Bay View Funding Blog

Bay View Funding has helped 3 high growth companies, specializing in distribution, janitorial services, and oil field servicing, with their working capital challenges.

Accounts receivable funding continues to provide an excellent answer for companies who simply cannot obtain traditional forms of financing. Proving also, that there are many occasions when collaboration with the bank really can provide a successful outcome.

Liz Castillo, VP, and Regional Sales Manager, for Bay View Funding in the Southern Region, has had an exceptional month, funding in the wholesale, healthcare and oil field markets. Castillo commented that ‘Bay View Funding is in an excellent position to help specialist markets with invoice factoring, where traditional forms of financing have simply not been a viable option. Happily, on many occasions, we are able to work closely, and reciprocate business, with banks to find the right answer for each challenge”

We are happy to report that further to recent findings from NFIB.Com, the Small Business Optimism Index is up! This is an indication the economy is slowly moving forward. At least this is what we would like to think – or is the economic rollercoaster still in full swing?

The April 2014 report, which is a reflection of the opinions of business owners/members of NFIB, indicates that after February’s decline, confidence is up in March. “Overall, the March gain more or less reversed the February decline, while the Index still can’t seem to get above 95, we can be encouraged that the economy is at least crawling forward and not heading in reverse,” said NFIB chief economist William Dunkelberg. What is the improvement down to? In part real sales gains (50%), inventory satisfaction and inventory investment plans.

There are times when a company will contact a factor believing they are in great shape to finance their accounts receivable, in other words, to use their invoices to generate cash flow. One of the first phases in the factoring process is to establish a viable relationship. Sometimes the answer is not what the company wants to hear.

This begs the question, Why am I unable to factor my invoices? There is a general misconception that invoice factoring is easily obtained and it is simple to qualify when a cash flow crisis arises, but not in every circumstance. Why should the answer be no?

While, generally speaking, it can be easier to obtain invoice factoring than it is to establish a loan or line of credit at the bank, the factor will still be looking to make sure your company finances are in good shape.

As part of the invoice factoring process, the factor will initially establish your financial objectives. Obviously you are looking to alleviate cash flow issues but the factor will want to determine exactly why. This is where the initial paperwork comes into play.

There are many articles written about invoice factoring being an excellent choice if your company credit history is less than perfect. While it is true that the factor looks at your customer’s credit rather than your own, this is not the only part of the equation.

So what is purchase order financing and how does it differ from invoice factoring? Both are viable solutions for when sales growth exceeds working capital but each option has slightly different ways to benefit your business.

PO funding is an excellent answer as a short-term financing option if you meet the necessary criteria to qualify. It enables companies to pay suppliers immediately, rather than using cash reserves. Sometimes factors such as seasonality or large unexpected orders will put a strain on the company cash flow and therefore the ability to fulfill valuable potential sales. Without easy access to readily accessible working capital your business risks losing orders from customers.

So how does this differ from invoice factoring? In order to factor you must have created an invoice and provided proof of delivery of any goods or services prior to receiving an advance on your accounts receivables. This is a great way to receive a cash advance on your invoices that would not normally be paid for a further 60 – 90 days. However, if that unexpected order comes in, it may be worth considering purchase order funding as another possible option to fund the purchase of goods to be re-sold to your customer prior to delivery.

When it comes down to choosing an invoice factoring company, there are many questions that need to be addressed, and many concerns to overcome, before there is a mutual decision to move forward. For Bay View Funding, the relationships they forge with their customers, and their customer’s clients are of paramount importance.

There is a lot of talk about the initial decision to factor, and discussion about the process and all the documentation required. But one of the most frequent concerns is ‘How will you treat our customers?’ Do they have to know we are factoring their invoices? This concern is very real, simply because the answer is ‘yes’ they do need to know. Factoring with an experienced company can actually enhance your relationship with your customers.

The team at Bay View Funding does not want your decision to factor to be based upon your concern about how your customers will be treated. Excellent customer service is an integral part of our company philosophy. Professional and friendly service is on going and not just something to be considered on initial contact, in order to get business, or when the first set of invoices are funded.

Bay View Funding has successfully funded advances of over $450,000.00 to 3 high growth companies with working capital challenges in Philadelphia, Delaware, and New York.

While we like our blogs to be informational, we think it is helpful to illustrate the ways in which working capital can be managed with the help of invoice factoring. We are happy to share some recent success stories, and will do this from time to time to highlight the industry specific companies we are able to help.

Jerry Calabrese, Business Development Manager, for Bay View Funding in the Mid Atlantic Region, shared “It is always gratifying to enable high growth companies succeed using invoice factoring, a much overlooked, but extremely simple, effective source of financing. The 3 companies in question were experiencing different situations that were a perfect fit for accounts receivable funding. We were able to provide a simple solution to the challenges they were each facing.”

Are you taking maximum advantage of your working capital? In the process of achieving maximum profit, some operational savings can be neglected. So what should you consider in order to make your money work most effectively for your company?

Take a look at the complete chain, from the most efficient design of your product to the optimum manufacturing process. Then analyze the sales and sales support process. Are all your processes streamlined and simple, and do they eliminate waste?

In a recent document for QFinance, Patrick Buchmann, Managing Director at Thyssen Krupp, and Udo Jung, Sr. Partner at Boston Consulting Group, examine techniques for optimizing inventories, receivables, and payables. They reference how to manage the operational components of net working capital. The best practice document gives an in depth explanation and also covers the following areas: