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.

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.

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.

 

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.

How to Prepare Your Business for the Second Lockdown

 

As Ontario faces another lockdown on Boxing Day, businesses have a short period of time to prepare for the financial health of their operations and for the wellbeing of employees. While the lockdown is certainly going to be financially taxing on many SME's, the silver lining is that this is not the first time businesses have been through the challenges of either closing completely or operating with restrictions in place. 

If you haven't already, now is the time to lean on your experience over the last year to ensure that you are as prepared as possible for the second lockdown. Here are five tips to help you do just that:

1. Look back at your response to the first lockdown

A successful business is introspective. It's important to look at what went well, and what didn't during the first lockdown and make changes accordingly this time around. Keep in mind that what went well from your perspective may differ from others. Take the time to talk to your employees, partners, suppliers, vendors, and customers to talk about what worked and what you should do differently.

2. Expect and anticipate shipping delays

There have been more shipping delays than usual this time of year because of increased online holiday orders as consumers bunker down and stay home. That may mean that essential business goods or shipments out to customers are taking longer to arrive.

Be patient and remember that essential workers in the shipping and trucking industries are working harder and putting in extra shifts and long days. Despite their efforts many companies are still struggling to keep up with demand and make deliveries on time.

From delivering essential food items to the COVID-19 vaccine, those in the trucking and freight industries are giving up time with their own families and putting themselves at risk. This essential and thankless job is keeping Canadians fed, comfortable and secure and allowing business in Canada to continue. The best way to deal with these delays is to know the reality of the situation and place orders well in advance of when you need them.

3. Identify bottlenecks

Procuring and delivering goods may be one bottleneck to deal with during lockdown, but are there others? Common bottlenecks that can put your business at risk include staffing and cash flow.

Are you ready to cover shifts of employees who may be unable to come to work because they've got symptoms or are waiting for a COVID test result? Have a plan in place and trained staff on standby just in case.

4. Get Your Finances in Order

Many businesses across the country have been relying on government subsidies and programs to continue to operate. That may help you get through the lockdown, but it's not a long-term strategy. For businesses with reduced hours (or those who will be closed), take advantage of the time afforded you and get your finances in order. In an article for the Chartered Professional Accountants of Canada, business consultant Eitan Dehtiar suggests that businesses "look at an overall cost reduction plan, trying to transition as many fixed costs as you can to variable costs so that you have the ability to turn off the tap and adjust."

In addition to reducing costs, advice from EY (formally Ernst & Young) includes evaluating short-term liquidity and closely monitoring cash flow to stay on top of potential shortfalls.

5. Remember, Cash is Always King

Cash flow is always critical to the health of a business, but even when business is good, if customers don't pay what's owed, things can go sideways. Even businesses that have never missed a payment with their bank, like Carl Gatt, owner of BLB Transport Group, may be denied credit when it's needed.

Earlier this month, FreightWaves interviewed Gatt, who shut his trucking business down after a financing dispute with his lender, RBC Bank. Gatt, who is planning on retiring, ended up paying his drivers from his own personal savings after his business accounts were shut down as the dispute went to court.

Luckily for Gatt's drivers, RBC Bank and the courts agreed that he could sell his business to Ready Go, who agreed to buy the company's assets and hire most of Gatt's employees. "When I met Carl, I saw how much he cared about his employees," Ready Go owner and General Manager Ajay Virk told FreightWaves, adding that "we didn't want to see these guys losing their jobs."

While Gatt's story ended on a somewhat happy note, this isn't always the case. Now, more than ever, it's important to get a hold of your cash flow, ensure your accounts receivable are up-to-date, and have a plan should any government programs or subsidies you're using disappear.

Relying on your bank for credit is risky. Instead, consider invoice factoring as a safer way to ensure your expenses are covered. With invoice factoring you'll get paid instantly for your invoices so you can pay your employees and cover expenses. Give the team at J D Factors a call to learn more. Our contactless process means we're able to help your company get control of your cash flow, even during the lockdown.

 

 

 

How Factoring Can Help Save Your Business from Financial Uncertainty

Managing cash flow always has its challenges, but during a pandemic it can be even more difficult. For most B2B businesses, instability creates unpredictable customer behaviour. Cancelled orders, delayed payments, and bankruptcies will all undermine your cashflow, and potentially even threaten your own business. Some small businesses are finding themselves negotiating with their larger customers who use Covid-19 as a reason to try to change payment terms.

