My Biz Blog - Tips & Training
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I am launching another teleseminar, which I love to do, As I pondered the solution, I asked God what to do.
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... And so the dialogue started. Spring, 2010
Wow! Being recommended by the highest authority sure puts a big
responsibility on my shoulders! But, I'm up for it.
From whence did this plea emanate? It all started with a blunt suggestion!
I had gotten confused over an instruction Ann had given on a teleseminar.
So, I expressed my puzzlement via a short email.
To my delight, her response was so gracious and appreciative that I felt
honored. Honored that this hugely successful communication trainer
would not only thank me, but encourage me to notify her of other items
I felt needed her attention.
And so I did. And so did our enlightening 2-way dialog continue to this day.
Oh, yes, of course. Wouldn't you like to know the subject of our dialog?
Why, it's the author of "Speak Your Business in 30 Seconds or Less" --
ANN CONVERY. www.AnnConvery.com
#2 - But Wait, there's More!
More trainings. More Business Tips. More Discoveries... out there for you to latch onto, as well as business-related Resources. And I'll be sharing many of these valuable resources and business tips with you.
One of them is in the financial realm, an area I've worked in for many years. Hence, that places me in a good position to evaluate resources that can benefit you. Specifically, it involves getting payments from your customers faster than you're able to now.
Which brings us to the Question: What do you think is the most important resource every business cannot to do without?
♦ That's right: CASH. ♦ And CASH FLOW.
But the burning questions today is: "How do businesses get hold of this important financial resource?" And "Where do they - or You - go when your cash flow is slowing and it's keeping your business from growing?"
Not to banks these days. The ongoing tight credit atmosphere is putting the kabosh on their lending ability (or so they say). Nor even to other traditional lenders, as in the mortgage arena, what with property values (used for collateral) having been - shall we say politely - decimated.
Ah, but thankfully, there are Alternatives. Valid and Long-standing "Alternatives." In fact, the very kinds of financing that businesses of all sizes should be utilizing more and more. For if they do, it will keep them out of financial chaos and into smoothly running operations.
♦ For instance, you can probably relate to this. Not long ago, one of
our clients, Jack, found himself in a "Catch 22" predicament. He
couldn't qualify for a large government contract until he could show
he had the financing to handle it. Yet he was shut out of getting
financing from traditional lending sources - not because he didn't
have a full boatload of orders in place - but because he couldn't show
them a record of top financial strength for the prior several years.
♦ So what did we do for him? We got him funding in 48 hours. And
then, ten days later he won that $80,000 government contract!
#3 - "Oh, wow! ... Do you think My Business could do the same?"
[late Spring, 2010]
Well, as a typical Philadelphia attorney (for whom I worked several lifetimes ago) would say, 'that all depends.'
Let's first consider some realities. And here's the rub, fellow readers. Did you know that Businesses Owners who are suffering through cash flow problems are spending a good ►50% of their time looking for... actually scrounging around for... funding?
They could make it so much simpler for themselves. They could open up their minds a bit, look at what Jack did (see #2 post) - and go out and get 70%-80% of what they bill out for - in 2 short days, not 2 long months!
To bill out is to send invoices to customers and expect their payment in a reasonable amount of time. "Reasonable" used to be within 10 to 30 days. In today's credit-squeezed times, as you probably know, customers themselves are extending out that time horizon further and further.
And, of course, these delays are causing a ripple effect reverberating back to the original supplier or distributor of those goods and services. And if you and I are such suppliers, then you and I, in turn, are forced to delay payments to our own suppliers.
This 'round robin' of delays all too often results in loss of business. How so?
♦ If you can't pay on time, you stand to lose a good deal of the
buying clout you had enjoyed for years. Getting the picture?
♦ This could put you out of the running against your competition.
Not exactly the position you chose to be in as you continued to grow your business, is it?
We'll be discussing some of the ways to guard against such happenstance in future posts. Meantime,...
#4 - Shall we glimpse into some available Financing Resources?
[early Summer, 2010]
Let Me Count the Ways to Your Financial Outreach.
* For one, you could tighten up your credit limitations to both new as
well as existing customers.
* You could set up an 'early warning' system to call and remind customers
that their payments are coming due in the next few days.
