Cash Flow - Growth Money and Business Funding

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Money Management
Managing your Money

Is saving a dollar here and there really worth it? Does it significantly add up to anything worth while? Well that depends on who you are talking to. Saving $25 on any given occasion may not sound like that much but you do that over a year and you have yourself $300. Then take that $300 and invest it, and add the $25 each month and for arguments sake say you get 4% i... Read personal finance article



Home Based Business - Cut Taxes and Get Larger Returns
I want to let you in on a little secret that not too many people are aware of: Owning a home-based business or any type of business can virtually cut the amount of taxes you owe each year.

The amazing part about this is your business does not have to make a profit in order for you to declare deductions. According to an article written by Jeff Schnepper, "All you have to do is establish ... Read personal finance article



Cash Flow - Growth Money and Business Funding
The number one reason for business failure in the U.S. today is lack of working capital!

Businesses need money to grow. A business cannot survive just because it has a better product, an exclusive market or the best method of distribution. Funding in the form of working capital and cash flow is required for progress!

But where does a business go when the bank says no?

Asset-Based Lending - What Is It and How Can It Help?

The asset-based lending industry helps a business to leverage its "liquid assets" (most commonly accounts receivable, i.e. invoices/contracts, purchase orders) and gets cash to the business much faster than traditional sources.

As a result, the business has this cash for day-to-day operating expenses -- when it is needed - rather than having to wait. Then, the business can do what it does best - it's business - and produce the best quality product and/or service while escaping the, "Is the check in the mailbox?" syndrome so many businesses encounter.

One of the differences between the asset-based lending industry and banks/traditional sources is this industry looks at the company or business PAYING the invoice, bill or contract for its security as opposed to the credit history, cash flow and time in business of the business issuing the invoice.

Unlike traditional sources, asset-based funders do not have a "commercial lending section" to handle all business funding requests. Rather, there are specific funders who specialize in construction, manufacturing, the trades, professional fields such as engineering, medical, etc. They know that "one size" does NOT fit all when it comes to business funding needs.

Asset-based lending has always been available to "big business" but is just recently becoming utilized by "small business." The business world has begun to realize what the SBA has been saying for a long time, "The total of small business is larger than big business," and wants to tap into this gold mine.

Banks, realizing it is in their best interest, oftentimes send clients they are unable to help to asset-based lenders. Then, when the client has the financials the bank needs, their friendly banker who referred them to the asset-based lender can re-enter the picture.

Asset-based lenders also work in conjunction with an already established banking relationship. However, they are able to be much more responsive to the urgency of a businesses cash needs to take advantage of profit opportunities when they present themselves. For example:

Right after Katrina, a purchase order funder in the asset-based lending industry was able to help a power company fulfill a $2.2M order from the USACE. The power company's bank was not able to process their funding request fast enough and they were about to lose the order. The purchase order funder took the application on Wednesday and the order was being shipped by Friday of the same week. The power company was able to fill that order and other future ones due to the speed with which they were able to get the funding they needed.

When evaluating an asset-based funding deal, the cost of this funding should be considered in the context of the benefits to be received rather than on a stand-alone basis. Compared with other financing alternatives, asset-based lending is very cost effective and efficient and is there "when" you need it to take advantage of profit opportunities in the market such as we now have in Louisiana, post-Katrina.

As an example, we all want to shop at Wal-Mart (banks) and get the most for our dollar. However, Wal-Mart is often crowded, takes too long, or is not close enough if we live in smaller communities. So, we pull into the convenience store or other smaller, boutique-type merchant (asset-based lenders) where we know we can get what we need right away, when we need it, even though it might cost a little more. When a business needs funding, it NEEDS it then and not later!

Russell Handley, owner of a communications company in Newburgh, NY installs cable lines for large cable companies. It is standard for these firms to take as long as 90 days to pay bills. So, Handley uses factoring on occasion and gets his money quickly for his invoices that allow him to take on more work. In fact, he credits factoring with having helped him increase his annual revenue from $500,000 to nearly $4 million in seven years. "We wouldn't have grown as fast as we did without it," he says. (Pofeldt, Elaine. "Raising Capital." Success May 1999.)

Some of the most commonly used options available through asset-based lenders are:

1) Accounts Receivable Factoring

2) Purchase Order/Contract Funding

3) Business Credit Card Receipt Advances

4) Equipment Leasing

So, in the future, "If Your Bank Says No," why not check out the options offered by the asset-based lending industry.

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Financial Market Secrets

Financial Markets can be tricky to understand, but, since they play such a huge role in most of the western, developed worlds, it's imperative that you understand what they are. People can either become extremely wealthy through them or they can lose everything they have, including the shirt off their backs.

It's not difficult to understand why Financial Markets confuse people. There are 2 definitions that are quite different, though they sound similar.

Definition 1: A Financial Market is an ORGANIZATION that takes part in trading, such as banks, the stock exchange, etc....

Definition 2: A Financial Market is the ACT of trading, between buyers and sellers.

Do you see the difference? On the one hand, a Financial Market is an organization, while on the other hand a Financial Market is a type of action. Both definitions revolve around "Trading", which is an action performed by buyers and sellers.

For instance, you want to buy a house so you ask for a loan from a bank. The bank says "Ok, here is the $250,000 you need right now, but you have to PROMISE to pay us a little bit of money every month for a number of years and, in the end, you will be paying us more than $250,000." Congratulations, you just made a trade. You got $250K from a bank; they got a promise from you to pay more than that - later. So you made a trade and the both of you were participating in the Financial Market.

Why do Financial Markets Exist?

Financial Markets exist for a lot of reasons, but the main reason is exemplified above. They exist so people who need money (Borrowers) can find the people who have the money and are willing to lend it to them (Lenders). It's an absolute necessity in a free market economy where money equals freedom. The more money you have, the freer you are to be, do and have what you want.

Thanks to the Financial Markets, people are able to support themselves and others. People can support their family by purchasing a $250,000 home for a fraction of the price. Usually, you just pay a small up-front fee and then a small monthly payment. Financial Markets also allow people to support businesses and make some money themselves. Say you want to buy stock in a company. In effect you're saying: "Hey, I like your company and I think that you will take the money I give you and use it to make even more money for your company. Oh, and then you'll give me my money back plus a bonus, right?" That ''bonus' is usually called a Dividend.

The Financial Market is like AIR for our economy. Without it, the economy would surely die.

Who are Lenders and Buyers?

To put it simply, Lenders and Buyers can be people, companies or organizations. Whether they're a Lender or Buyer depends on their role in the "Trading" process.

If you're asking for money, you're a Borrower. You borrow money from a bank, right? A company borrows money from you when you buy their stock. Did you realize that? Governments borrow money from people by selling Bonds. It's like an IOU from the Government.

If you are handing the money out, expecting to get it back later, with extra - then you're a Lender. That ''extra' part is called Interest. "Sure, I'll lend you $10 today, if you give me $12 tomorrow." You charged $2 worth of Interest. When you bought stock in the company - you were the Lender in that case. You're also a Lender when you put money in a savings account or Money Market account in a Bank. You don't have to put it there, but when you do, they use your money to try to make more and you get paid Interest.

Financial Markets make our developed world turn. You now have a strong grasp of the basic concepts. You probably know more than the majority of people. Don't stop here, though, because the more you know, the more you can EARN.




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Cash Flow - Growth Money and Business Funding
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