Monthly Archives: October 2018

Tech Factoring: Continuous Capital for Long-Term Success

The technology industry covers a wide range of businesses, from hardware companies to software development, independent consultants, and everything in between. Yet whether your business sells large hardware configurations, consulting services on long-term projects, or subscription-based services, working capital keeps the lights on, allows people to find solutions, and meet time-sensitive deadlines.

Invoices and the Speed of Technology

Accounting and technology move at different speeds. A fast a crucial tech solution may be delivered within hours, but the rate at which clients pay their invoices may take a month or more. This disparity can severely restrict finances. Even lean tech startups require some very high-end resources to deliver on contracts and customer requests, and the lag in payments can cause operations to grind to a halt.

Resolving the Equation

In order to keep cash flow moving faster, and to build up the amount of working capital on hand, tech companies are using factoring services. Tech factoring unlocks revenue held up in unpaid receivables. Factoring is much faster and more efficient than traditional loans, and factoring doesn’t place debt on the books. Factoring gives businesses in the tech industry access to capital which can be applied to basic overhead expenses, research and development, and alleviate the need for “crunch time.” Tech factoring also allows businesses to build up the capital necessary to take on larger clients without placing a strain on internal resources.

Building Credit

Many tech startups cannot access loans for a number of reasons. First, traditional lending channels still view the tech industry as a high-risk field. Second, many tech companies are startups operating on a lean staff with a short history of financials and low credit ratings, precluding them from loan approval. Because tech factoring is debt free and structured around an exchange of receivables for cash, businesses can preserve and build credit ratings.

Mergers and Acquisitions

Mergers and acquisitions are not uncommon among technology businesses. However, both mergers and acquisitions require a reliable source of capital, especially during the delicate transition phase. Technology factoring allows companies to boost cash flow during these crucial transactions to ensure there is ample capital to cover immediate concerns and expenses. Taking advantage of the benefits of factoring services can enable rapid growth for businesses in the tech industry.

New Century Financial is a national leader in technology factoring for all types of businesses in the industry. Contact our offices today and learn more about how we can improve your cash flow.

Revenue Cycles: Smoothing Out Uneven Cash Flow

While business forecasts and projections can point to ballpark goals, revenue cycles themselves become rather uneven when analyzed on a more granular level. Sale figures fluctuate. For businesses that issue invoices with payment schedules of 30 days or longer, smoothing out uneven revenue cycles can go a long way towards growth and overall success.

What Causes Uneven Revenue Cycles?

There is no one main reason that causes revenue cycles to rise and fall. The overall strength of the economy certainly plays a big part. In some cases, customers purchase conservatively in one period and then buy aggressively in the next. For service-based companies, customers may allow contracts to lapse or fail to renew service subscriptions. In all of the above scenarios, having revenue tied up in receivables can place a strain on finances. While big businesses might feel a slight impact from cash flow turbulence, new and smaller businesses are affected more severely. Uneven revenue cycles can, in extreme cases, mean the difference between hitting a major growth milestone and being unable to make payroll.

Corrective Measures

Not all solutions are created equal. Gaps in revenue cycles may push businesses to take out short-term loans for a boost in cash flow. However, the capital from loans, and the accompanying debt, can cause even bigger problems. Once the money from the loan is used, the debt remains until the balance is repaid. If revenue cycles become uneven in the future, the capital needed to fill in any gaps will also include debt from the previous loan, and borrowing will only exaggerate and compound the problem.

In order to correct cash flow issues and smooth out revenue cycles, businesses need a fast and debt-free solution. Invoice factoring is an alternative to traditional loans, and can be used to unlock capital tied up in unpaid invoices. Factoring doesn’t place any debt on the books, and ensures an optimized cash flow, so businesses can maintain capital reserves to both cover obligations and make plans for growth.

New Century Financial offers invoice factoring and funding solutions to a wide range of industries. If your businesses is experiencing uneven revenue cycles, or if you want to protect your business against cash flow turbulence, contact New Century Financial today and learn how our factoring services can help you.