If your cash flow has been a source of worry for the last few quarters, or you’re worried about the impact of even more lockdowns on your customers and their ability to pay, you should consider invoice factoring. Invoice factoring can help save your business from financial uncertainty, here’s how.

Cash in Your Hands

When you work with an invoice factoring company, you send your invoice out to the company. The factoring company pays you an agreed upon percentage of what you are owed, and then passes the invoice onto your customer. If you work with J D Factors, you’ll have payment for your invoice within 24 hours. That means that no matter how long it takes for your customers to pay, you’ll have the cash you need to:

• Buy more materials and inventory
• Pay your staff
• Pay your rent
• Invest in opportunities and innovative practices.

A strong cash flow is critical to keep running your business, which is critical during this financially difficult time.

Let Us Handle Collections

What happens when you have many more late payments than usual? Usually, you have to divert more of your resources, like money and staff time, to remind customers to pay. Stop chasing clients down! When you work with an invoice factoring company, you don’t need to waste your resources or threaten your relationships with your overdue clients. Leave all that headache to us. We will remind your customer to pay and if necessary, deal with collections, which can be an expensive process for you (and less so for us, because we have partnerships with outstanding collections agencies.)

Another benefit of having us handle the collections is that you won’t need to speak to your customers during the collection process, and they won't have the opportunity to bring up payment term changes with you.

Non-Recourse Factoring

Bankruptcy of your clients is a large risk in 2020, and likely will be moving into 2021. Forbes argues that more retailers are likely to go bankrupt in 2021, and other industries may be at risk too, especially as the Canadian government drops some of the protections it has offered businesses.

Bankrupt businesses do not have to bring your company down with them. J D Factors offers non-recourse factoring. That means if you have a customer who does not pay because they go bankrupt, we do not ask for the money we paid you for the invoice. You don’t have to return the funds, which means you can confidently use the money to run your business when you first receive it, even if you suspect that your client is in trouble. And, you don’t have to worry about absorbing the bad debt from a client’s bankruptcy, we will do that for you.

Non-recourse invoice factoring from J D Factors can help save your business during these financially difficult times. Reach out to us today to discuss how we can support you.

5 Ways Factoring Can Fix Your Payroll Woes

For millions of Canadians, the first of the month, mid-month or end of the month is a time of relief. Pay day! A time when bills can be paid, savings accounts topped up, and for the 53% of Canadians who are living paycheck to paycheck, necessary purchases made. 

However, pay day may have the opposite feeling for many business owners, especially those without a healthy cash flow. For businesses struggling to make payroll, it can be a time of stress and a scramble to come up with the cash to pay employees what they’re owed. To do so might mean investing time and resources chasing overdue invoices, transferring funds from one account to another, or even drawing on debt. This moment of panic often takes place quietly, so as not to raise concern with employees, which can add further to the stress and isolation experienced by business owners.

Sound familiar? If so, then it’s time to consider factoring for payroll.

One Simple Process to Remove the Stress Associated with Payroll

Factoring for payroll is a service offered by J D Factors and other factoring companies that’s designed to reduce the common stress and uncertainty associated with payroll.

Here’s how it works: Your business turns over your invoices to the factoring company who will then pay your employees consistently and on time. The factoring company will collect the money owed from your clients when each invoice is due. In this way, factoring for payroll is the ideal solution to solve your cash flow issues and ensure that your employees are paid, no matter when your client’s invoices are due.

The Benefits of Factoring for Payroll

Factoring ensures that your employees are taken care of, stabilizes your cash flow and reduces your stress come pay day, but these aren’t the only benefits. Factoring eliminates the time spent chasing clients for overdue payments, a process which is often uncomfortable and can strain important relationships.

Factoring is also a way to provide your business with the cash it needs to grow and stay competitive, because when you use factoring, you know you have cash on hand when you need it rather than having to wait for payment, or wait for a commercial loan to provide the funding that you may need now. This benefit is especially useful in cases where there’s an opportunity to take on a new client but doing so requires an immediate upfront investment in product, equipment or people.

How Much Does Factoring Cost?

Factoring companies will take a percentage of each invoice as their payment. This amount will depend on factors such as:

• Monthly sales
• Terms of sale (net 30, net 60, etc.)
• Level of concentration (one customer at $100,000 vs 10 customers at $100,000)
• Your customer’s credit profile
• The industry.

