Blog Articles and Comments

On Saturday February 20, 2010, the Factors Southwest team “Pink Punch” participated in “Par it in Pink;” a golf tournament at Starfire. The event was organized by Two Gals Events and was intended to raise funds for the Susan G. Komen For The Cure organization. Not many know the foundation was organized by Susan’s sister Nancy in 1982, and has galvanized women from around the country to stand up and take an active role to raise breast cancer awareness. Saturday was no different in bringing together women from a variety of backgrounds for a common cause.

Factors Southwest was proud to be a major sponsor of this event. We met some great women and made some nice connections. One of the contests at the tournament was “best decorated cart;” and FSW was determined to win. Tee off wasn’t until 8:00 am, but the FSW “Pink Punch” team was at Starfire at 6:30 putting the finishing touches on the work of art that totally nailed the contest. Click here to check out all of the photos.

Seriously, we met so many businesses at “Par it in Pink” who didn’t mind sharing how much trouble they were having obtaining traditional banking loans. Once they understood what FSW did and how we could assist their business with working capital, we could open the dialog to specifics on what FSW could do for their business. Aside from the support Factors Southwest was able to provide the Komen Foundation, team FSW enlightened our new business friends with finance options I’m not quite sure they new were available to them. 

At the end of the day, “Par it in Pink” rewarded Factors Southwest with a couple of commemorative bottles of wine for best decorated cart; and FSW made business connections that will change the finance direction of our new business friends towards profitability. What happened Saturday reaffirms what we believe strongly at FSW; “we are contributing to economic growth one invoice at a time.”

Contributed by Emily Amparan-Business Development Officer (Emily@factors-southwest.com)

Beware of what you wish for! If you are wishing for a really cheap loan and think an SBA loan is the answer to your prayers, then think again. There are many things to consider but right now it looks like the wait list for an SBA loan just got really big! Click here for more details: SBA Wait List

Maybe it is time to start looking at the alternatives: www.factors-southwest.com

If you thought factoring was a form of financing for the near dead companies then think again. Factoring is gaining popularity as banks continue to retreat from small business lending. Savvy businesses are not waiting for the banks to come back and instead are looking to alternative forms of financing such as factoring.

Want more proof? Click here for a great article from Inc.

Want to talk to a factoring company? Go to www.factors-southwest.com

Credit terms or trade credit is the set of terms a company extends to its customers to allow them to buy goods and services on account without immediate cash payment, thereby creating accounts receivable for the company and accounts payable for their cus¬tomer. Trade credit is the largest use and source of working capital for businesses. The average turnover for accounts receivable is approximately 44 days, meaning that it generally takes over a month and a half for a small or medium-sized company to collect the cash it is owed for by its customers.

While trade credit can help a business sell more, it can also cause serious cash flow problems. The length of payment terms is a battle for working capital. Basically, the extension of trade credit is a free loan for the customer and the chance of collection decreases as the invoice ages. The customer (buyer) wants to extend this free loan for as long as possible so they can use the capital on their end. The business (sellers) wants the cash as soon as possible to manage their own expenses. The result is a work¬ing capital tug-of-war, which ultimately restricts growth.

So how can a business still offer trade credit and ensure it has cash to meet payroll and other expenses? Contact Factors Southwest (www.factors-southwest.com) to find out about our factoring lines of credit. Factors Southwest can put a stop to the working capital tug-of war!

A little over a year ago, we took on a new client who was a spin off from another successful company.  The client specializes in software development and utilizes engineers from Mexico to service and maintain operational efficiencies. The idea behind using these engineers from Mexico is similar to companies outsourcing work to India.  It is cheaper. 

During the underwriting process, we were aware of a payment plan this client had with the IRS for past due payroll taxes.  The plan included an agreement to keep current for 2009 with their quarterly payments.  We received confirmation of these payments throughout the year as we watched them grow!  They continued to increase their business while recruiting employees from Mexico. 

Towards the end of November when we were happily collecting holiday cards in the mail, the IRS slipped one of their “cards” in and it is safe to say, it wasn’t a holiday card.  We received a levy from the IRS on this specific client’s A/R.  Unfortunately we had to stop funding our client until we could figure out what had happened.

