Managing Cash Flows is Vital to Your Company’s Success

A business can be profitable and still go under due to poor cash flows. What a profound statement. Even though your business is showing a profit it can be difficult to pay suppliers and make payroll on time. This difficulty is typically caused by a delay or fluctuation in revenues. Cash flow shortages are usually caused by slower paying customers, seasonal sales, or your company suddenly experiences growth.
When customers do not pay with cash on delivery (COD) a gap is created between the receiving of the revenues and the payment of expenses. Payroll, rent, utilities, suppliers etc. all need to be paid on time. Lets say in one month you sell $100K worth of product with a profit of $20K. The $80K in expenses needs to be paid right away but your customer does not pay for 30 days. This creates a gap in cash flows. You need to pay out $80K before you see the $100K in revenue. You are profitable but do not have the cash on hand to pay your bills. This is why profitable companies can still go under. When your company experiences growth this gap in cash becomes far more difficult to manage because your costs are increasing faster then the revenues coming in.

Good management and planning for this shortage in cash flow is vital to your company’s success. At a minimum, a one-year cash flow analysis needs to be completed and reviewed on a monthly basis. The gaps in cash flow must be identified with a plan to overcome these gaps. The ideal situation would be for a company to keep a cash reserve to draw against when a cash flow gap is created. Unfortunately this is not a viable option for many companies. Some businesses have the luxury of a generous line of credit with a bank to overcome these cash shortages. In today’s tough lending environment these generous line of credits are difficult to come by. Although this situation sounds grim there is another viable alternative called Accounts Receivable Funding.
Accounts Receivable Funding or Factoring is a type of financing that is tied directly to your accounts receivables. Qualifying for factoring is much easier than traditional bank financing. A bank will focus on your company’s financial history and cash flow while a factor will focus on the creditworthiness of your customers. This is because a factor ties financing directly to your accounts receivable or invoices. These invoices are a “promise to pay” from your customer. If you customer has good credit then a factor is happy to lend you money against it.

Factoring invoices is an excellent financial tool to help maintain proper cash flow in your organization. When you sell your product or service a factor will generally advance you in cash up to 90% of the value of the invoice. Now you have closed the cash flow gap and are able to meet payroll, pay expenses and pay suppliers on time. When your customer finally pays the invoice the remaining amount of the invoice will be forwarded to you minus a fee. As your organization grows, so does your funding.
There is a cost for this type of financing so you need to carefully weigh the reduction in profit to the benefit of being able to make your payments on time. You need to also include the benefit of the redirection of your time. Instead of trying to juggle customer payments with paying bills you can concentrate on running and growing your business.

If you investigate this type of financing, don’t forget to shop around. Fees for factoring can range significantly. To see how factoring can help your organization there is a cash flow calculator at Cashflowtool Simply model your company’s current cash flow situation, add the cost of factoring to your cost of goods, lower your collection days and watch how your cash flow improves.

About the Author
Mark Lomas, MBAOwner of Spotlight Financial LLC SpotlightFinancial.biz

How to Build or Establish Good Credit

Building a solid credit rating from scratch is not as difficult as one might think. The reality is that you can establish a decent Credit Score in as little as 3 months and have a solid rating around the 12 month mark. From that point, if you maintain proper borrowing habits, you can have an impeccable rating for the rest of your life.

The key is to have a basic understanding of what actions affect your rating and to follow a basic strategy design to keep you within the limitations of those influences. If you are starting from scratch, never having had credit, here is an easy to follow step by step guide to establishing your credit. As well as suggestions on avoiding a few pitfalls along the way which could hurt, instead of helping if you fall into them.

Step 1) Check Your Report

While it may seem ironic, even if you know for a fact that you have never had credit before, checking your history is the first step. Your report contains more than just credit accounts on it and may have inaccuracies pertaining to other areas. I had a $500 phone bill attached to my report of which I had nothing to do with. In fact, it was tried to a business I worked for but had no ownership in nor any ownership responsibilities.

While it is fairly rare, you may be surprised to find out that someone else has been using your good name instead of you. With the expansion of the internet, this occurrence is not as rare as it use to be. Regardless, it is good to know for sure what you are dealing with.

Step 2) Dispute Errors in Your Report

If, when you check your report you found no errors on your report than you can move on to the next step. However, if you did, in fact, find a discrepancy you will have to clean them up before you can go forth with your endeavor.

It is very important that you take the time to so, and go through any possible frustration that might arise as these errors left on your record will not only plague you, but cost you a lot of money. It is the healthiness of your report that lenders base the interest rate they will charge you.

This can literally cost you thousands of dollars in interest over the years and it will drive your monthly payments up for the same amount of money borrowed or charged. We have written and article to further assist you in clearing negative items from your report. To view How to Dispute Discrepancies in Your Credit Report - Click Here.