At J D Factors, we’ll sit down with you and discuss your goals, challenges and finances to ensure that you choose the type of factoring that’s most beneficial for your situation and industry. We’ll also take the time to explain all the terms and conditions of your contract so that you have the knowledge you need to make an empowered decision that supports the future of your business.

So, what are you waiting for? Eliminate your payroll woes and protect your employees and your business. Give J D Factors a call to explore the benefits of factoring for payroll.

Financial Solutions to Manage Your Cash Flow Better in 2020

Was 2019 a difficult year for keeping on top of your business bills and costs? As you reflect on last year’s business performance, you may feel that you need to plan for new cash flow solutions. Poor cash flow can cost you opportunities, customers, and even other business relationships such as sub-contractors. Commit to better cash flow in 2020 with these financial solutions.

Fine Tune Your Process

Having more cash on hand may be a simple matter of finding that cash in your process. Whether you are providing a service or creating a product (or both), you should review your process yearly. Are there cost savings to be found in streamlining your production, changing your services, or even your pricing structure? For example, subscription-based pricing gives businesses more consistent payments and therefore makes managing your cash flow simpler.

Change Your Vendor Relationship

It’s a wise idea to review your current vendor relationships and make sure you’re still working with vendors that make the most sense for your business. It’s not always wise to choose the cheapest, but you need to regularly review what else is out there in case there are more affordable options that may work out better in the end.

Once you’re sure you want to move forward with your vendors for 2020, you may consider putting some new effort into the vendor relationship. Do they have knowledge you can take advantage of, or ideas about how your business can become more efficient? Both can help you manage your cash flow better.

Reward Regular, Timely Payments

Once you’ve reflected on your vendors, reflect on your customers as well. It’s easier to manage your cash flow when you have customers who pay on time. You can encourage them to do so by rewarding timely payments with thank you notes, coupons and discounts.

You can also discourage late payments by changing your payment policies. The following can help:

• Send invoices immediately
• Follow-up on invoices before they are due
• Charge more interest on late payments
• Have customers who pay late make deposits upfront
  

Try Invoice Factoring 

Unfortunately, managing your customer’s payments and trying to discourage late payments can be costly, and so can trying to recover payments from clients who have outright refused to pay. This can quickly eat into your cash flow. A better solution is invoice factoring.

In order to start invoice factoring, you need to partner with a factoring company. Instead of sending your clients your invoice, you send them to the factoring company, who pays you the invoice amount immediately. Then, the factoring company sends the invoice to your client and does the hard work of getting a payment. This is very beneficial for managing cash flow as you get paid immediately, minus the factoring company’s fee.

Another type of accounts receivable factoring, called non-recourse factoring, may be an even better option for you. If your customer never pays the invoice, the factoring company does not ask for the initial amount they paid you. They take the loss, not you.

Reach out to J D Factors today to get a quote for invoice factoring and start 2020 off with better cash flow management.

Never Have to Write Off Bad Debt Again

When a client of yours is unable to pay you, you simply have to take the hit. You can write off bad debt, but you can’t recover the strain on cash flow you’ve been suffering, and you can’t get back the time you spent trying to recuperate the debt. In fact, bad debt hurts companies in both B2B and B2C industries more than you might anticipate. 

The Negative Effects of Bad Debt

Typically, you will complete a quote or project for a client well before you realize they won’t be paying you. The result is a reduced cash flow that doesn’t just affect the un-paid project, but also your projects with other, more stable customers.

How does reduced cash flow from a delinquent client negatively impact customers with whom you have a strong relationship? Reduced cash flow means you run the risk of not being able to quickly fulfil customer’s orders and it can prevent you from expanding your business, buying new equipment, or taking advantage of opportunities for growth. Writing off bad debt can cause you to lose a hundred little opportunities.

One bankruptcy can ripple throughout a whole industry. The bankruptcy of Target Canada Co. left more than 1,700 companies with bad debt, ranging from a few thousand dollars to a few million. Any amount of bad debt can threaten a company’s future success, and all of these companies will have to handle this shortfall somehow.

