Frustrated with how long it takes to collect your small biz invoices? Would you like to convert a large share of the invoice into cash with a week? Please check out episode 10 of Financially Empowered with Ralph Russell where we discuss account receivable financing, or factoring with expert DeWayne Hill of TBS Capital, (www.tbscapitalfunding).
Getting access to the cash you are owed on your receivables is vital. Along with the daily management of your operation, occasionally an opportunity arises for a new order which requires money on your end to meet the order. The ability to tap into your receivables to fulfill that order may take your business to the next level. Here is an example from TBS Capital on how factoring assisted a company in growing their business.
ABC Electric (generic name) company approached TBS Capital Funding seeking $200,000 per month to help shore up their cash flow deficiencies that was resulting from taking on more work from a General Contractor that built Walgreen’s pharmacies. The electrical contractor had worked on a few similar projects with the GC and had preformed very well. The GC was now wanting to give them all their business in a 4 state area. This was a great opportunity for the electrical contractor however because of the time it took to receive payment from the GC they were very concerned about accepting the additional work since it would triple their dollar volumes. This would add an additional 2.5 million to the company in the next year and they were concerned about being able to continue their regular day to day business while now floating the additional volume for 45 to 50 days being offered by the General Contractor. This was especially frustrating since the work being offered by the GC to build the Walgreen’s was profitable and right in the wheelhouse of their company. This is where TBS was able to step in and help. TBS approved the GC based on the strong credit history and offered to buy all the invoices the electrical contractor had for the GC once they were approved. We advanced 90% of each invoice after it was approved by the GC for 2.5% fee. The GC’s payment system was set up on NET 30 and TBS usually received checks in about 43-48 days. At this point TBS Capital Funding would send the remaining 10% to the electrical contractor minus an additional .05% for each 10 day period after the initial 30 day flat rate (the 2.5% mentioned earlier). This was total cost of 3.5% to the electrical contractor for the average $200K of invoices that TBS bought from them each month. TBS has now advanced money to ABC Electric for 4 months and it has been a huge benefit for them. “We would never have been able to take on the additional work without TBS. It’s been a huge boost to our bottom line.”
TBS Capital assists companies in a wide variety of industries, including trucking, staffing and construction, just to name a few. Companies involved in progress billing are eligible for factoring with TBS Capital, which is not always the case with other factoring companies.
For more information on how factoring, or account receivable financing can boost your business, please email me at firstname.lastname@example.org, or call my office at 312 582 0929.
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