Category Archives: Blog

Overcoming Challenges on the Road to Business Growth

Growth allows businesses to create more jobs, take on more and larger client accounts, and tap into new markets. Business growth is a great goal, but too frequently things like cash flow, debt, and capital reserves keep companies from reaching their milestones. Thankfully, there is a way to overcome those challenges and achieve rapid business growth.

The Drawback of Using Loans for Business Growth

In the past, businesses used loans to achieve growth. While the function of loans hasn’t changed, the lending landscape certainly has. Banks and other business lenders have tightened their requirements. Businesses need higher credit ratings and more collateral to qualify for loans. At the same time, banks have reduced loan amounts, making it more difficult for businesses to secure the capital they need to achieve growth. Additionally, debt-based solutions limit the growth potential of businesses. Business owners need to calculate how much the monthly installments will be on bank loans and figure those into cash flow after growth. While businesses typically experience some cash flow strains under regular conditions, adding another loan payment into the mix can stretch finances beyond their limits.

Business Growth without Debt

Fortunately, loans are not the only way businesses can achieve growth. In order to ensure successful growth, businesses need to maintain strong cash flow, reduce debt, and build up their capital reserves. One of the fastest and simplest ways to overcome all three challenges without taking on extra debt is to use accounts receivable factoring. When businesses issue invoices, they usually have to wait 30, 60, or even 90 days to receive payments from customers. This staggers cash flow and often delays plans for growth. Accounts receivable factoring boosts cash flow by converting unpaid invoices into capital and making those funds available within 24 hours. The side benefit is that with an accelerated cash flow, businesses can cover expenses, build up capital reserves, and achieve rapid business growth without taking on debt or limiting their potential.

New Century Financial specializes in accounts receivable factoring for businesses that are looking to position themselves for growth. Contact our offices today to learn more.

Achieving a Better Sales to Revenue Ratio

Businesses across all industries are balancing sales and revenue to optimize cash flow. However, the sales to revenue ratio can get skewed when payment windows are staggered by a month or longer. Fortunately, there is a solution that can rightsize cash flow and bring the sales to revenue ratio back into focus.

Understanding the Sales to Revenue Ratio

When you purchase something from a retail store or a restaurant, goods are paid for and the business received revenue immediately at the cash register. For other businesses, such as manufacturers, suppliers, maintenance companies, law offices, and more, invoices are issued after a sale is made. Those invoices have staggered payment windows of 30, 60, or 90 days. This means that customers have a month or longer in which to pay for the goods or services they purchased, all while businesses are spending money to cover overhead, payroll, and the costs associated with other customer orders. In other words, a business could have sales through the roof and still find themselves struggling to keep operations running while they wait for payment from customers.

Improving the Ratio

Issuing invoices with staggered payment windows of a month or longer is a standard business practice, and probably will not change anytime soon, even though the rate at which we do business gets faster every day. Yet there is a way businesses can turn their unpaid customer invoices into cash to improve their sales to revenue ratio. Instead of waiting 30, 60, or 90 days, businesses that factor their unpaid invoices get access to capital within 24 hours. This results in a nearly perfect sales to revenue ratio that allows businesses to boost cash flow, cover costs, and build up reserves for growth. Additionally, factoring is not a debt-based solution, which makes it a much friendlier solution than resorting to short-term loans to smooth out uneven cash flow issues.

At New Century Financial, we provide comprehensive factoring services to businesses across all industries, with no upper limits and no long-term contracts. Achieve a better sales to revenue ratio today by contacting the experts at New Century Financial.

Preventing Business Bankruptcy in an Unpredictable Economy

As we enter the first year anniversary since the start of the COVID-19 pandemic, businesses are still facing challenges to maintain cash flow and prevent bankruptcy. Take heart! With increased vaccine production and distribution, it looks like everyone has entered the homestretch to get “back to normal.” Fortunately, there are ways for businesses to prevent bankruptcy as we approach the finish line.

Loans and Business Bankruptcy

When the pandemic hit, businesses struggled to maintain sales while trying to pay off existing debt. At the same time, banks tightened their credit and collateral requirements, making it extremely difficult for businesses to take out short-term loans to smooth over uneven revenue cycles. The first round of PPP loans offered very limited support, and while the economy is slowly entering an uptick, businesses are looking for cash flow solutions that are not debt-based so they can preserve credit and collateral while avoiding bankruptcy.

Cash Flow and Bankruptcy

Whether the economy is experiencing a downward turn, or if it’s on an upswing, businesses can face bankruptcy due to cash flow. Outside of retail and other businesses that use a point-of-sale system, most businesses issue invoices to customers with staggered schedules of 30, 60, or even 90 days. The lag in payments creates a strain on cash flow, with more money being spent than is coming in as revenue. This is especially risky now, when clients may file for bankruptcy themselves before their invoices are paid. Businesses need a way to reduce or eliminate the lag between sales and customer payments.

A Solution to Prevent Bankruptcy

To steer clear of bankruptcy and accelerate cash flow, businesses use accounts receivable factoring. When businesses use factoring, their outstanding receivables are converted into cash quickly, without placing debt on the books. This allows businesses to greatly reduce the time between sales and access to revenue, while also building up capital reserves to weather economic downturns and roll out growth plans during upswings.

At New Century Financial, we are a nationwide leader in accounts receivable factoring services. We factor invoices and make funds available to our clients within 24 hours. We put our clients in control, letting them choose which invoices or parts of invoices we factor for them. If you want to boost your cash flow and avoid bankruptcy, contact the team at New Century Financial today.

Running Your Business Without Debt-Based Loans

For the longest time, loans have been a necessary evil in order for businesses to maintain and grow their operations. In fact, loans have become the default, all-purpose solutions for everything a business needs, whether it’s using short-term loans to smooth over revenue cycles, extra capital to purchasing assets, or as a means to supplement capital reserves to roll out plans for growth.

But are debt-based loans really necessary?

The Drawbacks of Using Debt-based Loans

Regardless of how loans can help in the short-term, there is no way to avoid the negative impacts they have on businesses. Debt-based loans require collateral and lower credit ratings, making it more difficult for businesses to secure financing in the future. And of course, loans place debt on the books. This means that businesses using short-term loans to overcome cash flow challenges might be setting themselves up for a worse financial situation down the line. Cash flow issues are usually recurring, and taking out a loan places debt on the balance sheet that must be repaid through monthly installments. The net result is that revenue is being used to make payroll and cover regular overhead expenses, plus the amount needed to repay the loan. When cash flow problems occur in the future, they could potentially be dire because the debt from the loan makes the total expenses higher than before.

There is a Solution

Fortunately, there is a way to solve cash flow and working capital issues without relying on debt-based loans. When businesses want to pivot away from loans, they use invoice factoring. Invoice factoring is nothing new in the world of business. In fact, there are records of factoring going back to the ancient world in Mesopotamia. The concept is the same now as it was then – a business uses factoring to turn unpaid customer invoices into immediate cash to get fast access to funds and boost cash flow. In turn, the accelerated cash flow allows businesses to build up working capital, reducing and eliminating the need for debt-based loans. Businesses that use invoice factoring do not need to take on unnecessary debt, and they preserve their credit ratings in the process.

At New Century Financial, we offer comprehensive factoring services and convert invoices to cash so you can access funds within 24 hours. Contact our offices today to learn more.

Smoothing Out Uneven Revenue Cycles

All businesses experience uneven revenue cycles, which can greatly impact cash flow and prevent companies from thriving and growing. While many businesses use short-term loans to overcome these recurring obstacles, the debt and impacted credit ratings can create an even larger problem. Fortunately, there is a way to smooth out uneven revenue cycles without negatively impacting finances.

What Causes Uneven Revenue Cycles?

Uneven revenue cycles can be caused by many things. Unexpected business expenses, unpredictable economic downturns, unconsolidated debt – any and all of these things can disrupt cash flow. Even during high sales periods, the total payments received from customers can be well below the calculated revenue due to staggered payment schedules. The most common cause of uneven revenue cycles occurs when revenue is tied up in unpaid receivables with staggered payment schedules of 30, 60, or 90 days. The disruption to finances often forces businesses to take out short-term loans to smooth things over. However, if these cash flow issues are recurring, then loans will only make things worse. The debt incurred means monthly expenses are higher, in order to repay the balance. This can lead to even greater cash flow issues every month, and businesses can quickly reach their lending limits with banks.

Correcting Revenue Cycles

The simplest and most effective way to smooth out uneven revenue cycles is by using factoring services. At its most basic, factoring services are an exchange of unpaid receivables for immediate cash. Unlike traditional loans, factoring does not place debt on the book or impact credit ratings. This allows businesses to correct uneven revenue cycles, boost cash flow, and build up capital to weather obstacles and make plans for growth.

New Century Financial is a national leader in factoring services for businesses across all industries. We can turn unpaid invoices into cash within 24 hours. Our team is committed to giving businesses the flexibility they demand, which is why we do not lock clients into long-term contracts, and we let you choose which invoices or parts of invoices get factored. To get the fastest, most transparent, and most flexible factoring services, contact the experts at New Century Financial today.