The IRS Agent handling the case noticed the payroll tax payment for 3rd quarter was significantly less than the two prior quarters which was an indication to her that potentially our client’s business was going out of business and therefore she pulled the trigger.  She filed levies on the client’s A/R and sent letters to their customers directing payment to the IRS.  Our client had been reducing costs and as they continued to migrate their work to the engineers from Mexico, their payroll taxes continued to reduce.  They were doing everything right to continue to make their business successful and now not only was the client struggling to deal with a cash flow shortage since we had to stop funding for a short time; they now had major PR damage control to deal with.   

Just when we wonder if all those IRS seminars we have attended are worth it, it is safe to say and our client can now vouch that they are worth it.  Information we had learned through these seminars helped us weed through the red tape of the IRS and allowed us to start funding our client within 48 hours of the levy.  Once Factors Southwest started funding again, our client was able to use this as part of their damage control to their customers and just last week our client submitted a new contract with an existing customer that increased the monthly volume by double.

Singing the IRS Blues? Go to www.factors-southwest.com

Factors can be more creative than traditional, regulated bank lenders in finding ways to make a difficult funding work. Factors may also be able to offer better advance rates on factored accounts than the client’s existing bank. This may be because the bank: is less familiar with a client’s industry; adverse to risk; treats more accounts as ineligible; and requires greater reserves in calculating the bank’s borrowing base and lending limits. 

If your bank isn’t getting to the advance rate you need, come talk to us. www.factors-southwest.com

Three months ago Factors Southwest closed a line of credit for a distribution company, whose LOC at a bank was frozen due to an over advance. The distributor had a very successful business and then comes the “credit crunch”. With the real estate bubble bursting and businesses failing, the distributor’s customers started reducing orders and taking longer to pay.  Some customers even went out of business which didn’t help the distributor’s over advance on the line of credit.

To the rescue comes Factors Southwest! Factors Southwest was able to work with the distributor and the bank to pay down some of the existing line of credit in exchange for a subordination agreement.  At the time, the business owner had approximately $150,000 in eligible receivables and Factors Southwest approved the client for a $300,000 line of credit to allow for growth.  This week, we bumped the line of credit up to $500,000 for the distributor!  With improved cash flow and access to capital, the distributor has been able to reduce the payables by half and take advantage of vendor discounts; in turn the distributor has been able to focus on sales, customers and profit! 

It is very likely this business will be a bankable customer within the next year and will no longer need Factors Southwest and we will be able to report a “SCORE 2 FOR THE CLIENT”   

If you are a small business wondering what loan options you have besides a bank, contact Factors Southwest. www.factors-southwest.com

Several months ago, Factors Southwest received a call from a loan officer with a local bank.  He shared with us he had a client who just started a business, selling an environmentally friendly product.   The new business owner was at a complete loss as to an answer on where to go to continue funding his business.  He had a great product; cost of goods was next to nothing as he found a way to recycle a product that was being tossed in the garbage by businesses on every corner.  He had self funded and was able to sustain until the orders really started rolling in.  His product was selling all over and with little PR effort on his end, he was receiving all kinds of publicity.  He needed to hire help, purchase a piece of equipment to produce faster and a higher volume of his product to keep up with demand.  He had invoices from strong companies with 30-60 day terms, but no cash. 

Factors Southwest was able to look outside the box, beyond the 2-3 years tax return requirement that banks have and see a great product with great potential and we started funding him.  Initially we funded approximately $12,000/month and with cash flow in his control, he has been able to grow his company and is now funding approximately $20,000/month.  The loan officer who referred this deal was able to keep the banking relationship with deposits and we fully anticipate this business owner will go to this loan officer when he has his 2 years worth of tax returns for a bank line of credit.  Score 1 for the Client!

If you are a small business wondering what loan options you have besides a bank, contact Factors Southwest. www.factors-southwest.com

What will be the biggest concern for small businesses in 2010? According the Time Magazine, falling number of bank loans is emerging as the No. 1 economic concern of 2010. But while many expect the credit crunch to continue, falling bank loans might not be as bad a problem as many people think. Click here to read the full article.

If you are a small business wondering what loan options you have besides a bank, contact Factors Southwest. www.factors-southwest.com