The Transportation Industry’s Cash Flow Gridlock

The transportation industry serves every single business in the United States. From the food we buy at the grocery store to consumer electronics, raw construction materials, and everything in between, our economy thrives due to efficient supply chains and logistics. Yet even in the current economic climate, the transportation industry is facing growth challenges to meet rising demands from every industry.

Favorable Economic Conditions

The reports about our strong economy have not been exaggerated. Manufacturers are producing more goods. Consumers have extra capital and are purchasing more. The demand for capacity trucks has increased, giving transportation companies the leverage they need when entering into contracts. Even load matching apps are being used by larger clients, providing even more revenue options for independent owner-operators. Everything is lining up to favor the transportation industry, so why is it so challenging to meet the increased demand for goods to be shipped?

Tight Cash Flow

Currently, the transportation industry is running with restricted cash flow conditions. Sales have increased, customer demand is on the rise, but most of the revenue is locked in unpaid invoices. With more drivers and equipment needed to take the place of retiring truckers, and the need for increased recruitment campaigns to grow and meet the rising demand, the transportation needs immediate access to capital. Just because the economy is strong doesn’t mean transportation companies want to take on debt through loans. Debt-based financing creates liabilities and hinders growth plans. Certainly there must be a better way to get capital.

Transportation Factoring

Instead of relying on debt-based loans for capital, transportation companies are unlocking the revenue tied up in unpaid invoices and bills of lading. By using transportation factoring, trucking companies can get fast access to revenue instead of waiting a month or longer for customers to make payments. The improved cash flow provided by transportation factoring gives businesses the industry the ability to quickly accumulate capital for new vehicles and equipment, hiring additional drivers, taking on larger client accounts, and even taking on business in new territories. With the current economic trends, there is no reason for trucking companies to be locked in a holding pattern due to cash flow strains – nor should they feel forced to use debt-based financing.

New Century Financial offers comprehensive transportation factoring. As a national leader in accounts receivable financing solutions, our team works with trucking companies throughout the United States to ensure supply chains have the capital necessary to operate smoothly and grow in today’s economy.

Dispelling the Top 7 Myths about Accounts Receivable Factoring

There is a lot of misinformation out there regarding accounts receivable factoring. For new business owners, these myths can be very misleading, and can often engineer decision makers to get locked into debt-based agreements. New Century Financial would like to take some time to dispel some of the myths surrounding accounts receivable factoring to provide business owners with a clearer picture of how the process works and what to expect.

Myth 1: Accounts receivable factoring is only for struggling companies

This is one of the biggest factoring myths we see on a daily basis. Accounts receivable factoring is designed so businesses can access revenue faster and build up capital reserves. Factoring corrects cash flow issues for some businesses and prevents them from occurring for others.

Myth 2: Factoring is risky, or else banks would offer it

Accounts receivable factoring is one of the most stable forms of financing in existence because it is structured around tangible assets (invoices) instead of speculation. The reason factoring isn’t offered by traditional lending channels is because there is no debt involved, so there are no lingering liabilities on the books or profits to be made from ongoing interest spanning months or years.

Myth 3: Invoice factoring involves a lot of red tape

Far from it. Unlike traditional loans which have high requirements and arbitrary board decisions, factoring can be set up very quickly. In most cases, businesses that use factoring services can access funding within 24 hours.

Myth 5: Factoring will damage my business credit ratings

False. As mentioned above, accounts receivable factoring is debt-free. As such, factoring is not based solely on your credit ratings. If anything, the services are more focused around the creditworthiness of your clients.

Myth 6: Invoice factoring will mean I’m getting pennies for my invoices

Many of our clients see as much as 90 percent on the invoices they sell to us. New Century Financial is a national leader in factoring services because of how much we are able to provide to our customers.

Myth 7: Factoring is just a fancy term for debt collection

Factoring is much more than a method for cash flow improvement. Factoring services allow businesses spanning all industries to get fast access to revenue and build up capital reserves for rapid growth. Because of its efficiency and lack of debt, factoring is considered one of the few “recession resistant” financing methods.

To learn more about accounts receivable factoring and how it can benefit your business, contact the experts at New Century Financial today.