Five Tips to Avoid Bad Debt

It’s best not to let yourself get into this situation in the first place. Here are our best business accounting tips to avoid bad debt:

1. Use Credit Checks

You can avoid a landmine of bad clients by checking their credit. Even if you do want to take on clients with less than stellar records of payment, when you use credit checks you’ll understand what kind of risk you’re taking on. When you work with J D Factors you receive complimentary client credit checks.

2. Send Invoices and Follow-Up Aggressively

Even a few extra days of non-payment can affect your business, so you need to send invoices right away to get the ball rolling. What about following up? Don’t be aggressive in tone, of course, but following up on missed payments is important to keep the pressure on clients and be sure you’re at the top of their payment list.

3. Penalize Late Payments

Think about it, if a client has more than one outstanding invoice, they’ll pay whichever one is costing them the most first. That’s why it’s important to charge interest on outstanding payments.

4. Hire a Collection Agency

How do you chase after bad debts without taking up too much of your staff’s time? It can be more effective to use a collection agency whose staff have the training to get payments faster. Even better, use a factoring service like J D Factors and the invoicing and debt collection becomes our job.

5. Use Non-Recourse Invoice Factoring

Non-recourse factoring protects you from ever having to write off bed debt. The factoring company pays your invoice right away and takes on the risk that your client may not pay if their business goes under. At J D Factors we will not ask for your money back if your client never pays us due to bankruptcy. You significantly reduce your risk, and don’t have to waste time and resources chasing after payments. Give us a call today to learn more about factoring.

How to Manage Your Business’ Hypergrowth

Hypergrowth is both exciting and scary. If you’re experiencing hypergrowth you’re making more sales, more deals and, ideally, more money. However, you’re also experiencing more risk. There’s a possibility to get ahead of yourself and put too much strain on your employees and your cash flow. 

Those who can manage hypergrowth can make the most of this exciting process. If you can’t manage it, you may not experience the increase in revenue you should, and you could even destroy the business. So, how do you take hypergrowth by the horns? Here’s our advice.

Funding Hypergrowth

Adequately funding hypergrowth is critical because managing your cash flow is potentially the most important factor for your business’ success. You suddenly have a ton of new customers. How do you fulfill their orders when your cash flow is limited to your previous size? There are a few solutions:

1. Factoring

The first option is invoice factoring. This is where you hand your new invoices over to a factoring company, which pays you for them immediately. They give you the cash you need to fulfill that order, without having to wait for the customer to pay you. Your cash flow can expand as much as you need it, and only as much as you need it.

2. Loans

Loans are another option. You can get a traditional bank loan, but this is typically inflexible and very time consuming. Are you asking for too much? Then you may have trouble paying the loan back without cutting into profit. Are you asking for too little? Then you may not be able to take full advantage of your hypergrowth.

3. Investors

Start-ups that are experiencing hypergrowth typically look for investors. It’s great if you can find an investor who will back your orders. However, it’s rare. Invoice factoring is a more reliable funding source that can help you mitigate the risk of hypergrowth.

Guiding Your Culture

Other challenges you may face during hypergrowth come from your staff and business culture. One common problem for established companies experiencing B2B or B2C hypergrowth is that the staff are reluctant to change. It may take a lot of work to get staff up to date with new procedures, but also to change their mindset. When possible, replacing key staff, especially those who are responsible for the teams that need to change the most, is a good idea.

Hire Carefully

You may be onboarding new staff not just to replace current staff, but to grow. One big mistake you may make is getting ahead of yourself too quickly. You can’t be sure how long hypergrowth will last, or where you’ll be when it’s over. So, don’t hire based on some future projected size.

If you hire a former CTO of a massive company, but you’re currently 100 people strong, their skills may not translate well to your environment. You’re hobbling yourself, not fulfilling a future need. 
Instead, hire flexible, motivated people who have experience with the current size your business is at. Always keep in mind their ability to grow, as your business grows.

Choose J D Factors 

J D Factors can help you fund hypergrowth and expand your cash flow as you need it, without getting ahead of yourself. Reach out to us today to learn more.

Bankers Use J D Factors as a Short Term Solution for High Risk Clients

As a financial institution, are you serving your small and medium sized business customers as well as you can? How many potential customers are you turning away because they don’t qualify for financing? The solution isn’t to lower your standards, but to help businesses qualify for your services. You need a short-term solution that can get your potential business customers on the right path.

