Monthly Archives: March 2020

manufacturing

Service Companies: Financing Challenges and Solutions

Service companies play a very necessary but unique role in our economy. Service companies can be found in every industry, but they do not provide tangible goods, like traditional product-based businesses. The services these companies provide are invaluable, but finding adequate financing to maintain and grow their operations can be challenging.

Financing Challenges

Securing traditional loans can be difficult for any small business. Lenders set requirements for credit ratings and collateral to qualify for loans, but since service companies do not have physical goods, real estate, or other large assets, they might not meet the requirements for most loan programs. Even non-traditional lending, such as a merchant advance, requires a point-of-sale system to repay the balance. Alternative lending places the majority of the risk on the applicant, so there are usually additional fees and high interest rates, as well. Since service companies operate on a lean business model, taking on debt and high interest rates can severely impact finances and prevent growth.

Solutions for Service Companies

The tangible assets that service companies all have in common are receivables. Many service companies either have contracts with clients, or perform on a per-job basis. The invoices issued have payment schedules of 30 days or longer. During that period, a service company still needs to cover expenses, make payroll, and cover the cost of services rendered to other clients. In short, the lag caused by staggered payment schedules can create a situation where a service company is spending more than it is making. To prevent this and build up capital for growth, service companies take advantage of factoring services. Invoice factoring services are designed to accelerate cash flow and eliminate the lag between payments. Factoring is a simple exchange of receivables for cash. Since factoring is a simple transaction instead of a loan, a service company can preserve its credit ratings, avoid debt, and remove the need for traditional and alternative lending.

At New Century Financial, we provide a comprehensive factoring program for service companies. Our team will work with you to create a tailored solution to help you reach your goals. We give service companies the power to choose which invoices – or parts of invoices – get factored, and provide funding within 24 hours without any hidden fees or long-term contracts. Contact New Century Financial today to get started.

CORONAVIRUS (COVID-19) UPDATE

March 23, 2020

To our Valued Clients,

As a follow-up to our first update from last week, sent on March 13, 2020, we want to let you know that New Century Financial has been conducting business with 100% of our staff working remote for a complete week and in prior rotations since February 28, 2020. We have serviced 100% of our clients while conducting business as usual during this COVID-19 changed environment.

In our line of business, completing a funding transaction for you is our utmost priority since we understand cash flow time sensitivity. Our team will continue to provide ongoing updates to you as more information is provided by the CDC and other credible sources. Please consult with your Account Manager if you have any specific questions on our preparation for business continuity related to COVID-19.

Please feel free to call your Account Manager for any questions. Reference the links below for news updates on COVID-19 and best practices to minimize exposure:

https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/businesses-employers.html

https://www.cdc.gov/coronavirus/2019-ncov/cases-in-us.html

https://www.cdc.gov/coronavirus/2019-ncov/about/index.html

Warm Regards,

New Century Financial Management Team

business-loans

Running Your Small Business without Breaking the Bank

Businesses of all sizes have expenses. Payroll, supplies, equipment, bills, and more can really eat into a budget before any revenue gets to the bank account. For smaller businesses trying to manage finances, there are ways to run and grow operations without decimating your budget or taking on a ton of debt.

1. Purchasing equipment isn’t necessary

While every business uses equipment, the large cash outlay to purchase machinery, vehicles, and tools can deplete capital reserves or force business owners to take out loans. If you run a small business, or simply want to reduce expenses, try leasing equipment instead. Leasing agreements are flexible and the payments are manageable, so businesses can get the exact equipment they need. Leasing companies also handle maintenance and repairs, which also eliminates extra expenses for your small business.

2. Use Contractors or Staffing Agencies

If you run a small business, you may want to staff your operation with contractors or use a staffing agency. While contractors may get paid more per hour than regular full-time employees, you also will not have to include them when filing your quarterly IRS taxes. The cost of contractors and temps can actually end up saving your small business money when it comes to employee taxes and liabilities.

3. Loans shouldn’t be your first answer to financing

Small business owners are staying away from debt-based financing because of how it impacts cash flow and internal finances. Additionally, loan requirements have tightened over the years, and newer businesses may not have the credit ratings or collateral to qualify for the financing they really need. Loans can place a strain on finances because revenue needs to be portioned out to make those monthly payments. A short-term loan now can end up placing a strain on finances later.

4. Speed up revenue for your small business

The wait between sales and revenue can sometimes seem like an eternity, especially if your small business issues invoices with payment schedules of 30, 60, or even 90 days. While you are waiting for payments from your clients, you still need to make payroll, cover the bills, and pay any other expenses that arise. To speed up the rate at which revenue comes into your small business, use invoice factoring. By using factoring, unpaid invoices will be converted into cash which will be made available within 24 hours. This allows your business to stay on top of finances, cover expenses, and plan for growth projects without relying on debt-based financing.

