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New research shows that small businesses are beginning to feel much less confident than in months past, which has affected cash flow since there has been a significant increase in customer requests to pay late during the first quarter of this year. Specifically, small business confidence experienced a moderate drop in the last few months, and confidence has continued to drop to its lowest rating since August 2006. And a staggering 76% of small businesses feel that economic conditions are not improving. Most business owners are citing increased energy costs primarily due to rising fuel prices as the major culprit. The good news is: We can help. As we all know, cash flow is one of the most vital elements in the survival of a business, especially during difficult economic times. You can enhance your cash flow with a FactorLine from Charter Capital. When you can predict or even control your cash flow, you are in a much better position for continued business success even during an economic downturn. Although today’s economic news can be cause for concern, this should not stop you from trying to look for opportunities for stability and growth. Practice caution, but always be optimistic about positive changes and be open to opportunities that come your way. Remember: The economy as a whole is generally out of your control. Still, you should keep in mind that things are what you make of them.

Related Articles: Small Businesses Can Face Economic Downturns With Confidence

Return to: Small Business & Factoring News from Charter Capital

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We've just published a new edition of our newsletter! You can check it out on our website and get the latest information from Charter Capital - Factoring Made Simple. Let us know what you think!

Read It Now Here

Dealing with an uncertain economy is never easy, especially for small businesses. Unlike their larger counterparts, small businesses rarely have the resources to monitor and take corrective action for every trend and issue. And even those owners who have weathered numerous business cycles may be faced with new circumstances that confound their otherwise successful instincts and knowledge.

While there is no crystal ball that accurately predicts the future, small business owners can take a number of steps that will help their enterprises endure the worst of times, and position them for success when conditions inevitably improve.
 

• In the face of the ongoing credit crunch, consider an alternative to borrowing funds from a commercial bank.
  Consider a funding line from Charter Capital, a preferred provider of accounts receivable factoring services. Charter Capital has vast experience in economic cycles, and can advise you on issues specific to your business and industry. It may be helpful to arrange for a factoring or funding line. You may not need it for several months or at all. But if a lag in cash flow occurs, you will have a ready source of bridge money in place.
• Make sure you have good relations with your vendors.
  You may find it necessary to renegotiate terms, but overdue bills and inconsistent payment practices will not help your position. What’s more, your vendors may be experiencing financial difficulties as well. Any flexibility will hinge on whether they perceive you as a reliable partner, or a risk. A factoring or funding line from Charter Capital will help establish you as a reliable partner.
• Similarly, keep a close watch on your receivables.
  Follow up with whoever owes your company money and make sure they are meeting their terms. Be firm when dealing problem accounts, but also be willing to negotiate where appropriate. It may take only a matter of months for a struggling customer to become a highly stable source of income. If you can accommodate such situations without adversely affecting your company’s financial position, everybody wins. A factoring or funding line from Charter Capital will give you the freedom to extend even more generous payment terms to your valuable customers.
• Step up your marketing efforts.
  Many businesses mistakenly see marketing as a luxury when money is tight. The truth is that this is the time you need marketing most. Along with reassuring your current customers that you are still there to serve them, marketing can help you reach new markets that will sustain your business now, and facilitate its growth in the future. A factoring or funding line from Charter Capital will give you peace of mind to accelerate your marketing effort knowing that that increased sales can be supported by funds.
• Make sure expenditures can be justified, and that they contribute to the financial health of your business.
  You may find it necessary to redirect money to areas that will enhance business performance. If you carry an inventory of products, check the accuracy of your records and procedures to prevent losses. Do not feel pressured to hold down sales for lack of inventory. A factoring or funding line from Charter Capital will give you freedom to invest in even more inventory than you might otherwise be able to afford.
• Review your operations and expenses on a regular basis.
  If you monitor your profitability on a monthly basis, it’s a good idea to do it weekly or biweekly during slow economic times. Likewise, review your business plan more often. Monthly or quarterly reviews will make it easier to make adjustments and keep your business on track. A factoring or funding line from Charter Capital will give you a certain amount of flexibility in meeting your cash obligations. Obtain cash to negotiate prompt pay discounts with your vendors. Meeting your payroll and payroll tax obligations on a timely basis will most certainly save you additional expense.
  

Return to: Small Business News from Charter Capital

Through years of experience we understand that one of the biggest questions business owners have about factoring is: "What do I tell my clients?" or "How do I let my clients know that a factor is involved?"

This boils down to a real concern that clients may get confused or misunderstand the factor's role.

At Charter Capital, we have come up with a few tips for what to say to your clients to make them comfortable with your decision to factor your accounts receivable invoices.

Most importantly, this helps to position your decision properly right from the start.

1. Factoring with Charter Capital helps me to expand my business by enabling growth.
   Factoring invoices (accounts receivable) to Charter Capital is a standard business practice for many companies. It's important to know that our business is not in trouble, but growing. Factoring with Charter Capital is fueling that growth by accelerating my cash flow.
    
2. Your day to day contact with our Company will not change.
   I will continue to be the person you contact regarding project related issues.
    
3. Your payment terms will stay the same.
    
4. Working with Charter Capital is simple.
   You will receive invoices that involve Charter Capital. Instead of mailing a check to our business, you simply redirect payment to Charter Capital.

It’s just like anything else in business: you set your client's expectations. How you choose to deliver the decision to factor your invoices will shape how your clients perceive the news. And to your clients: it's just business as usual, except for where they send their payments.

Return to: Small Business News from Charter Capital

"Smaller Lenders Feeling Squeeze Of Credit Crunch"
     - The Wall Street Journal

Factoring from Charter Capital is your Alternative when lenders say "No"

As banks continue to "tighten up" their lending practices due to continued pressure from federal and state bank examiners, small business owners are finding in increasingly difficult to secure the financing they need to grow their business.

The Difference Factoring Makes
An increasingly popular way that small business owners secure capital for their growing business is factoring. Factoring (also known as Accounts Receivable Financing) is the practice of selling your accounts receivable (invoices) at a discount to another company like Charter Capital. You immediately get the money from Charter Capital and we collect on the invoices.

It is important for small business owners to know that factoring is not a loan and will not show up as debt on the company’s balance sheet.

With factoring, you are free from many of the restrictions placed upon your business by traditional bank financing such as loans or lines of credit. Most importantly, with factoring, you are free to grow without having to give up equity or control of your business. This is because factoring your Accounts Receivable is technically the sale of an asset, and the funding you receive from us is not debt, but a cash asset.

In today's competitive marketplace, getting debt-free funding in the form of factoring can give businesses the edge they need to succeed.

Return to: Small Business News from Charter Capital

Here's what usually happens on the search for capital for your business:

First you call Uncle Mike. When his money runs out, you tap a few private lenders - old rich guys with nothing better to do.

Next, a bank might make you a loan or issue you a line of credit, which is much harder to accomplish these days because banks have really tightened-up in the past few months.

Raising money is difficult and time consuming, and most small businesses fail because they run out of cash. Getting additional capital in smaller chunks will get you the cash your business needs without risking a loss of equity or ownership.

Factoring may be the answer to many business cash flow issues. Gaining in popularity, factoring (also known as Accounts Receivable Financing) is the practice of selling your accounts receivable (invoices) at a discount to another company. You get the money from the company that you sold your accounts receivable to and they help you collect on the invoices.

The reason many businesses make this move is to ensure the continuous flow of cash to the business without sacrificing equity or incurring debt. Essentially, businesses that use factoring are focusing on having most of the money now rather than all of it later. It can take time to collect on an invoice, so when a company finances its accounts receivable, they are getting their money faster and without the hassle of the collection process.

With small to mid-sized businesses, freeing up working capital through factoring can prove to be vital. The money can be invested into new equipment, used to pay bills, or used toward payroll. Of course, the alternative is to chase the customer for the invoice payment and defer everything else while the money is tied up in the collection process.

The lesson here is: Working capital in-hand today is better than dashed dreams tomorrow. 

Return to: Small Business News from Charter Capital

See this Wall Street Journal Article

Factoring from Charter Capital is your Alternative when lenders say "No"

As banks continue to "tighten up" their lending practices due to continued pressure from federal and state bank examiners, small business owners are finding in increasingly difficult to secure the financing they need to grow their business.

The Difference Factoring Makes
An increasingly popular way that small business owners secure capital for their growing business is factoring. Factoring (also known as Accounts Receivable Financing) is the practice of selling your accounts receivable (invoices) at a discount to another company like Charter Capital. You immediately get the money from Charter Capital and we collect on the invoices.

It is important for small business owners to know that factoring is not a loan and will not show up as debt on the company’s balance sheet.

With factoring, you are free from many of the restrictions placed upon your business by traditional bank financing such as loans or lines of credit. Most importantly, with factoring, you are free to grow without having to give up equity or control of your business. This is because factoring your Accounts Receivable is technically the sale of an asset, and the funding you receive from us is not debt, but a cash asset.

In today's competitive marketplace, getting debt-free funding in the form of factoring can give businesses the edge they need to succeed.