Factoring may be part of that solution. Factoring can give your clients the healthy cash flow they need to improve their credit, pay down their debt, and eventually qualify for your financing or other products. Everyone benefits: your small and medium business clients get the financial support they need, and you gain a new client who is grateful for the past assistance you provided.

How Factoring Helps Your Clients

Do you find you have clients that you’d love to help, but their credit score, debt, or other aspect of their business disqualifies them? You can still help these clients by pointing them to another option: accounts receivable financing, or factoring.

With factoring, your clients will receive the money they invoice for immediately. This can help them build a positive, healthy cash flow they need to make the investments required to support hypergrowth or otherwise improve their business.

J D Factors goes a step further and offers non-recourse factoring. This means that we take on the risk of bad debt and don’t demand money back from our clients, even if their customers never pay. So, if you have a potential client whose financial troubles are partly due to their unreliable customers, non-recourse factoring can help them eliminate that risk and start to recover.

How Suggesting Factoring Helps You

As a bank or financial institution, your loans will always be in demand. It’s just a question of whether those who want your financing are eligible for it. Factoring is the perfect way for you to help new clients qualify for your services.

Factoring doesn’t have to compete with bank loans. Chances are, the clients you send J D Factors will continue to use factoring until they are ready and qualify for traditional financing with your organization.

You should also recommend factoring to your clients because when you show your potential clients that they have other options, they trust you. You demonstrate that you care about their business, even if you can’t help them right now. That makes them much more likely to return to you when their business is in a position to take on a loan.

Further, when you send clients to J D Factors, we can give you a referral payment. If the customer you send us doesn’t work with you again, you’ll have earned something for your time helping them.

Contact J D Factors to learn more about how we can partner together, to strengthen small and medium sized businesses across Canada.   

Track These Metrics to Monitor the Pulse of Your Business’ Cash Flow

Understanding your cash flow is essential to the health of your business. A strained cash flow will limit your potential, stopping you from taking advantage of new opportunities. In fact, a very limited cash flow could push your business into debt as you lose more in costs than you bring in. You need to be aware of your cash flow to make the best decisions for your business.

According to QuickBooks, the Small Business Administration found that a problem in financial structure is to blame for 28 percent of business bankruptcies. Unless you understand your cash flow, you could be next. Here are the key financial metrics you need to monitor to understand the state of your cash flow.

1. Accounts Payable

How much money needs to go out your door? This metrics includes all the bills you haven’t yet paid like payment for materials, supplies, contractors, and more. It’s a good idea to calculate the accounts payable that you owe now and estimate next month’s figure too. You should compare both to the next figure: accounts receivable. 

2. Accounts Receivable

How much money is owed to you? Your accounts receivable is the total of funds your clients should have paid you already. If your accounts payable is higher than your accounts receivable, you have a problem. If they are tight, you also have a problem. You need to be able to bring money in quickly to stay flexible and competitive. When comparing these figures, don’t forget to write off bad debt, or your accounts receivable will be inflated and misleading.

3. Time Worked for Small Businesses

The smaller your business the more relevant your time worked will be to your overall business cash flow. If you’ve worked significantly less, perhaps due to illness, you can forecast a reduction in accounts receivable. Cut back on accounts payable, or be in the red.

4. Free Cash Flow for Corporations

Larger, more complex businesses will benefit from looking at free cash flow over time worked. You’ll need to find your earnings before interest, tax rate, depreciation, amortization, and add them. Then subtract your capital expenditure, like mortgage payments and equipment costs, and subtract any change in net working capital. Free cash flow can help you ensure you’re not cutting into your business’ cash flow too much.

5. Cash Burn Rate for Start-ups

If you’re a funded start-up, it’s critical to monitor your cash burn rate and ensure you’re not limiting your cash flow by over-spending. You need to increase your accounts receivable before your “cash runway” ends.

The Solution: Accounts Receivable Financing

No matter your business size or type, if you have cash flow problems, you need to get the money owed to you in the door faster. Accounts receivable financing is a cost-effective way to do that. J D Factors will take care of your business invoicing for you. Send us an invoice and we will pay you for it within 24 hours, and then invoice your clients or customers on your behalf. With invoice factoring you’ll see a healthy cash flow is right around the corner.

Non-Recourse Factoring

You’ve likely dealt with frustrating clients before. Sometimes a debtor will simply avoid you until they declare bankruptcy. Some are just chronically late or irresponsible and dealing with them can be just as tough.

