Another Source of Business

by Xynergy Capital | Jul 22, 2015 | Uncategorized

Evaluating a Financial Proposal

by Xynergy Capital | Jul 9, 2015 | Uncategorized

Working with Referral Sources

by Xynergy Capital | Jul 9, 2015 | Uncategorized

Marketing directly to businesses or medical practices that need cash flow help is one way to develop new business. These direct marketing efforts focus on the end-user of the product and require a large volume of targets and numerous contacts per target. Can more efficient efforts be used to accomplish these marketing strategies?

Leverage is the key. To define leverage in this context we mean contacting an individual (or business) who services, supplies or advises numerous businesses that you would consider viable targets for factoring services. Working with one “referral source” can open up opportunities to present your factoring services to numerous targeted end-users. This leverage allows you to reach more prospects using fewer resources. Send ten letters to ten end-users or contact one referral source and has access to ten of his clients, which is more efficient?

However, there are more benefits than just leveraging your marketing efforts to get to more targets. We can first see that we benefit from a referral’s already existing business relationship. Credibility is one of the objectives we need to accomplish when attempting to present our financial products. So, what better way to begin that process than getting recommended by a person with an established business relationship with our targeted prospect?

Referral sources that provide goods or services to our potential clients can also give us information required to “qualify” the prospect. Cash flow issues are no more apparent than suppliers not being paid promptly. It is therefore a very solid way to know if a prospect is in need of factoring or is well capitalized with sufficient working capital to run his/her business.

Who are these referral sources? Aside from suppliers to our targeted prospects, we must also consider advisors to them as well. Accountants, attorneys, bankers and payroll services can be of use. In healthcare prospecting we can use (in addition to the ones just stated above) external billing companies as referrals.

Your marketing efforts must be efficient, cost effective and organized. Think about how to maximize your marketing/sales dollars and how to get strong qualified prospects to grow your cash flow business. Develop your referral base.

Conventional and Non-Conventional Finance..

by Xynergy Capital | Jul 9, 2015 | Uncategorized

Lenders and Factors look for collateral to secure their finance transactions. There are instances when these two types of finance companies cannot provide their services to the same client. If a client has very limited assets that are fee and clear of loans or liens, then it stands to reason that two finance companies may not be able to exist for the one client. Neither would want to advance money without sufficient security/collateral behind it. That may not always be the case however. Understanding how both conventional and non-conventional transactions can co-exist for one client will help to provide answers for a prospect, and will also improve the broker’s credibility as a knowledgeable source for business finance needs.

A lender that provides equipment leasing may look to secure its finance transaction with all of the borrower’s assets. However if the client also needs factoring, it is very likely that the leasing company will secure its transaction with the leased equipment only, allowing the factor to use the invoices/accounts receivable as collateral, thus making room for another finance facility. Sill another example would be a lender advancing against commercial real estate that has secured its transaction with the property and all other assets. If the value of the property is appropriate with the formulas used by the real estate lender then the other assets can be freed up to provide collateral for a factoring or purchase order finance transaction.

In still another example, the same collateral type can be sliced and diced to provide collateral for two different finance facilities. For example a healthcare related factoring transaction in which the client bills both medical insurance companies and commercial entities such as  hospitals, hospices, skilled nursing facilities, assisted living and other medical providers. In this case we can have two factors, one collateralized by the healthcare receivables and the other secured by the non-insurance type payors. This type of “carve out” is very often used to allow the two finance facilities the ability to fund and remain secured by assets.

Conventional lenders and non-conventional lenders can participate in the same finance project as long as the collateral securing each party is sufficient in value to give each its own comfort level.

Can I Get A Quote?

by Xynergy Capital | Jul 9, 2015 | Uncategorized

A story is told about a man who walks into a Radio Shack store at his local mall.  He saw on the shelf behind the counter a small TV with a price of $750 on it. He called over the salesman and asked if that was the best price that Radio Shack could offer. The salesman responded by saying that the price listed was the best he could do and also inquired as to why the customer was questioning it. The customer replied that he had just seen the same TV in Macy’s for $500. The salesman responded with an inquiry as to why he did not buy it from Macy’s at that seemingly low price. The customer replied that Macy’s had no more left in inventory to sell. The salesman then perked up and said, “oh,….when we  no longer have this TV in inventory we sell it at $400!”

So what is point of the story? Many  clients shop around for quotes from lenders. However, these prospects do not;  a) complete an application  b) provide and accounts receivable aging  c) give any information as to the creditworthiness of their debtors  d) indicate how many invoice they will submit on a monthly basis or e) give any financial information as to their own company’s viability.  Yet many lenders  will shoot out a baseless quote just to lure in the applicant. Very often we have a prospect call us and say that they just want a quote on our fees and advance rate. We frown on providing that! The reason being, we have no basis to build such a quote and using superficial information to do so is inaccurate at best and more leaning toward misleading. If we desired to actually give a quote we certainly can be like the TV salesman at Radio Shack and quote a ridiculously low fee knowing that we have no information to base it on and also knowing that anything we say is meaningless since we’ve done no underwriting.

Rather than misrepresenting ourselves or to even acknowledge that we can quote a price without basic underwriting information, we just respectfully ask for an application and supporting documents so our quote can be one based on reality and not one derived from “air.” Without any information on the transaction, we can quote a meaningless price structure the will be better than anyone else’s meaningless price quote. As the salesman in the above example would say, “with no information about this transaction at all, we can quote you a 1% discount for 60 days and an advance rate of 99%.” The “take-away” from this story… never give a quote or a pricing structure without all of the facts concerning the transaction.

Slow paying invoices

by Xynergy Capital | Jul 9, 2015 | Uncategorized

Slow-paying invoices are a common cause for cash flow problems. As a supplier, the clients ca pay your invoices in 30, 45 or more days. However, small and medium size suppliers can’t always afford to wait this long for payment. They need money sooner. Eventually, slow payments create a financial problem that can seriously affect your business even if it’s growing quickly.

Solution

There are two ways to solve this problem. One solution is to provide clients  with an incentive to pay faster. Offering a 5% discount in exchange for a payment in 10 days can motivate clients to pay quickly. However, this incentive sometimes is not accepted and also is very expensive.

An alternative is to use invoice factoring to finance slow-paying receivables. This method improves cash flow immediately and enables you to pay all your expenses including payroll with no stress. To learn more about factoring give us a call at (855) 358 8258. We will be happy to answer your questions and send you an application. There is no fee to have us review your application and receive a proposal.