Step 3) Secure Personal Credit

Once you have verified your report and have resolved any disputes that you may have found on within it, the next step is to secure credit. This is easiest accomplished by securing a credit card. The fact that you are not established as of yet will be a factor in where you should apply.

Rather than applying for a standard card and loan offers, start with accounts that are tailored to meet a specific need. Applying for a standard card before your rating supports the requirement can place unnecessary negative marks on your report. Each time you apply for credit and are turned down it is recorded negatively on your report and lowers your already low score.

Your first attempt at securing credit should be a gas card, a department store card, a secured card, or a prepaid card. These vehicles are specifically designed for the purpose of offering credit for those with a low rating, or for someone who has yet to establish themselves. It must be pointed out that you can expect to pay a higher interest as the risk is higher for the issuer.
In today's boom, there are several quality guaranteed approved cards available for you to establish yourself with. Each make monthly reports to the reporting agencies which assists in improving your credit score. Providing that you make your payments on time, your score will climb to a high enough level where you can apply for a standard card with normal interest rates. Remember, it is best to seek out offers than to respond to those which come in the mail. To view detailed reviews of several of these guaranteed approved cards Click Here.

Step 4) Begin to use Your Card

Once you have obtained a credit card you need to use it regularly and pay the balance off in full each month. Many who get a credit card for the first time will take advantage of the opportunity to get that stereo they have been wanting or some other consumable.

You should never use your new card instead of cash, especially while you are trying to build your credit. Instead your goal should be to use your card to cover an expense that you normally pay cash for, like gasoline or perhaps your noon meal. Instead of spending the cash, save it and use it to pay your charges in full when the bill comes in. Be responsible with your card and you will realize your score rising each month. The higher the
Credit Score the lower your interest will be on the next card you apply for and your odds for approval will increase drastically, to mention your borrowing power.

Step 5) Review Your Progress at Least Quarterly

After you have used your card responsible for 3 months check on your credit progress. Providing you have been responsible you will notice your score has increased. Check to insure that all of your payments are being reported accurately. If you find and errors now is the time to take action on them to correct them before your portfolio gets out of hand. Monitoring your report regularly allows to detect possible credit fraud in its early stages as well.
Step 6) Increasing Your Limit

As previously discussed, once your Credit Score reaches various levels and you have proven yourself to be a good risk you will flooded with numerous pre-approved offers, and as stated, these offers are not always in your best interest with many bordering on Predatory Lending. While it is your objective to increase your limit to a comfortable level, it is best to do the research yourself. Another site we would like to direct you to is Credit-Card-Rates.info. They offer detailed non-bias reviews on over 130 credit cards from leading providers such as American Express®, Discover®, Bank of America, Chase®, and more.

They also provide a pre-qualifying questionnaire that does not ask for specific personal information nor is any information gathered whatsoever. Once submitted the questionnaire returns all of the possible cards you qualify for. Each one links to a non-bias detailed review of both the pros and cons of the card's benefits and rewards. Convenient online application is just one click away. When using the questionnaire it is in your best interest to answer the questions accurately as it does provide an accurate result to the cards you qualify for. This will help you to keep from getting negative hits on your report for applying to cards you don't qualify for yet.

To view the questionnaire Click Here.

Pete Bolduc has served as the marketing director for several small businesses, including serving as a Regional Sales Manager in the insurance industry and as Regional Marketing Director in the Water Treatment industry.He maintains a locally focused Web Design and Services business in New Mexico and publishes a number of educational and for profit websites focusing on internet marketing and credit repair.He was recently appointed to the position of Director of Marketing & Media and adviser to the Chief Operations Officer for Second 8th Week Ministries, Inc., an international organization. Rebuild-credit.usCredit-Card-Rates.info

Experience you can count on

For over a decade, Benchmark Lending has been helping home buyers and owners realize their dreams. As a primary lending institution, Benchmark is uniquely positioned to assist both refinancing and new mortgage customers. We take the time to understand you and your financial goals. We tailor loans that take into account your cash flow, payment timeframe, equity plans and investment opportunities. You will get a loan that won't break your budget and provides you the flexibility and resources to get the most out of your property investments.

They loan process is in one word easy, easy to understand, easy to complete and most of all easy to manage, because we handle all the hard work. Your personal Loan Officer will manage the application process, work with you through any and all credit issues and help ensure that every I is dotted and every T is crossed. They will carefully explain every detail of your mortgage so there are no surprises on your monthly bill. Our sole aim is to make the experience of financing a new or existing home absolutely painless. We will guarantee that you have a loan tailored to your specific financial needs.