Maintaining Cash Flow Under the Defense Production Act

In late January, the United States government brought the Defense Production Act to the table as a means of tackling the pandemic and accelerating supply chains for vaccines, medical equipment, and more. This means that manufacturers, distributors, suppliers, and businesses across all industries will be taking on government contracts to keep up with this new initiative. But how can these businesses keep up with demands if cash flow is already tight?

What is the Defense Production Act?

The Defense Production Act (DPA) was first deployed in the 1950s to shore up goods and materials to aid the United States military in overseas conflicts. Now, the DPA is being invoked to ensure we can fight COVID-19 and get the country back on track. This act opens up a number of opportunities for businesses who want to dedicate operations to assist in this purpose. Businesses that enter production to help with the initiatives to combat the pandemic enter into government contracts, and are compensated for their efforts.

Cash Flow and Government Contracts

In order for businesses to meet the demands laid out by the DPA, they have to maintain a healthy cash flow. Much like regular orders, invoices sent to government agencies are paid on staggered payment schedules. During those gaps in payments, businesses still need to make payroll, purchase supplies and materials for production, and cover general overhead expenses. To resolve the equation between production demands and staggered payments, businesses need a faster turnaround on invoices.

To boost cash flow to keep up with contracts, businesses use accounts receivable factoring. Unlike traditional loans, accounts receivable factoring does not place debt on the books. Instead, unpaid invoices are turned into cash and the funds are made available within 24 hours. This allows businesses to eliminate the lag between payments and boost cash flow to cover expenses, plus build up capital reserves in the process. At New Century Financial, we offer the most comprehensive accounts receivable factoring services. Whether you need to smooth out uneven revenue cycles, boost cash flow to cover production costs, or build up capital reserves, we can help. Contact the team at New Century Financial today to get started.

Does Your Business Have a Post-Pandemic Strategy?

With the announcement of multiple vaccines for COVID-19, people were able to set their sights on the future, while still juggling day-to-day challenges. Businesses in particular need to form a plan to ensure they are in the best financial position possible once we start to enter the post-COVID era.

The Need for Immediate Capital

For the past year, businesses have had to adjust to pandemic guidelines. Reduced or high focused operations have forced businesses to worry about maintaining cash flow for immediate expenses, such as payroll, overhead, inventory, and supplies. Business owners are focused on maintaining cash flow for the here and now. The advent of vaccines has changed all that. Businesses now need to maintain cash flow to handle daily, weekly, and monthly expenses, as well as planning for six months or a year from now when the country isn’t facing such restrictions.

Cash Flow Planning

Despite all of the adjustments businesses have made, from moving operations online to implementing safety guidelines, the one constant that has remained is how invoices are paid. Businesses still issue invoices with staggered payment schedules of 30 days or longer. In a time when cash flow is more crucial than ever, the lag created by staggered payment schedules places a heavy strain on businesses. If businesses are waiting a month or more to receive payments from their customers, overhead costs and payroll cannot be covered, and operations can grind to a halt. Relying on short-term loans to smooth over uneven revenue cycles isn’t a viable solution, especially as lenders tighten their requirements for businesses. Staggered payment schedules also prevent businesses from accumulating capital to make plans for after the pandemic.

Overcoming Cash Flow Challenges

In order to accelerate cash flow so plans can be made for the future, businesses use accounts receivable factoring. New Century Financial offers comprehensive accounts receivable factoring services so businesses can turn their unpaid customer invoices into cash within 24 hours. Our factoring services boost cash flow so businesses can meet short term costs, such as overhead and payroll, and they can build capital reserves to get a competitive edge in the post-COVID economy that’s on the horizon. Contact New Century Financial today to get started.

Asset-Based Financing Solutions: A Primer for Small Businesses

Asset-based financing – sometimes referred to as asset-based lending or ABL – has come to the forefront as a popular funding solutions for small businesses across all industries. However, there is quite a bit of confusion over exactly how assets-based financing solutions work and how businesses can use them.

Defining Asset-Based Financing

Asset-based financing is a catch-all for funding solutions structured around items owned by a business. Equipment, property, and other assets can be used to create financing in place of traditional debt-based loans. Sometimes, asset-based financing is a line of credit, but by far one of the most robust, efficient, and versatile forms of asset-based financing is accounts receivable factoring, which is structured around invoices. Receivables are assets owned by a business. Once a sale is made, an invoice is generated, which acts as a note for future payments, typically with staggered schedules of 30, 60, or 90 days in which customers need to provide payment.

