Cash Flow Hacks for SMEs

When cash flow is a problem, it can make running and expanding your business a challenge. Cash flow issues can restrict the investments you can make, make it challenging to take on new jobs, or make it a struggle to even pay your employees. Unfortunately, cash flow is one of the most common problems faced by small-to-medium enterprises (SMEs). Getting this problem under control can be a big boon to your business, so if this is something you’re struggling with, consider using the cash flow hacks outlined below.

Cut Your Costs

While we’d love to say that you should start by improving the turnaround from invoicing to payment, you’re not always in control of that aspect of your business. You can encourage customers to pay you early but spending your time focusing on the areas of your cash flow where you have more control can be more effective.

One big area where you have control is over your own costs. Cutting down on where and how much you spend can provide significant relief on your cash flow. Consider if you can do the following:

• Renegotiate costs with suppliers
• Discard older technologies for more affordable ones
• Streamline software and other services
• Choose to rent new equipment rather than purchasing it
• Outsource new employees rather than hiring them
• Make more than minimum payments on debt (where allowed)
• Renegotiate payment terms with lenders

Understand Your Cash Flow Better

Often, SMEs struggle to make better cash flow decisions because they don’t have all the information they need when they need it. Modern bookkeeping software can help you understand where your money is going and where it’s coming from. By syncing up with your business accounts, many of these software options can provide you with precise, up-to-date information. You don’t have to hire an in-house accountant to access this information (which is also good news, because it saves you money!).

Schedule Your Own Payments

Now that you can see your payments clearly, you can start to be more strategic. Don’t pay things early when you don’t need to. Also, don’t neglect payments to suppliers or others that are essential relationships for your business. Figuring out the song and dance of paying your bills in just the right order is important but spending a bit of time doing so can really help. Delaying payment means keeping cash in your accounts longer. In that time, you may always receive payments.

Non-Recourse Invoice Factoring

You can skip the wait to get paid entirely with invoice factoring. A factoring company will pay your invoices within 24 hours after you send them out, and then collect the payment from your client later.

Non-recourse factoring is the most valuable for keeping your cash flow healthy. With this kind of factoring, if your client never pays and you collect some bad debt, the factoring company does not ask for the payment back from you. Instead, they take the loss. This is a huge advantage that can protect you from the risk of bringing on new clients who might not be reliable.

Reach out to J D Factors today to discuss how our factoring services can benefit your business and help to solve your cash flow issues.

Tips to Save Fuel and Manage Trucking Expenses

With rampant inflation throughout the economy, especially in diesel prices, it is harder than ever for shipping and transport companies to keep their cash flow healthy and their margins strong. You’re likely paying more in operating costs than you ever have in the past. That means your accounts receivable aren’t going as far and, when there is a delay in payment, it hurts you even more. How do you save on fuel and reduce your expenses as much as possible? Here are some options you may not have considered.

Vehicle Efficiency

Vehicles with even minor issues become less efficient and burn more gas than they would normally. Work with your mechanic to correct issues before they cause major losses in efficiency. Tire pressure is one such example. Lowered pressure forces your vehicle to use more fuel to get to the same place. Your mechanic should be familiar with the other problems which could seriously impact your fuel usage.

Also consider the efficiency of the trip itself, by considering factors like load balance. Make sure drivers pay attention to and manage axle balance, especially when moving unusually shaped items on flatbeds. Proper balance can significantly improve fuel efficiency.

Newer Vehicles

It can be difficult to afford new equipment, but when you need to make an investment anyway, choosing equipment that offers much better fuel efficiency (which is often new equipment) does make sense. You can simply do the math on this one and determine, with its better fuel efficiency, how much the new equipment will save you in fuel costs and how long it will take for that amount to make up for the increased cost of the equipment. Considering how expensive fuel costs can be for even one trip, more efficient equipment is often very much worth the investment.

Fuel Reductions

If you have contracted fuel, you’re in a better position to negotiate the price down. But what if you’re a smaller business that can’t negotiate for a bulk deal? There are some options that even the smallest operations can take advantage of. One of those options is to use apps which track gas prices. Smart drivers can try to fill up only where prices are lower.

Another option is to use credit cards which offer cash back on fuel purchases, or fuel cards that are specifically for deals on fuel. There are many of these available and it is worthwhile to compare them.

Invoice Factoring

Keeping your cashflow healthy will help you afford things like higher gas prices and the investments you need to make in order to reduce your fuel usage, such as new equipment or better driver training. Invoice factoring is an excellent way to keep your cash flow healthy enough to handle high inflation in fuel prices and in general.

When you work with an invoice factoring company you get paid for your delivery the moment that you issue an invoice for it—or within 24 hours. When you immediately get your cash on hand you can invest it back into your business or use it to extend your runway.

There is more to learn about how invoice factoring can help you. Reach out to J D Factors to explore this option.

Cash Flow Tips for the Service Industry

Prioritizing cash flow strategies should always be on your mind when outlining an effective business plan, especially if you’re a small or medium-sized enterprise. Why? Your cash flow actually shows you the amount of money moving within your business rather than what you’re waiting for via accounts receivable.

Following a business plan which focuses on cash flow has the advantage of letting you know the exact dates that money will be moving in and out of your account. Knowing these dates is imperative to crafting an effective business plan and handling your expenses. If your cash flow is positive, then you’re making more than you’re spending; the opposite is true for a negative cash flow. Consider the ways in which this affects your business – does your equipment require maintenance? Do loans need to be repaid? Can you cover payroll? All of these variables depend on maintaining a positive cash flow. That’s why we’re outlining some strategies to help you do just that.

Projections

The first step you can take in maintaining a healthy cash flow involves mapping projections. Preparing cash flow projections for the coming month, quarter, or year inside of accounting software (or even a spreadsheet) will help you keep track of your inflows and outflows. This will let you know whether you’re in the red or the black, and if you can afford to take on any risky expenditures.

Profits

Analyzing the profitability of your products and services is another key process that will help you increase cash flow as you decrease expenditures on low-selling variables. If your profitability isn’t what it should be, then you could consider analyzing your prices. Adjusting your prices and checking for consumer feedback can be potentially rewarding when it comes to maximizing revenue.