Return to: Small Business News from Charter Capital

Charter Capital (a Houston based factoring company) announces the acceptance of its membership to the Houston Hispanic Chamber of Commerce. Houston, TX (PRWEB) November 29, 2007 -- Charter Capital, recognized as one of the most flexible providers of working capital to small and mid-sized businesses, announced today acceptance of its membership to the Houston Hispanic Chamber of Commerce. This affiliation will provide Charter Capital with even greater opportunity to help shape the landscape of Houston's small business community. Hispanic-owned businesses are one of the fastest growing business groups in Houston, and one of the most financially underserved, as well. "It is without a doubt that the Houston Hispanic Chamber of Commerce is central to Hispanic business and cultural affairs and we are glad to give our support," says Keith Mabe, Director of Operations for Charter Capital. "By working with the Houston Hispanic Chamber of Commerce we are inspired by true professionals that are dedicated in their perseverance of success for Hispanic business owners and the community at large," Mr. Mabe added. Headquartered in Houston, Texas, Charter Capital (http://www.chartercapitalusa.com) provides working capital funding via a process commonly referred to as "factoring of accounts receivable", asset-based lending, and cash flow solutions for businesses nation-wide including: freight delivery and transportation, repair, maintenance and inspection service providers, consulting firms, most other service providers, staffing firms, distributors, wholesalers and manufacturers. Charter Capital also serves business in Dallas, TX; San Antonio, TX; Austin, TX; Atlanta, GA; Albuquerque, NM; Phoenix, AZ; Nashville, TN; Indianapolis, IN; Oklahoma City, OK; and cities nationwide. ###

Other Press Releases by Charter Capital

New Website Provides Comprehensive Online Guide to Factoring 2007-05-20 Charter Capital Forms 'Rapid Response' Business Unit to Provide Factoring Services to Financially Underserved U.S. Small Businesses 2007-05-20

Houston Business Journal Article Endorses Factoring

A Houston Business Journal article (shown below) has some great information for small businesses about factoring.

Financing factor: Selling receivables can smooth cash flow woes

Houston Business Journal - February 6, 1998

Congratulations, you've landed a big client. Before you can get paid though, you need to deliver the goods. But how can you do so if you don't have the money to hire the people or to buy the equipment to attain your goals?

Ill-timed cash flow is a problem businesses face everywhere, particularly start-ups that find it impossible to get bank financing. While you might be able to self-finance your way through the dry times, not everyone is able, or willing, to throw tens of thousands of dollars of receivables on their credit cards. But who wants to turn down a gargantuan account with a huge profit margin simply because you don't have the working capital to do the job?

One way out of this Catch-22 is factoring, a seldom-discussed but oft-used means of managing your receivables. It operates on the same principles as a credit card company. Factoring companies play the part of the credit card company, paying you (the credit card merchant) for services bought by your customers (the credit card holder).

How this works: factoring companies will essentially buy your receivables, paying you between 70 cents to 85 cents for each invoiced dollar. The rest of the invoice payment is kept in reserve, or "hold-back."

The factoring companies then administer collection, freeing you from badgering your customers for payment. When the factors collect, they pay you the balance of the invoice, keeping a percentage as their fee. This fee -- usually between 3 percent to 5 percent of the total money owed -- varies depending on how much money is owed, how long it takes your customers to pay, and the creditworthiness of your customers.

Factoring works well for small businesses and start-ups because the factoring company is investing not in you -- which they might perceive as risky -- but your customers. A bank may turn you down for being too small, but to a factor, as long as your customers have a solid reputation and good credit, your credit or company size is not an issue.

While you can look in the Yellow Pages under "factoring" to start your search, a safer bet is to call your bank for a recommendation. You might also want to seek recommendations from your industry's trade associations or local business chamber of commerce.

When choosing a factor, pay attention to the collection process in addition to the terms you negotiate. Don't risk upsetting customers that encounter an overly aggressive collections process. In particular, ask how late payments are handled. References, as long as they're in a similar industry, are often a terrific source for an accurate depiction of the process.

Once you begin factoring your receivables, the first set of invoices you factor will take about a week to process. Subsequent processing will take less time; some factoring companies even offer 24-hour cash turnaround.

Factoring is not for everyone. This method is more expensive over the long haul than a flat 10 percent interest bank loan. But for businesses whose lack of cash may spell business failure, turning to factoring, even for a short period of time, can be a financially savvy move.

Quick tips
• Not everything needs to be factored. It can be more cost-effective to factor only some invoices than to hand over all your receivables.

• Don't restrict yourself. Some factors will require that you work with no other factoring company. Find out about any exclusivity requirements up front.

• Know who you're talking to. Sometimes a factoring broker will play the part of an actual factoring company. Ask directly to make sure, and don't use a broker if you don't want to