Accounts receivable factoring leverages those invoices for on-the-spot capital, turning them into immediate cash that businesses can use for any purpose they want. Because the invoices are essentially being sold for immediate cash, there is no debt involved, and the fast turnaround boosts cash flow. Going one step further, businesses can use accounts receivable factoring to convert parts of invoices to cash, whole invoices, or entire batches of invoices. The end result is strong cash flow, and businesses can make plans for the future instead of waiting on sporadic customer payments.

Asset-based financing from New Century Financial

New Century Financial offers comprehensive asset-based financing in the form of accounts receivable factoring. We convert invoices to cash within 24 hours and give businesses the control they want by allowing them to choose which invoices or parts of invoices get factored. There are no long-term contracts or hidden fees with our factoring services, plus we offer a suite of tools so business owners can track payments and even check on the creditworthiness of their customers, which assists in making decisions and building relationships. To learn more about accounts receivable factoring, contact the team at New Century Financial today.

Businesses Need Working Capital, But Not All Solutions Are Equal

The health and strength of any business centers around cash flow and the amount of working capital on hand at any given point. Now more than ever, businesses need working capital to maintain operations and make plans for growth as the economy enters the early stages of recovery. However, not all working capital solutions are the same.

Loans are no longer the go-to solution

Loans were one of the main method for businesses to secure the working capital they needed. Over the past decade, and especially in the last year, businesses have been moving away from loans. PPP loans were very helpful, but neither banks nor businesses really took on any risk. Traditional loans place debt on the books for businesses. At the same time, both banks and businesses assume risk with loans. Banks that approve loans for businesses are at risk if entrepreneurs default. Similarly, businesses are at risk because they take on debt, and the monthly payments impact credit ratings. Not surprisingly, in times of economic uncertainly, loan approvals are low, and those borrowers that do get approved have to deal with higher requirements and lower lending limits as banks shift as much risk as possible onto business owners.

Merchant cash advances are losing favor

Merchant cash advances always seem like an attractive way to get working capital when banks are tightening their requirements. Yet merchant cash advances have been dropping out of favor as well. Alternative lenders are offering merchant cash advances with extremely high interest rates and hidden fees to get the most out of businesses. Taking out a merchant cash advance, even though it does not place debt on the balance sheet, can place businesses in a very precarious financial position due to the high interest rates and fees attached to the financing.

Leveraging receivables for working capital

The one reliable working capital solution is accounts receivable factoring. Accounts receivable factoring does not impact the credit ratings of businesses, nor does it place debt in the books. Instead factoring is a process by which unpaid invoices are converted into cash and the funds are made available within 24 hours. This eliminates the need to wait 30 days or longer to get access to revenue from sales. There are also no hidden fees or long-term contracts. Businesses use accounts receivable factoring to boost cash flow and build up capital so they can thrive and grow, regardless of the economic climate.

Find out why businesses use factoring services from New Century Financial for their working capital solutions. Contact our team today.

Finding the Right Factoring Solutions for Your Business

When businesses need to smooth out uneven revenue cycles, boost cash flow, or get fast access to capital without taking on debt, factoring is the go-to solution. However, like with all financing products, the factoring industry casts a wide net, and not all factoring solutions are the same. Finding the right factoring solutions for your business has as much to do with your capital needs as it does the specifics of the factor you are using. Businesses should be looking for the following qualities if they want to find the best factoring services.

Look at factoring limits

Some factoring companies have minimum requirements for their clients. Factoring solutions for large companies typically require a base invoice amount to qualify for services. Ideally, you should look for factoring services that have low or no minimum, and no upper limits.

Is there a contract?

Many businesses enter agreements with factoring companies because they need fast access to capital to get over a rough financial patch only to find out they need to enter a long-term contract. The right factor will work with you to understand your needs and create a customized solution. Additionally, it is best to work with a factor that does not require contracts.

Are you in control of your invoices?

Many factoring services boast that they will help automate your cash flow. While this is true, some factoring companies automate any and all invoices once the agreement is signed. Businesses should look for factoring solutions that put entrepreneurs in control of which invoices, or even which parts of invoices get factored.

How soon can you access funds?

The timeframe on when businesses can access funds also varies from factor to factor. Some make funds available after 48 hours. Some can take a week or more. The business world is moving faster every year, which means companies need fast access to cash from their factored invoices. The ideal turnaround time for businesses should be within 24 hours in order to boost cash flow and build up capital reserves.

New Century Financial is a national leader in factoring services. We convert unpaid receivables to cash within 24 hours with no long-term contracts or minimums, and we let our clients choose which invoices or parts of invoices get factored. So comprehensive factoring solutions, contact the team at New Century Financial today.