Payments

Increasing the speed of your cash inflows is another strategy to influence your cash flow. To do this, focus on sending out your invoices more quickly and see if your clients are willing to pay electronically to speed up the process. You could even charge interest on slow payments, but it’s up to you whether this is right for your business. If you’re having trouble maintaining a steady cash inflow, then charging interest and potentially scaring away clients may be too much of a risk. However, it could be the right choice to ensure speedy payment if that’s something you’re lacking.

Paying Attention

Speaking of invoices, paying close attention to your accounts receivables by tracking what you’re owed, collecting payments in a timely manner, and determining who is past due will help you increase cash flow. If you’re not on top of these things, then it can seem like you have less cash available than you should. If after checking these aspects you do find yourself in a position with less cash on hand, then consider any expenditures that could be lessened. For example, you could start with your equipment – try leasing any expensive equipment rather than purchasing it. In the short term, this is an effective way to lessen financial stress on your business. It’s also worth considering that equipment leases can qualify you for helpful tax credits.

Invoice factoring is another method you have at your disposal, if you need invoices turned into cash fast. Here at J D Factors, we can walk you through the process and help your business develop the strategies necessary to sustain a healthy cash flow.

Essential Partnerships That Will Propel Your Trucking Company Forward

The trucking industry is a low margin industry. When things go wrong, you need strong relationships to draw on (not to mention a healthy cash flow) in order to make corrections. Ideally, when you foster the best relationships, you won’t hit as many stumbling blocks. Which is a good thing because errors and issues can be expensive. Here are some of the essential partnerships that will propel your trucking company forward.

Your Mechanic

You cannot afford to have trucks waiting on repairs or having reliability issues on the road. While larger trucking companies may have their own mechanics, chances are if you are starting out you will hire an outside professional. The skill and availability of your mechanic will determine how soon you can get your equipment back on the road. And it should be more affordable to bring your equipment in to this mechanic (when possible) rather than get repairs or maintenance on the road. Look for a local, independent mechanic or a shop with experience serving the trucking industry.  

Your Invoice Factoring Company

The benefits of factoring for trucking companies are huge. Getting your cash in immediately after a load is completed helps you fund the next portion of your trip. Factoring can help you deadhead for longer to get a better load, invest in equipment to help you grow your fleet and even make sure you have enough cash for a down payment. But does your invoice factoring company offer you everything it should? In trucking, bad debt can sink businesses. Consider nonrecourse factoring, a process in which your invoice factoring company may cover your customer’s bad debt.

Your Drivers and General Manager

It might be odd to think of your staff as “partners” but taking that mentality will help you get the most from them. It’s true that drivers on the road have great insights into which loads might be a better fit for your business. And, when you have a strong general manager, you can worry less about how your drivers are managing their time.

Your Customers

Your relationship with your customers matters a great deal. You want repeat business from them, and for them to spread word of how reliable your business is. When managing your customer relationships, always consider if it is in your best interests to be working with them. Larger companies may help boost your reputation, but they also tend to pay slower, and waiting for their payment can create cash flow problems (unless you’re factoring).

Your Equipment Dealer

Especially when you’re buying used, having a strong relationship with the company you’re buying or renting equipment from is a huge advantage. When their salespeople will keep an eye out for the specific equipment you’re looking for, offer you better prices on things you’d like to purchase, or just help you make better overall equipment decisions, you’ll come out ahead. Remember that it is a big trap in trucking to get in over your head with debt for new equipment. Ideally, your dealer will help you assess how much you could actually benefit from a new purchase instead of focusing on what a sale means for them.

Interested in developing a new relationship to benefit your trucking business? Reach out to J D Factors to discuss your options for factoring.

Solving Supply Chain Issues in the Transportation Industry

Recent, heavy demands on the supply chain have caused issues that are affecting almost everyone, especially members of the supply chain itself. Transportation companies, freight businesses, and commercial fleets are being hit hardest and may be taking serious financial hits as a result. At J D Factors, we can show you how to roll with the punches without the debt.

Increase Financial Stability

The key to financial stability is maintaining a steady inflow of working capital. So that even if interest rates or loan payments continue rising, you’ll be able to sustain your business operations. One way to increase your working capital involves the payment schedules of your invoices. The typical payment windows for an invoice issued by a transportation company is 30 or 60 days. Sometimes businesses even offer 90-day payment windows. These lengthy waiting periods mean that you’re not generating revenue as quickly as you’re actually able to.

During the current supply chain crisis, you want to receive your revenue as soon as possible by removing these wait times. That’s why many transportation companies are using accounts receivable factoring to gain access to their revenue more quickly.

With factoring, any unpaid invoices are turned into cash and quickly made available. This is a fast, simple process that lets you access unpaid receivables while increasing cash flow. Factoring also eliminates long payment windows! The consistent working capital received from factoring will help you survive the uncertainty of the supply chain and other economic factors. With over 30 years of experience J D Factors understands the needs of those in the transportation industry and we’re prepared to walk you through the type of receivable factoring that will make you feel confident in the face of today’s economic environment.

Promote Growth and Efficiency

This doesn’t mean that factoring is only for struggling businesses, rather, factoring is utilized by many flourishing organizations to promote growth and increase operational efficiency. The stable cash flow stimulated by factoring further increases your control as you can spend less time worrying about invoices and more time making the critical decisions that separate you from your competitors.

If you’re still hesitant to pursue factoring, you should know that not all of your invoices need to be factored! Together, we can decide how many invoices you’d like factored and the priority of each. With heavy supply chain demands, invoice factoring offers a lifeline of stability to companies within the transportation industry. Give our team a call to learn more.

Are These Factoring Myths Hurting Your Business?

 Some of the businesses which would most benefit from invoice factoring avoid it as a funding source because of common misnomers. The result is that these business owners turn to more expensive and less advantageous funding sources. 

It could be very important for your business to consider factoring! We'll assess the most common myths about invoice factoring so that you can make a better assessment as to whether it is a strong option for your business.