* You could offer your clients a nice Discount if they pay right away, or
within the ensuing 10 to 15 days. - This signals to your clients that
you're a 'good guy.' But even more important, it brings in money to
you faster.
Note: Even if not too many of your clients can take advantage
of your offer, don't chuck the idea. Some of them will.
Then, of course, (OK, here comes the real lowdown), you could use the non-traditional financing method long used by many a large corporation over many decades. One of the terrific things you'd have going for you here is that -- your own credit standing is NOT the crucial element that counts the most in deciding whether to provide you financing.
More commonly, it's the credit-worthiness 
of your clientele that counts more heavily when it comes to specialized
alternative financing. Novel idea, yes? Business owners love to hear this, so it bears repeating. It's the creditworthiness of your clients, not your own financial situation, that weighs more heavily in the eyes (and wallets) of alternative funding sources. Makes sense, doesn't it? {See the end of #6 below to make sure you've got it right.**} $$$$ Strength --►
#5 - Alternative Funding personified - [mid -summer, 2010]
Another good thing about the type of specialized funding we're discussing here is that there's so little red tape! Why is that, you ask? Because it's not a loan process, so no debt is incurred. It's a more straight-forward type of funding. In the event you are not 'bankable,' your company may well be ♦'fundable.'♦ And if that's the case, our Funding companies would be anxious to (work their tails off to) see that you get some much needed cash in a much needed hurry.
The owners of these funding companies... are for the most part independent business people, not hired hands with committees to report to and ponder over whether your firm meets their strict and very limiting rules and regulations.
In fact, several of these companies had successfully used invoice funding themselves - in their prior businesses - BEFORE getting into the alternative funding arena. So they know well the intricacies of this kind of financing from both sides of the aisle. That's why they're so good at what they do. The fact that they had access to consistent Cash Flow allowed them to grow their businesses rapidly, to a point where they were offered a premium to buy them out. And so they accepted the offers.
With the knowledge of how well their businesses flourished when they had access to cash payments almost overnight (versus waiting for delayed payments from customers) - when they themselves were ready to enter another business, it was 'a natural' for them to choose the alternative funding business route. You could say that one success follows another.
That's precisely why Funding Professionals know intimately the vicissitudes of cash crunches and tight money cycles that so many companies struggle with. They also know that many entrepreneurs and business people today are nowhere near as educated in or particularly skilled in the intricacies of finance as they are.
So in addition to adding financial capabilities to businesses, our funders also offer sound advice & information along with other amenities (which we'll talk about in a later post) that traditional lenders don't provide.
Bottom line, funding companies are in business to help viable companies flourish. And that's why I so much like working with them.
#6. - The Nitty Gritty of this Alternative Financing thing.
[Late mid-summer, 2010
Q: OK, so why do you keep calling the service under discussion
"Alternative Financing"? Why don't you explain it more fully?
A: Consider it done. It's important to recognize that Alternative
Financing can take several forms. One category could be
Factoring, another could be providing a Line of Credit
against a company's Receivables (their entire book of
Accounts Receivable). Still others could be Bridge lending
and/or ABL or Asset-Based Lending.
Since my primary business revolves around Factoring, I'll be focusing on that type of funding. What a Factoring company (sometimes referred to as a Funding Source) does... is provide a way for businesses to accelerate getting paid now instead of waiting til 30, 60 or 90 days or more after they send out invoices to their customers.
And that PROCESS works like this: The funding source actually purchases the qualified invoices that a company such as yours sends to customers after you've completed the work for them. This applies to both Services you've provided as well as Products you shipped.
The Factor even goes so far as to advance the money to you within a quick 2 days (sometimes less) after you send out your invoices.
This helps you in a multitude of ways! First, you now have the
biggest of two chunks (at least 70%-80%) of the money due you in
your hands. You are now free to use this "instant working capital" to...
=> get discounts from suppliers by paying them early,
=> pay down some of your high-premium credit card or other debt,
=> relieve the anxiety of sweating-out meeting payroll or tax deadlines,
=> ramp up your advertising and marketing campaigns,
=> generate more invoices that will bring in even more ready cash,
=> expand your facilities, your staff and your overall business,
=> and enjoy a more efficient and profitable organization.