New Century Financial is a national leader in invoice factoring services. We offer fast and transparent services and allow you to choose which invoices get factored without any long-term contracts or hidden charges. Contact our offices today to speed up your revenue.

IMPORTANT CORONAVIRUS (COVID-19) UPDATE

IMPORTANT CORONAVIRUS (COVID-19) UPDATE:

To our Valued Clients,

New Century Financial has been closely monitoring the evolving situation related to COVID-19. Banks around the globe have also been working diligently to ensure they can keep “critical operations” open through a potential pandemic.

As more cases across the nation have been reported, we have worked on a Contingency Plan to keep our employees safe and ensure business continuity while we keep making the necessary adjustments to our work and operations. Just as we did in Hurricane Harvey, our staff is able to work remotely and continue operations as usual throughout any crisis that may arise with COVID-19.

Our team will continue to provide ongoing updates to you as more information is provided by the CDC and other credible sources. Please consult with your Account Manager if you have any specific questions on our preparation for business continuity related to COVID-19.

Please feel free to reference the links below for news updates on COVID-19 and best practices to minimize exposure:

https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/businesses-employers.html

https://www.cdc.gov/coronavirus/2019-ncov/cases-in-us.html

https://www.cdc.gov/coronavirus/2019-ncov/about/index.html

Warm Regards,

New Century Financial Management Team

Business Registration: When Is It Necessary?

You have picked out your business structure and have filed for your company’s EIN, but do you need any other registration documents? Many entrepreneurs think that once a Tax ID is issued, they can start making sales and generating revenue. However, there are a few situations in which further business registration is required.

Protecting Intellectual Property

The federal government only requires a tax ID for a business to become a legal entity. Yet if your company delivers proprietary products and services, and you want to protect your brand from competitors, extra steps are necessary. The United States Patent and Trademark Offices have forms for everything from products to processes, brands, logos, and names so your business can protect its intellectual property and reduce messy legal entanglements further down the road.

Business Registration with State Offices

Practically every business needs to register with state offices. If your business has physical offices in a given state, then you need to register your business. If you have the majority of your in-person meeting with clients in a state or if a good portion of your revenue is generated in a particular state, then you need to register with that state’s business or commerce department. Additionally, if you have employees that work in a state, then you need to fill out the proper business registration forms. A state tax ID will be issued, which can be used to protect you and your business from identity theft, if you are a sole proprietor.

Local Business Registration

Most businesses to not need to fill out registration forms at the city or county level, with some exceptions. LLCs, nonprofits, partnerships, and corporations may need to register at the local level to get proper licenses to operate in a particular city or county. Businesses in specific industries, such as construction companies and law offices, may need to file locally as well in order to receive the proper permits to operate in a specific city. Some local agencies require entrepreneurs to file a DBA (Doing Business As), which can be registered under a company name or a real name.

Before you start making sales, consult with your attorney or CPA to figure out which business registration forms you should file to ensure you all of your bases are covered.

accounts-receivable

Small Businesses: Keeping Finances Healthy for Growth

For many small businesses, maintaining healthy finances is a careful balancing act between revenue, expenses, and liabilities. There are a few key guidelines small businesses can use to keep healthy finances and achieve successful growth.

Avoid Unnecessary Debt

Small businesses need capital for everything from overhead to payroll, and the cost of production for client orders. Using loans and other debt-based financing programs as an answer to smooth out financial turbulence is a slippery slope. Loans place debt on the balance sheet, lower business credit ratings, and place a further strain on finances. Yes, loans can temporarily provide a “fix,” but businesses have to set aside a portion of their revenue to make payments on the balance owed, which can create even larger cash flow issues.

Stay on Top of Liabilities

Small businesses need to pay their quarterly IRS liabilities to avoid fines and other penalties. If there are already existing loans, the balance owed can eat into finances and prevent businesses from making those quarterly IRS payments on time. Small businesses need to build up capital to keep their federal obligations covered to prevent liens and worse.

Optimize Cash Flow

Cash flow is crucial to all companies, but it has the biggest impact on small businesses. Sales are great, but if the lag between payments from clients is a month or longer due to staggered schedules, productivity and finances can grind to a halt. Even an unexpected or large order can be both a blessing and a curse. A large order will definitely yield more revenue, but covering the cost of filling that order can hold up regular operations, especially if revenue is coming in at a staggered pace. To optimize cash flow, small businesses use accounts receivable factoring. Accounts receivable factoring boosts cash flow by providing immediate funds for unpaid client invoices. This allows small businesses to build up capital to cover overhead, pay down liabilities, become less reliant on debt-based financing, and take on larger client accounts.

New Century Financial provides comprehensive accounts receivable factoring with a turnaround on receivables within 24 hours. We give small businesses more control by letting them choose which invoices or parts of invoices get factored, with no long-term contracts or hidden fees. Contact New Century Financial today, and keep your business finances healthy.