1. You Have to Factor All of Your Invoices

When you work with a factoring company, you agree upfront which of your invoices you’d like to factor and which you do not. While some factoring companies will only agree to work with you if you factor all of your invoices, others are more flexible. This is a term that is up for negotiation, and not set in stone.

2. You Have to Pay Factoring Fees Upfront

You pay a fee for factoring, and it is usually a percentage of the total invoice. You don’t need to pay this fee before you submit an invoice. Instead, the factoring company takes their fee out when they send you the money for your invoice. This means that you only pay it when you have cash or, more accurately, when you get cash.  Indeed, the factoring company doesn’t make any money until they actually collect payment on the invoice.

3. Factoring is More Expensive than Bank Financing

While some bank financing options could be more affordable than factoring, you shouldn’t assume that factoring is necessarily more expensive. Bank financing could end up costing you more down the road, especially if you’re getting large loans with long terms and/or high interest rates. The potential that factoring can limitlessly grow alongside you also trumps the potentially crippling wait for bank financing increases. With factoring, you don’t have to miss out on opportunities waylaid by bank financing because factoring focuses on the credit of your customers rather than your own personal credit. Most factoring companies also work much more quickly than banks, so you'll get the financing and related paperwork approved much faster. This is critical because we all know that time is money! Work out the numbers for yourself to discover which is the more affordable option for you.

4. Your Business/You Probably Won’t Qualify

Your personal credit might matter much less than you think when you’re applying for factoring. Your business’ financial state may also matter less than you think. Most incorporated businesses and especially most B2B companies will qualify for invoice factoring. That’s no guarantee, but it is certainly worth looking into instead of assuming you will not qualify.  

5. You Can No Longer Choose Your Clients

You worked hard to make a business where you’re in control, and you don’t want to make any decisions to undermine that. Many business owners worry that the factoring company will have undue influence in their business. The most control a factoring company can exert is saying that they are unwilling to factor invoices from a certain client. You can still work with that client.

In fact, most business owners find that with a stable cash flow from factoring, they actually feel more control in their business and better positioned to make the critical decisions that they need to.

6. Factoring is Only for Struggling Businesses

It’s true that many struggling businesses turn to factoring to bolster their business and survive hard times. It's also true that many successful businesses also turn to factoring to help them grow, function more efficiently, and achieve their goals.

Do you want more factoring facts? Reach out to JD Factors today to discuss if invoice factoring is the right option for your business. 

Tips to Hire and Keep the Right Drivers

Businesses in the transportation industry and those that operate fleet vehicles are struggling to find qualified drivers. Keeping the qualified drivers that you do employ can also be a challenge, but it's an important one to manage. Low driver turnover will lower your hiring and training costs which helps reduce your operating costs. 

Even in the face of a labour shortage there are things you can do to hire more drivers and keep them, too. Here are our tips:

Offer Referral Bonuses

Your current drivers likely know other drivers. Plus, the connection between them means they may both be more likely to stay with the company. Motivate your employees to refer friends and family with a bonus.

Post to Multiple Platforms

Most people find jobs online, but you can’t be sure which platform your perfect driver is looking at. To increase your odds of success post to all of the online job platforms that people use in your area – LinkedIn and Indeed are good starts.

Offer Training Support

Sometimes your ideal truck driver isn’t a driver yet. You may have much more success when bringing people into the job and covering some or all of their costs for any government-mandated licensing or training programs.

Of course, you should also be conducting your own training for new drivers. Ensure this training is designed to create bonds within the company, which will help your new truck drivers transition to work more effectively.

On-Boarding Clarity

Different businesses have different policies for compensation, scheduling, and routes, all things drivers care a lot about. You can keep more drivers if they understand all of the relevant details of their job up front and agree to them, rather than being surprised and discouraged later on. Things you should be very clear about include:

• Routes, scheduling, and time at home
• Compensation including paid time off and benefits
• Specific relationship, as an employee not a contractor
• Specific vehicle or other equipment they will operate

·       You may find a few people do not agree to the employment after a very frank conversation about the position, but these are people who would not have stayed with your company anyway. Now you avoid the cost of losing them and can pick another candidate.

Work Quality

A few different factors of a driver’s work can encourage them to sign on with your company and to stay. Offering them more guaranteed “at home” time is a great way to ensure they stay motivated when they are driving. Ensuring that dispatchers cultivate a good relationship with the drivers can also help them have a positive attitude about work.

Compensation

One of the best ways to attract better drivers and keep them is simply to offer them more financial compensation. This includes a larger hurly rate or salary, as well as other financial benefits such as more paid vacation and sick time and better health benefits. You can also motivate drivers with bonuses for safe driving or for bonuses for being with the company for a certain period of time. 

Payroll Tips

For transportation companies, cash flow can be a problem and it can impact your ability to keep the best employees. Inconsistent and poor pay will reduce your ability to hire and keep the best drivers. You can use invoice factoring to get healthier cash flow and thereby provide better compensation to your drivers. Reach out to the team at J D Factors today to discuss how invoice factoring can improve your payroll and cashflow and reduce employee turnover.  

Tax Considerations for the Transportation Industry

The transportation industry works on thin margins, so every little tax break that owners and operators can get will help. For owners, consider making your drivers aware of the tax deductions they can receive just by driving. Helping your team make the most of their pay will be appreciated and will help you retain the best drivers. 

There are also decisions you can make as the owner of a transportation company to help your business get through tax time with strong cash flow. That is, if you are an independent business and not a PSB. Discover our tax tips for the 2021 tax year below.

Tax Deductions for Drivers

Those who are employees driving a truck for a company, or those who work in the transportation industry and do the transportation (like a crewmate on a ship or a stewardess on a plane) can deduct a large portion of their work expenses from their taxes. Those expenses may include:

• Up to 50% of meal expenses
• Up to 50% of hotel or lodging expenses
• Up to 50% of showering services (even if you're sleeping in your cab)
• Some of the tools or supplies that you purchase
• A portion of a business phone bill.

Part of your pandemic tax advice to employees could be a list of the relevant expenses they should be deducting.

Are you a PSB?