As one Staffing Agency we worked with put it: "We were delighted to find out that we could get our customer payments faster than we had ever thought was possible." And not only did this new financing method relieve tension among their back office personnel, but they were able to promote one of their back office staff (in accounts receivable) to a sales rep position. Ah, the rewards of better financing!
**Re the last paragraph of #4 above: The Factor will be collecting the moneys from your clients.
#7. - So far so good. So What's the Downside to Factoring? [Late summer, 2010]
Well, that depends on your point of view and your business situation. From a Funder's viewpoint or that of a Consultant (like myself), there's very little downside.
That's because we all work with each other to get the best deal for our clients and their customers.
On the occasions where there appears to be some downside, many times it comes from a client's unfamiliarity with the factoring process and not knowing how the all-inclusive ancillary services translate into huge advantages over what traditional lenders offer.
For instance, banks are historically known for NOT taking too well to businesses with poor financial showings or losses in recent years. (Have they been oblivious to the world's financial and economic woes of these past several years?)
Nor do they take much interest in a company's back office operations or providing continuous monitoring of existing as well as new customers [If they did, they'd likely save themselves and their borrowers tons of money-losing commitments.] Their primary interest is: "can you and will you pay back their loans?"
♦ By contrast, a Factor well understands the hardships that businesses undergo, and they look primarily at the pay-back ability of a company's customers and clients. If a Factor is satisfied that your "credit-worthy" customers can and will pay the company's invoices on time, the factoring advance can be accomplished in no time flat - like 2 days!
Alarmimg Headline:
Here's a frightening dilemma, however. Because fewer regulations are required by factors, invoice funding is nonetheless a financing transaction! And the Factoring companies themselves still have to answer to a higher authority - their own banking and other private financing sources. So guess what: they too are subject to surprise audits
at any time!
# 8 - Today's Reality - in early Fall, 2011
Business people have been used to dealing with bank services since the millennium and for the most part, have gotten bank loans in the past without a lot of hassle (though not without a lot of waiting). So they're familiar with the overall procedures of banking.
However, if they've never worked with a Factor, they've been known to . . .
♦- misconstrue new terminology and the discounting process,
♦- have misconceptions about factoring rates,
♦- shun having to learn different types of procedures,
♦- be reluctant to deliver financial information about their company or
customers in a timely manner,
♦- shop around a bit too much for their own good... not knowing that
the multiple bids they think they've gotten from different funding
sources are, in fact, from the same company. - How's that? - It's
the result of companies using different names on the internet.
Today, given the non-availability of loans they'd always been able to qualify for, many a businessman's outlook is a bit soured. But after a while, when reality and reason sets in, and after education about the less restrictive qualifications of non-traditional "alternative" financing and how the system works, he is soon able to overcome prior prejudices.
From this point on, he can readily get down to brass tacks and a take a hard look at whether this kind of competitive funding is right for his business. In other words, astute business people with an open mind usually 'get it' without a big to-do (technical term), and move on toward making an informed decision.
#9. - So, What Else is New in the Our Industry?
[Early Fall, 2010]
Glad you asked. For openers, Factoring has been around since the millenium. And it's generally available today for all kinds of businesses and organizations of all sizes - from a one-person corporation or LLC to large multi-division companies.
For instance, the TYPES of Businesses that use factoring vary all the way from... Manufacturers, to...Distributors, to...Wholesalers, to...Retailers (new), to... Service Providers, including Professional Services. - Except for Retailers, these are all companies that sell their products and services to other Businesses or to Government agencies. That's why they're referred to as B2B or B2G. The funding process for Retailers who provide goods and services to individuals, will be discussed at a later time. (But see "Our Services" on this website for an overview of this niche area.)
So These B2B Companies Can Include....
♦ apparel, home furnishings, computer hardware & computer
software outfits, as well as...
♦ medical-related products, engineering & design firms, staffing
agencies (office staff, nursing staff, etc.), plus...
♦ trucking companies, machine shops, steel fabricators, and even...
♦ small and huge-sized industrial equipment.
In other words, if you provide goods or services to other Businesses or to Government agencies "on terms" (credit terms), and you generate invoices for work you completed for them, those invoices are 'factorable.'
Two exceptions these days are Physician services and Construction. Why? Mainly because their businesses are more complex, and either involve 3rd-party billing or billing for work still in progress (work not yet completed). While funding for these businesses is doable, their higher risk comes with a higher price tag.
