order to improve growth, boost profits, and please shareholders. In the modern age of business, you need to be sharp to manage your business towards having a competitive edge.

Read on to learn how to sharpen the tools in your management kit in 2020 and beyond.

Think Staff

With so much chatter across the business world about digital technology and automation, it can be difficult to refocus back on staff – the people who get the job done for you and your company. All the most successful companies, you’ll have seen, are those that instill a smart, professional and motivated workplace culture – a code of ethics and responsibilities by which everyone abides.

As a manager, it’s your responsibility to see these values upheld, in order for productivity to be boosted, and workers maintaining loyalty to your project and your goals.

Software Steals

Nonetheless, there cannot be a business article in 2020 that does not mention the oncoming tide of technology that’ll make your business double-digit percentages more efficient in the 2020s. You only have to look to the technology news that’s published across the internet to read a host of fascinating stories about software and their use within companies large and small. Your responsibility as a manager is to make sure your business is the first to enjoy these benefits – using software and automated tools to boost your productivity this decade.

Financial Management

This tip is especially important for small businesses, which are perhaps more liable to falling profits, debt, and liquidation than their larger and more permanent cousins. If you’re managing a smaller company that’s on a growth strategy, you need to ensure that you’re working with the right tools to help you manage and understand your finances. With quickbooks authorize net integration, you can combine your accounting software into one streamlined system that provides instant and data-assessed access to your company financials, helping you make the snap decisions – about business deals and investments – that might prove profitable for your business in the future.

Think in the Long Term

Much of the news cycle is concerned with the here and now – and that atmosphere, of instant gratification and on-the-button updates can make business strategies myopically short-term. It’s the responsibility of a good manager to also direct workers’ perspectives to the longer term.

You can do this by setting goals, but you’ll also do this with a little blue-sky thinking about the future needs of your consumers, and the future pressures on businesses in your industry. By using this perspective, you can buy yourself breathing space and flexibility in the future, by making changes today that’ll boost your long-term competitiveness into the 2020s.

These business management tips will help all ambitious and thoughtful managers plot out a route to success in this new digital decade of enterprise and trade.