Drivers who are incorporated may not necessarily need to file as an incorporated business. According to the Canada Revenue Agency, those drivers who have incorporated, but who actually act as an employee of one business, must file as a Personal Services Business (PSB).

You may be a PSB/employee and not an independent business if you:

• Work for only one "client" company
• Do not own your truck or other tools
• Do not choose your own hauls or hours.

It is very important to get tax advice about whether you are a PSB or not as there are many tax implications to this nuance.

Tips for Owner-Operators

For owner-operators, tax season may be very stressful as a large bill comes due. Especially during the volatility of a pandemic year, you may not have been able to set aside the funds you need to cover your tax burden.

Factoring is a great solution for those who find their business struggles to afford tax time. With invoice factoring, you receive the money for your invoices as soon as you send them, from your factoring company, which handles getting the payments from your clients.

Some factoring companies may even set aside some of that money on your behalf, for taxes. J D Factors can assist you in this regard and if you would like us to start holding funds in trust to make sure you can a monthly tax payment, we are happy to do this in order to keep you on track.

Invoice factoring is a huge benefit at tax time because it allows you to have a much stronger cash flow, so you can afford to invest where you need and put aside funds too. It can be challenging for your cash flow to absorb quarterly estimated payments that you have to remit in advance. You can change that with factoring for SMEs. Reach out to J D Factors today to discuss if your transportation business is right for invoice factoring.

Cash Flow Tips in Times of Inflation

In Canada, inflation is creating some instability for businesses. Your suppliers may be set to raise prices, your clients or customers may be intent on spending less, and you may not be sure how to handle your own pricing scheme. One way to better ensure you weather an inflation storm is to focus on your cash flow. 

Between increased costs and lowered sales, some businesses will find themselves remarkably low on cash, potentially to the point of significantly impacting their ability to meet operating costs and stay afloat. How do you protect your working capital? Here are some cash flow tips specifically for times of high inflation.

1. Stop Extending Credit

Extending credit to your customers when inflation is minimal may make financial sense. However, as inflation rises steeply, the cost of that credit is amplified. What might have cost you $100 to deliver this month may cost you $120 to deliver the next. The money your customer is giving you a few months down the road is dramatically less valuable than the money you could get from them at the time you rendered your services. Of course, you’ll always have some delay between fulfillment and payment, but this delay is more disadvantageous during times of high inflation. Stop extending credit and create new policies or invest in new technologies that can encourage clients to pay you as quickly as possible.

In addition, you also should consider the possibility that your clients will be overwhelmed by inflation themselves and may not be able to pay you. Avoid bad debt and stress on your business by denying credit moving forward.

2. Increase Inventory - Wisely

Your supplies and inventory cost less today than they will tomorrow. Where your supplies or goods are shelf stable, you may consider purchasing and storing more, especially if you expect inflation to continue to rise. It is most wise to do this for core products or supplies that you are sure you will be able to sell. Stocking up on products that may decline in demand can leave you with inventory you can’t sell and further undermine the stability of your business. Stocking up on solid inventory can be a hit to your cash flow now but can make it much healthier down the road.

3. Understand the Risks of Loans

When you’re struggling to keep your cash flow healthy, a loan may seem like a good option. And, it can be, but the value of a loan is diminished during times of high inflation. By and large, loan rates increase during periods of inflation. If you have fixed rates for any loans or lines of credit you have then you don’t have to rush to pay them off. However, taking on new or having variable rate loans can be detrimental to your business.

4. Explore Invoice Factoring Options

Invoice factoring is a wiser way to achieve a healthier cash flow. In this arrangement, you send your invoices to a factoring company which pays them immediately, and then secures payment from your clients or customers. You get the benefit of your cash right away, which is essential as any delay in time means the value of your money is reduced. Your factoring company can even shield you from bad debt in what is known as non-recourse factoring, which is highly beneficial in times of high inflation. Whether you're looking for cash to increase inventory, hire, or otherwise invest in your business, factoring is an option worth considering.

Reach out to J D Factors to discuss how invoice factoring can help your business have healthier cash flow.

 

Invoice Factoring for Fleets: How to Grow in the Transportation Industry

The transportation industry can be tough, even in times of great demand. There are so many variables, a large financial commitment for growth, and changing economic conditions to throw a wrench in the best laid growth plans. One of the top things you can do to make your fleet more successful is to use factoring for at least some of your invoices. If this comes as a surprise to you, you’ll be interested in the data from RigDig Business Intelligence, which shows that since 2017, and especially during the Covid-19 pandemic, fleets that use at least some factoring have been outpacing those that don’t. 

Here’s the data, and why we think invoice factoring plays such a pivotal role in supporting the transportation industry specifically.

Fleet Growth Over Time

From 2016 to 2020, the size of fleets that use some form of invoice factoring has grown by 90%. In the same time period, the size of fleets that do not use any factoring has only grown by 30%. This is on average, so individual companies will have grown more or less depending on their circumstances. Still, the overall impact of factoring is clear. Transport companies that use at least some invoice factoring can better leverage opportunities to grow.

Why Is Invoice Factoring Successful?

Transportation is one of the industries that can benefit from invoice factoring the most. You have small margins and very long lead times. Potentially, your clients may take 30 or even 90 days to pay you, and that is after the delivery is completed.

When you’re trying to complete a new order, you may need to make investments and then wait for the cash to reach your pocket for even six months from the time you first wrote an estimate. In the meantime, you need fuel, payroll, and the cash to cover your other operating expenses. Putting business from more reliable customers on hold to handle large new accounts can jeopardize the stability of your business overall.

With all of these challenges to growth, and even day-to-day stability, invoice factoring is an excellent solution. After the delivery is complete, you send out your invoice to a factoring company like J D Factors. We pay you within 24 hours, meaning that you immediately have the cash to cover expenses incurred in the delivery, and keep investing for the next ones. That cuts you down from 90 days to one and keeps your business running smoothly.

Invoice factoring gives you better cash flow, which means that you can take advantage of opportunities that pop up, whether it’s a new fuel card, an order from a new client, or making new investments in quality trucks.