I'll bet you're wondering how Factoring compares with Bank rates, aren't you?
Well, that's a question for a whole separate article on the subject. Call 818/ 594-1272 to request a copy or e-mail Marcie@seagreenfinancial.com to receive your copy.
Suffice it to say that in today's business setting, you've got to compare more than just rates. The big QUESTION that remains is: Can you get traditional financing for your business in the first place? ...And if so, will you be able to maintain all the requirements and covenants for the life of the loan - beyond making the mandated monthly payments?
Meantime, enjoy the holidays and look for some economic improvement.
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Happy New Year!
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#10. - Quality firms do business with Quality Companies [Early winter, 2011]
Happy New Year Everyone! The good news is that things are beginning to look up - especially for quality businesses.
Have you ever noticed that... Quality seeks out Quality - in all kinds of endeavors? Quality people like and understand people like themselves and look forward to doing business with them. That's what good relationships are built on. And these day, relationships count higher than salesmanship.
When quality people encounter those they don't trust, for real or assumed reasons, they shy away from them, even if it means losing some business. - - Passing up some business that 'smells like trouble from the get-go' will not only avert future hassles but keep you from running head-first into double trouble in the long run. - [Does that last comment conjure up a past troubling encounter? Lesson learned? Good.]
This certainly holds true in the world of Factoring and invoice financing. As a business owner, you certainly want to check out sources of funding, and well you should. What you may not know, however, is that when you're shopping for MULTIPLE BIDS or QUOTES in this Industry, what you don't know may hurt you, or at best, keep you from getting a legit bid in the first place. Here's why:
FYI, the world of "Quality Alternative Financing Firms" is a rather
close-knit community. When business people shop around for
"the best deal" - all well and good. But when these same business
owners fail to own up to the fact that they've been turned down by
several factoring firms, that's not only an immediate problem - it
could pose a veritable impasse for them.
For, when they come to Consultants like us (at Sea-Green Financial )
to help them and fail to be straight-forward and up-front with us, we
find it out pretty quickly. Trying to hide that information not only
leaves a bad taste in the minds of Factors, Brokers and Consultants,
but will cause any one of us to be leery of dealing with that kind of
business operator under any circumstances.
So What do we Suggest?
First, avoid at all costs allowing your business to get to the point of desperation. Unfortunately, we've seen fine but desperate people doing desperate things. And we'd hate to see you reach that point.
Call us first ♦♦[818/ 594-1272]♦♦ and let us guide you to a good solution, even if it's only a short-term solution. You'd be surprised at what positive outcomes can be accomplished when you have quality financial professionals working on your behalf.
Second, whatever problem you have, whether it's... unpaid taxes, an existing loan that was just "called in," or a recent bankruptcy, etc., - just be 'up-front' about your situation. We've witnessed our Funding sources bending over backwards to help viable companies work out or work around their predicaments.
And it's a delight, as a consultant, to work with these kinds of financing pros.
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#11 - So Now Good Readers – How about a Word or Two on You asked for it, so here’s the straight skinny on how and why funds are advanced to someone before his or her lawsuit is settled. It’s also called
Why does the attorney ‘front’ the case expenses? Because he or she apparently believes the injured person (the Plaintiff or Claimant) was wronged and has a good chance of winning monetary remuneration from the party (the Defendant) who caused the accident in the first place and the resultant damages.
#12. - Overview of a Personal Injury Case Working through a P.I. case entails an extensive process of gathering all the information pertaining to the law case, both written and verbal. This includes medical and other reports, insurance documents, and a whole host of written questions & answers exchanged between the parties (plaintiff and defendant). After that, formal depositions are taken and expert witnesses may be called upon to garner more specific details about the incident. The poor Plaintiff or Claimant, meantime, has incurred mounting debt – medical bills, mortgage and car payments, and daily living expenses – which he or she wasn’t able to pay because of the inability to work and earn a living. Got the picture?
Where Sea-Green Financial Services and our Legal Funders come in -- is when the Plaintiff finds himself with a big pile of bills, is maxed out on his credit cards and other financial sources, and is in dire financial straits. It's at this point that he needs funds in a big hurry just to survive. And this urgent need usually occurs around the “negotiating stage” of the legal case.