Cash flow isn’t the only benefit. Your factoring company will deal with invoicing your client and receiving payment. That means you spend no time chasing accounts receivables, reminding people about payments, or sending out ignored emails and calls. In fact, with non-recourse factoring, you are protected further against clients who don't pay because of credit issues, stop answering your calls, continuously break promises, or even file formal bankruptcy or bankruptcy protection. You reduce your burden of bad debt and have a significantly more stable business. Looking for an advantage this year? Discuss invoice factoring options for your transportation company with the team at J D Factors.

Negotiating Terms? Avoid These 4 Common Mistakes

The biggest mistake a small business owner can make when they are working with a bank is to think that the terms the bank presents are non-negotiable. The truth is that you can and should ask for a better interest rate or other more favorable credit terms. However, small business owners who are not used to negotiating these important financial arrangements often make mistakes. 

Here are the common mistakes you need to avoid in order to get the best terms when negotiating credit with a bank.  

1. Avoid Being Intimidated 

It can feel daunting to negotiate with such a large organization, and one that has so much power over the future of your business. But remember that there is more than one bank out there and the others want your business too. There is no reason to be intimidated by the bank or the people you speak to there. The person negotiating for the bank is not all-powerful and is a person, just like you.

2. Do Your Homework

Why do you deserve better terms? Just wanting them will not be a compelling enough reason. You should demonstrate the reasons that your business is more likely than average to pay back your loans or to be a good customer to the bank over the long term. Arrive to the meeting aware of all the information that may be important to bring up. Discuss your credit rating, the future prospects of your business, or the kind of investment you’re making with the credit the bank is offering you, if any of those facts would be compelling.

Whatever your argument, preparing it ahead of time will give you the opportunity to pull the numbers and make it more appealing to the bank’s representative. 

3. Listen to Build Trust

The bank will have its own reasons that the initial terms they offered you are acceptable. By listening to the representative’s counter arguments and perspective you gain valuable insight about which terms the bank might be more open to negotiating and what they would need to see in order to offer you better terms where they currently cannot.

Perhaps the bank is inflexible on the interest rate, but more flexible on monthly payments or overall credit amount. By listening you can find opportunities. You’ll also build more trust with the bank’s representative, who will realize that you understand their perspective and will therefore be more willing to work with you.

4. Know What's Good Enough

It’s rare in any negotiation to get precisely what you ask for. You’ll walk into the negotiation knowing what you want, but you should also know where to settle. What terms would be good enough to get your business the credit it needs? When you know the bare minimum you’d be willing to accept you will know when you should walk away and pursue other options.  

If the negotiation doesn't go well, keep in mind that you have other financial options available to your business. Invoicing factoring is a great option, particularly if your negotiations with the bank don’t fare well. Reach out to J D Factors to learn more about this alternative option.

6 Ways to Optimize Your Budget as Transportation Costs Rise

Freight costs are rising across the board, whether you are using trucking, rail, ocean shipping, air cargo or another option. Not only is shipping less reliable than it has been in the past, but the strapped supply chain is also asking for more in the way of rates and fees. 

If you’re facing increased freight costs then it is natural to turn to your budget to see how you can make it work. Here are our tips for optimizing your budget to better handle these costs and keep your margins stable.

Volume-Based Discounts

Shipping more may seem like a counter-intuitive solution to your problem, but it can work. Many carriers offer volume-based discounts. In fact, some will even offer free shipping if you’re over a certain minimum order. If you can ship more to get a better deal, it is worth looking into it. Note that you don’t have to necessarily have a larger inventory for this. If you work with multiple shippers, moving all of your product or materials to one may make it more affordable overall.

Focus Your Products

When volume won’t work, narrowing what you ship will. Many retailers are focusing on cutting out products that do not perform as well as their core products. Sometimes you may even need to consider whether your core products are performing as well as they should. Whatever is selling well, make it your priority to have it on the shelves or in stock. Cut whatever isn’t performing well (doesn’t sell more than five units per month or isn’t carried in at least half of the markets).

Introduce new products in this market very carefully. Track your data so that you know sooner if a new product is performing well enough to merit its shipping costs.

Self-Distribute

When you don’t have something in stock that a customer needs, you may lose them entirely to a place that does. That’s why we’re seeing some retailers end up buying their stock at the local Costco, just to deal with shipping instabilities. When you can self-distribute as a temporary measure, it can make sense to keep your customer base loyal.

New Suppliers

Finding local suppliers for your materials may reduce your shipping costs substantially. Even if you have previously looked into local options, you may find that their prices are now more competitive, and that their delivery will be more reliable in comparison to our current freight woes.

Increase Your Prices

Sometimes you should not absorb increased costs. If your shipping rates have raised substantially, this may be one of those costs you simply should pass onto your customer. However, you should focus on doing this with caution. Driving away customers with sudden spikes in prices is not wise.

Dispute Resolution

It is costly to have delayed and missed shipments. One way you can give your budget a break is to have a dispute resolution method worked out with your shipper, in your contact with them.

Do you need to make your business and budget more flexible? J D Factors can help with invoice factoring services. Find out more today.

Invoicing Innovations for SMEs

Are you looking to streamline your invoicing? Handling invoicing by hand is time-consuming and occasionally creates costly errors. Every year, new technologies and software are released to help SMEs with limited resources handle their invoicing more efficiently, avoid miscommunications, avoid accounting errors, and spend less time on paperwork. 

Here are a few we think you should know about:

Cloud-Based Invoicing

With the cloud, you can always have quick access to any invoices that you need to look over, even using an app on your phone to do so. You can get real-time updates about the status of your accounts receivables, too. Cloud-based invoicing eliminates the needs to have paper invoices as well as the cost to print, send and store them. It also makes sharing invoices across team members simple.

Online Payments

If you deliver invoices in person or send them through mail, online payments will be a significant upgrade for you. Online payments make things more convenient for your customer which can encourage them to pay you faster. With online payments, when your software detects that the payment has been made, your whole accounting system can be automatically updated.

Online payments are also ideal for international clients, especially because they are available 24/7.

Automation  

Many aspects of invoicing can be immediately performed by your software through automation. After your client’s appointment is completed, software can automatically send out their invoice without your input. Software can automatically remind clients about unpaid invoices, automatically update your accounting team about partial payments, and do so many more actions that otherwise you’d have to pay someone to perform.

Artificial Intelligence

You can take your invoicing to the next level with artificial intelligence. Some software offers predictive intelligence that can help you spot errors with invoicing, refine your estimating and billing processes, and even generate more revenue. Some artificial intelligence even offers tools to help you reconcile accounts, get payments from clients who are late, and encourage early or on-time payments. You may be surprised at all of the features invoicing software can offer through artificial intelligence.

Other Features

When you invest in invoicing software that offers any of the above, you will often also get access to other features that help your business be more successful. You may be able to track project completion, calculate customer lifetime value, see when your average customer pays and get better, up-to-date information about your cashflow. Chances are, invoicing software will help you see just how critical managing your invoices and accounts receivable is to the overall success of your enterprise.

Choose Invoice Factoring

Of course, you don’t have to do all of your invoicing yourself. At J D Factors, we can handle the more challenging aspects of managing your accounts receivables. You send your invoice to us instead of your client, we pay you within 24 hours, and we handle all of the further contact with your client. We follow-up, send reminders, collect payment, and even handle non-payment and bad debt. Reach out to us at J D Factors to make your invoicing simpler and more reliable than ever.

5 Easy Fixes for Common Payroll Errors

For most businesses, payroll is a huge expense. While businesses in the service industry generally have higher payroll costs, it's fair to assume that 20% to 30% of your gross revenue will be spent on payroll. It's important to be precise and accurate whenever you're dealing with such a huge chunk of money. Consequences for late payments, missed deductions, and more can add up and eat into your business' bottom line. Here are some common payroll errors and easy fixes to help you get the most out of your payroll.

1.      Remit Your Payroll on Time

Missing deadlines for payroll remittances to the CRA is a costly mistake that's commonly made. The CRA can fine you 10% of the total of the late remittance for a first offense and 20% for a second offense in the same calendar year. The later you are, the more interest you are charged.

Although it's costly, it's easy for a business to lose track or forget to file payroll remittances on time. Outsourcing payroll is one simple way to avoid these late penalties.

2.      Know if a Person is an Employee or a Contractor

You can get into trouble if you pay employees as if they are contractors, especially if you're audited by the CRA and they determine that the arrangement is more like an employer/employee relationship. If you classify the relationship incorrectly, you could end up being liable for the CPP and EI owing on whatever amount was paid to the person. Visit the CRA's Employers' Guide to learn more and ensure you're classifying the people who do work for you correctly.

3.      Deduct CPP, EI and Income Tax from Overtime Pay

If you're paying employees overtime, you still have to deduct CPP, EI and income tax from that overtime pay. The way you should pay overtime depends on the pay period. Whether the amount owed is paid in the same pay period it was earned or paid in a later pay period will depend on how you pay it and what deductions you make. Talk to your accountant of visit the CRA's Employers' Guide to ensure you're paying overtime correctly.

4.      Pay CPP on Commission

In some situations, you may pay an employee commission after they sell something, which can happen irregularly. In this case, to determine the maximum CPP contribution amount, you have to prorate the annual basic exemption amount for CPP for the number of days in the year between the commission payments. Otherwise, you may pay CPP incorrectly and be stuck making up the difference later on.

5.      Ensure You've Got the Cash for Payroll

Let's face it. Payroll can put a huge strain on your cash flow. Talk to J D Factors about invoice factoring, which is a great solution to ensure you always have the cash available to pay your people on time.

Correcting these costly payroll errors will help you avoid having to pay more than you need to. With your payroll under control your cash flow will be too, which is a critical part of a strong, healthy and growing business. Give the team at J D Factors a call for more cash flow tips! 

5 Tips to Reduce Your Operating Costs

What you pay for the day-to-day operations of your business is called your operating costs. Understanding these costs and working to reduce them where possible is important to have a more successful and financially stable business. 

Problems such as poor cash flow and small margins can be reduced if you focus on spending less money on running the business. However, you have to reduce operating costs carefully to be sure that you don’t sacrifice the quality that you deliver to your clients and customers. Otherwise, you’ll undermine your company’s reputation and growth. It's a tough balancing act, but here are five tips to help you reduce your operating costs without negatively impacting your business.

1. Start with Software

Many owners of small and medium sized enterprises do things by hand when there are software options that can do it for them. When you use software, you save yourself and other staff time, promoting efficiency and reducing your operating costs. There are many different software options to consider, including those for marketing, accounting, customer relationship management and more. Consider whether you’re spending a lot of time on something a computer could handle for you.

2. Outsourcing

Staffing is a huge cost, so you should also consider outsourcing where you can, not just to save on staffing costs but also to get better results than you might be able to achieve yourself. A specialist in a field may be able to get you better marketing results, better legal advice, and more. Their guidance can help you make better use of your resources, saving you in the long run.

3. Change Suppliers and Vendors

You likely have a strong relationship with your suppliers’ vendors, but it is simply good business practice to also look elsewhere to see if you can lower your costs. If you have ongoing orders at a supplier, then you may be able to negotiate a discount for your business. Or your supplier may be willing to match lower prices that you’ve found elsewhere.

Consider setting up a quoting process and getting at least two other quotes. This will help keep your vendors competitive even if you keep choosing them over other options. Be sure that you’re providing enough information that all of your quotes are accurate, or newcomers may underestimate the job and quote too low (which could cost you money in the long run).

4. Lose the Office Space

Do you really need to have office space, or at least as much as you do right now? By allowing employees to work remotely, you can significantly reduce your operating costs. You don’t need to sacrifice connectivity to do this. There are plenty of online tools to keep you in touch with your employees and monitor their progress on assigned tasks.

5. Energy-Efficiency

Perhaps you have to have an office space to meet customers or host employees? Then you can try to reduce your costs by making the office more energy-efficient and green. Better insulation or HVAC equipment can reduce your monthly utility costs.

While many of these tips may increase your up-front costs temporarily, you should find that they overall lower your operating costs enough to make up for this, and then benefit you, after several months. In the end you’ll have a healthier cash flow and stronger business overall. Invoice factoring can help with that too. Reach out to us at J D Factors to discuss how.

 

Cash Flow Mistakes SMEs Should Avoid & 4 Easy Solutions

You need to buy supplies, pay staff, and make investments. But suddenly you don’t have enough cash on hand for these necessities. Cash flow sputters like this can significantly impact your business, so much so that you miss out on contracts, are late to deliver, drive away your best staff and struggle with other problems. For many small and medium sized enterprises (SMEs), most cash flow issues are the result of a handful of common mistakes that are easy to correct. Here are four things your SME should do to avoid common cash flow problems.

1. Conduct Regular Cash Flow Projections

If you know that a cash flow problem is coming, you can change your decisions to get your business on the right track. The key to seeing problems coming is to conduct cash flow projections. Many different accounting programs include options to project your cash flow. You can also project it yourself with basic expenses and accounts receivables information.

2. Finance Major Purchases

If you need to invest in new equipment, property, or other major purchases, don’t dry up your cash reserves to do it. You need the flexibility of having cash on hand. Look into financing options for all of your major investments. It may cost a bit more, but it also enables your business to be more financially flexible and take advantage of opportunities.

3. Regularly Check Your Profitability

If your business isn’t profitable, then you will inevitably struggle with cash flow. Even if you were very profitable the last time that you looked, it's important to review your finances regularly because things can quickly change. Check how profitable you are and look for ways to boost your profitability. You may need to charge more for certain services or products, focus more on selling what’s most profitable to you, or reduce your expenses. Regularly checking your profitability is a wise idea to streamline your business and prevent major problems before they pop up.

4. Keeping Good Invoicing Practices

When you get paid will dramatically affect your cash flow. In order to get paid as quickly as possible, you have to have strong invoicing practices. That means making payment terms clear to customers from the outset, sending out invoices as soon as you can, demanding payment in 30 days or less, following up on invoices that are late, and using strong collections tactics. If you work with fewer, larger clients and can afford to be selective, it is wise to take on only the clients who pay well. Also, you can consider offering stricter terms (such as higher late fees) for clients who routinely pay late.

What If You Are Still Having Cash Flow Problems?

Some businesses have to wait a long time for payment, manage large projects, and deal with other inherent problems that make managing cash flow more problematic. Factoring can help you manage your cash flow better so you can build a more robust business. You’ll get your money within 24 hours of issuing your invoice and be able to use it immediately. This can also benefit you by reducing the time and resources you spend on invoicing and collecting. Contact J D Factors for more information on how invoicing can help your SME regain control of your cash flow.

Canadian Businesses Struggle to Access Financing Amid Covid-19 Response

The COVID-19 response continues to strain small and medium-sized businesses in Canada. The uncertainty makes buying supplies, paying for new safety features, and even paying staff a struggle for many. While the Ontario government stepped in to offer financial support to businesses, many are still waiting.

Delays in Government Funding

According to the CBC, as of this April, Magdi Bazara, owner of the 3 Cents² Coffee Shop and Eats to Go, was promised funding that never arrived. Both businesses were granted $10,000, but the money didn’t come through. In March, Bazara then learned that his application for the Coffee Shop was deemed ineligible after the fact, without any explanation as to why. Being out $10,000 that you had counted on is a struggle for any business.

The CBC has several examples of businesses that are still waiting for the bureaucratic machine to fulfill its promises. For example, Steve Quay, owner of Quay Communications, has been waiting for a government grant he was approved for since January. As many business owners are no doubt doing, Jones is pouring his personal money into his business to try to keep it afloat in the meantime.

The government admits that while 108,000 businesses received their first payment, 35,000 have not yet received their second. An informal survey conducted by NDP MPP Jessica Bell found that 85% of the business owners she spoke to have not received their funding yet.

Gaps in Government Grants

Government funding isn’t just slow--it also has strict eligibility criteria that leaves many struggling businesses in the lurch. For example, Ontario’s Main Street Relief Grant for Personal Protective Equipment (PPE) is only for very small businesses with 2 to 19 employees. Sole proprietors with no employees and small businesses with 20 or more employees don’t qualify for this support.

Other grants have minimum revenue loss as their metric for eligibility. For example, the now-closed Small Business Support Grant required businesses to demonstrate a 20% revenue drop in April 2021 specifically. However, this was in response to a lock-down measure starting in December. The government did not really offer support to businesses that struggled over Christmas, unless the effect was so severe it lasted into April.

An Alternative: Invoice Factoring

If you find yourself ineligible or still waiting for government financing for your business, we have the financial solutions you need. Invoice factoring is a strong alternative to government loans. When you send out an invoice to J D Factors, we make sure that you have access to the cash from that invoice in 24 hours. That response time means that you can be more flexible, make better decisions, and be certain that as long as you can invoice, the cash will keep coming in.

Our services are particularly valuable as these economically uncertain conditions continue. J D Factors offers non-recourse factoring, which means we handle collection efforts from your clients and don’t ask you to return your money to cover bad debt due to a client's bankruptcy. Reach out today to discuss how invoice factoring can help you manage risk and keep your business open.

What You Need to Know about the Emerging B2B Ecommerce Market

Some B2B companies already had ecommerce sites set up to serve their customers. However, with Covid-19 preventing most traditional in-person sales, even more B2B companies are adopting an ecommerce model that allows customers to order much in the same way as B2C consumers purchase items on sites like Amazon. According to Forbes, B2B ecommerce has become one of the fastest growing segments for both new and established companies. Forrester Research projects that B2B ecommerce will make up 17% of all B2B sales in the United States by 2023.

If you’re considering creating an ecommerce site for your company, there are a few things to consider. Making the move from a personal, face-to-face sales process to an online one can boost convenience, and works especially well for companies that need to connect with younger buyers, but it has its pitfalls too. Here is what you need to know about B2B ecommerce.

General benefits of moving to ecommerce

Larger customer base: Moving online allows you to access a much wider base of customers. So long as you can ship your product or offer your service in their area, you can reach them online. Ecommerce is a key tool to expand your business.

• Convenience for customers: Customers find ecommerce to be highly convenient. They can access the store at any time, see their past purchases to buy again more confidently, look through product specifications at their leisure, and use new payment options.
• Avoid credit card fees: The world of ecommerce provides access to other payment options that may charge you less in terms of fees than traditional credit card providers. Some of your customers may prefer to avoid using credit cards as well.
• Customer loyalty programs: It can be easier to implement a customer loyalty program through an ecommerce site. These programs provide their own benefits to you, like providing a wealth of customer data and intelligence.
• Competition: As ecommerce has not been adopted widely across all industries, it may be a great opportunity for you to get a leg up on the competition.

Potential issues when adopting ecommerce

Starting up an ecommerce site for your business can be rewarding but is expensive and also brings risk, like any business change. You can protect your business from these issues ahead of time if you consider them first.

One issue is meeting customer expectations. Delivery expectations for clients are higher when they are buying online. They compare the experience to consumer-facing ecommerce and expect quick shipping, fast updates on shipping progress and more.

Web development has its pitfalls as well. You’ll need a highly intuitive and functional website right from the start, or you could deter customers who have bad experiences using your website's new functionality. You’ll also need a platform that is secure to protect your customer’s information.

Creating a website that can meet these needs can be expensive. Invoice factoring can help you build up the cash reserves to afford a quality website right from the start, by giving you access to your revenue the moment you send out an invoice. Many businesses work with companies like J D Factors to fund their growth and development, too. With invoice factoring, the factoring company pays you what you invoice your customer, minus a fee, and collects from the customer on your behalf. In the meantime, you can use that cash to fund initiatives like developing an ecommerce website.

J D Factors offers factoring services that can help you grow your business with ecommerce solutions, or in other ways. Contact us today to learn more.

Tax Advice for Businesses that Have Survived the Pandemic

First, if you’re here, congratulations for surviving a very tough year! About one in six businesses considered closing for good this year. We’re not quite out of the woods yet though and are heading into a tough tax season for businesses that have survived the pandemic. Thankfully, you still have options and strategies that can help. Here’s our pandemic tax tips for 2021.

The Canadian Emergency Wage Subsidy (CEWS)

Many businesses took advantage of the CEWS in order to pay their employees and keep their doors open. If you claimed CEWS, then the money that you claimed is considered business income and must be included with your taxes. You also must withhold CPP, income tax and employment insurance premiums from the CEWS that you give to employees.

The CRA is doing mini audits of the CEWS and requesting that some businesses give them information about how they used the relief benefits within 10 days. It’s wise to work with your accountant to have this information available quickly.

The Temporary Wage Subsidy (TWS)

If you were eligible for this tax break the CRA already calculated it and told you. This is not taxable income, instead it is a straight tax break that you will not need to pay taxes on, although you will need to report it.

For Your Employees: Working from Home Tax Deduction

Keeping your employees employed this year was likely tough. While you probably can’t offer them the kind of benefits or bonuses you’d like to, you can at least make them aware of the tax benefits that the government is offering. If your employees are newly working from home, or did for a period of time in 2020, then they may be able to claim a maximum of $400 for their expenses, without having to track them. In most cases you do not need to provide anything for employees to claim this.

Moving Matters

Do all of your employees still live in Ontario? When people began working from home they also moved away from the office. Some may have moved out of province. There can be tax implications to hiring or having an employee who is out of province. This is an important subject to bring up with your accountant.

If your employees moved out of the country, or you chose to hire people who are not residents of Canada to fill gaps or lower your employment costs, then there are even more tax implications that you should discuss with your accountant.

Factoring and Taxes

Do you find that you don’t have the cash on hand to handle your tax obligations? It has been a challenging year, and many businesses are in the same position. Factoring can help you have a healthier cash flow, maintain your savings for your corporate taxes, and save for and pay your employee’s salary more effectively.

Invoice factoring gives you access to your accounts receivables immediately. At J D Factors, we pay you when you send out an invoice and then we handle the payment from your customer. This means that you’ll have a stronger cash flow all year, which is especially helpful come tax time.

Last Minute Tax Tips

It’s tax season again, which means it’s time to get your affairs in order. This can be a busy and stressful time for everyone, but particularly for small and medium sized businesses. Add the unique stressors of the pandemic, and your taxes may seem even more daunting this year. But have no fear, there are a handful of simple, last minute tax tips that will help alleviate the stress.

1) Start Early

Don’t procrastinate. This can be hard when things are stressful, but you will be better off if you just buckle down and get things done. So, call your accountant to make an appointment to start early to ensure that you are ahead of the game and avoid any surprises.

2)     Pay on Time

Missed payments, late filing and other delays can lead to unnecessary fees or interest payments, ultimately making your tax season more expensive than it needs to be. Worried you won't have the cash on hand to pay your taxes? The team at J D Factors can help. We can work with a pre arranged payment plan with the CRA and can even put aside a portion of funds from funding to go towards your tax bill.

3)     Ask for Help

The Canadian government offers several credits and deductions for small-to-medium sized businesses to assist with pandemic recovery. These programs are designed to help you save money to support the growth of your business and the Canadian economy. Make yourself aware of these assistance programs and their tax implications. Doing so could help save you money and accrue additional support for your business.

4)     Be Thorough

The last thing you want is to be finished with your taxes and then get a letter from the government saying your business must undergo a costly and time-draining audit. While sometimes being audited is random and unavoidable, you can take steps to prevent the likelihood. Your accountant and bookkeeper will help ensure that you:

• Are thorough with your deductions.
•  Understand the limits to deductions such as travel expenses and dining out and don’t overestimate them.
• Keep consistent and detailed records of what you claimed on your taxes (this is important to keep for your own purposes in case an audit is in your future).

 5)     Seek Help from a Professional

At J D Factors, we provide factoring advice to small and medium sized businesses looking to improve cash flow (and following these tax tips will help you do just that). Contact us to get your cash flow under control so you can pay your taxes on time.

Remember, there's still time to seek help from a professional accountant, and we'd be happy to connect you with some of the best – reach out if you need a referral. Working with an expert will ensure that your taxes are done properly, thoroughly and on time.