#13. - So How does a Legal Funder Determine its Risk? We talked about a person sustaining severe injuries from an auto accident that was in no way his fault. We also outlined the process of “discovery” in which the injured party’s attorney gathers enough documentation to establish the extent of his client’s injuries as well as the Defendant’s negligence in causing the accident.
The remaining job now is for the Plaintiff’s attorney to negotiate a fair settlement with the defendant (usually the insurance carrier), considering all the medical treatment, loss of earning capacity and general lifestyle turmoil his client had to endure.
**Why not ask for funds against the case sooner to avoid **Good question. The reason is that the plaintiff is still in Initially, there’s simply NOT enough information, reports and documents that have been received by the plaintiff's attorney to establish the validity of the Plaintiff’s claim. What information would such items convey? (1) negligence on the part of the Defending party; (2) the potential settlement “value” of the Plaintiff’s claim (3) an indication from the defendant’s insurance carrier as to
#14. - OK, So When Can An Advance Be Made? [Winter, 2011] When I inform people that we can get advances for Plaintiffs who’re waiting for a settlement of their law cases, their eyes start to bulge with excitement. Claimants and attorneys alike think – “Oh boy, I can get some money now - and whenever the case gets settled, the settlement funds can pay for the money I get!”
Well, that’s not quite the whole story. If you remember one thing from our previous blog, it’s this: Advances against a legal claim aren’t made until such time as when... (1) an attorney has received some evidence of insurance coverage, (2) discovery [fact-finding] has been mostly completed, and (3) an “Offer” of monetary settlement has been made.
So as you can see, this "time frame" for expecting to receive funding BEFORE your case settles [pre-settlement lawsuit funding] is toward the middle, or better yet, the tail end of the lawsuit – not just the starting point of a claim where investigation and corroborating evidence hasn’t even entered the picture. And, of course, this is also one of the most frustrating times for the Plaintiff. He (or she) has been through the wringer establishing negligence on the part of the defendant. He has undergone trauma, pain from injuries, unpaid time off from work and major family disruption. He has provided all the necessary documents, attended depositions and medical examinations and undergone extended treatments. So it's difficult for him to understand why it's taking so long to make settlement arrangements with the Defendant’s attorney and/or insurance company. #15. - Guess who’s got the time advantage? [Year-end, 2011] Alright, here’s the rub: the suffering plaintiff just cannot fathom why a “deep-pocketed” insurance company can't or won't come up with the money to settle his case. And that, dear readers, is the crux of the matter.
The defendant insurance company wants to hold on to its money as
So as a favorite long-time broadcaster used to say at the end of each broadcast: ~ And now you know… the R-E-S-T of the story! ~
Or at least that particular story. To be continued... ~ in 2012 ~ Happy New Year !!
In the interim - if you have any questions you'd like answered,
~ So now we come to LEGAL FUNDING for LAW FIRMS ~
OK friends and skeptics all: If you’ve gotten this far in our Biz Blog, you’ll also
Here are the chief Differences in 1 - Law Firm funding generally involves much LARGER amounts of money 2 - Moneys advanced to Law Firms are typically used in handling serious P.I. (personal injury) cases, medical malpractice, and class action cases “on Contingency,” as described in #11 above. Patent Infringement cases are also used for collateral, but we’ll discuss that scenario a little later. When Plaintiff clients are NOT required to pay attorney fees upfront, it's primarily because the attorney believes strongly that awards will be made in favor of his/her clients, which is why the attorney has “skin in the game.” 3 - The RISKS are much higher in Law Firm funding, in part because the evaluation process for multiple cases is more demanding than a single case. As you can imagine, the size of the legal cases put up for collateral are usually larger, more complex and tend to be higher-risk situations where the outcomes are less certain. Thus the stakes are higher in these instances.
4 - However, now for the best part. The REWARDS a Law Firm might expect to obtain as a result of financing through Legal Funders can be enormous. No bank can come near this kind of favorable risk-reward ratio. Let’s think about this for a moment: If one or more of the collateralized cases settles in the $$ Millions (not unusual in a Any questions you'd like answered? If yes, kindly write them in the
Marcie Green - 818/ 594-1272 SeagreenFinancial.com
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