Sometimes, it takes a lot of work to get clients to hand over the money you’ve earned. There are plenty of techniques to chase clients down, including contacting them regularly, using an escalating tone, claiming interest, and even bringing the client to court. Not only will these steps sour your relationship, but they cost time and money you don’t have.

With factoring, you receive your payment from a factoring company, who issues your invoices and collects payment on your behalf. Factoring is a huge benefit to your business, but non-recourse factoring is even better. That’s because non-recourse factoring removes the credit risk of unpaid invoices.

With traditional factoring, if a client or customer refuses to pay, the factoring company usually expects you to buy the accounts back, at their original cost. To do this, they often withhold some of the value of your future invoices (which defeats the main benefit of invoice factoring—it’s predictability). While it’s helpful that you save some of the costs of dealing with your unpaid invoices, this kind of accounts receivable financing leaves the biggest risk in your hands.

Non-Recourse is The Smarter Choice

Non-recourse factoring is different. At J D Factors, we pay you within 24-hours after you issue an invoice and we take on all the risk and costs of dealing with your clients. If they never pay, that’s our loss. Period. That’s why non-recourse factoring is a great risk management option for your business.

At J D Factors, we’re experts at collecting on accounts receivables. We have the experience and techniques to minimize the risk from the accounts we take from you. We’re good at what we do, so you can spend your time doing what your business is all about—delivering your products or services.

An Investment in Your Time

Rather than worrying about unpaid invoices or cash flow, with non-recourse factoring you simply pay a factoring fee to save yourself the time and money you’d be spending chasing after clients. When you offload your unpaid invoices to J D Factors you won’t have the worry of a credit risk associated with some clients. Non-recourse factor allows you to establish worry-free relationships with new clients. If they turn out to be bad risks, the risk is ours. You’ll still get paid.

Contact J D Factors to start non-recourse factoring and truly free yourself from the drain of unpaid invoices.

Sources:

http://blog.factorfunding.com/blog/what-are-the-differences-between-recourse-and-non-recourse-factoring/

http://www.rtsfinancial.com/guides/difference-between-recourse-and-non-recourse-factoring

Improve Your Cash Flow by Clearing These Payment Hurdles

Poor cash flow is a constraint on your business. Did you know that there are many payment hurdles keeping your clients and customers from paying you faster? Here are some tips on how to overcome these hurdles and minimize your outstanding payments:

1. Negotiate Payment Options Up-Front

People are used to doing business a certain way, and when your payment policies differ from what they are used to, they may find themselves unprepared to make your payment when it is due. You can avoid this problem by clearly stating your terms before you provide your goods or services.

If your terms are radically different from what your client was expecting and they’re already late with your payment then it makes sense to compromise with them on terms this time and insist your policies be followed in the future.

It is also a good idea to allow multiple payment plans, so that your clients can pick a schedule that works for them. However, not all business structures allow for clients to pick and choose which payment elements they like, and this can become complicated if you have many clients asking for different payment plans. Ultimately, all of your payment plans should work for you. It’s fair to ask for account payables within 30 days of your invoice. 

2. Confront Outstanding Accounts

You’re very busy, but it’s important to contact a client the moment they miss a payment. Your early and polite request will give them an opportunity to pay you if they simply forgot or made a clerical error. If not, this early pressure makes it clear that you’re paying attention to their account. It also minimizes their excuses later. They can’t argue they weren’t aware a payment was overdue if you contacted them about it immediately.

If they continue to delay their payment, you should be reminding them regularly, in an escalating tone, that their payment is past due. Remind them that your late payment policies may come into effect if they continue to default on their payment.

3.  Enforce Your Policies

Set policies for late payments and enforce them, otherwise routinely late clients will take advantage of you, to your business’ detriment. Claim interest where it’s due and if this isn’t part of your existing policy be sure to set a new policy explaining that late payments will accrue interest. Having to pay more money if they continue to delay payment is very motivating to clients, especially when they are strapped for cash.

4. Keep Struggling Customers and Clients with Factoring

You customers and clients might be struggling financially, whether their industry has taken a bad turn or their business is failing, or their personal finances are not in order. Of course, you feel for you clients because you have a good relationship with them, which makes overcoming this payment hurdle a challenge.

If you’ve decided to extend the payment period for a struggling customer, protect yourself next time and insist they make a deposit up front. You can also do this with habitually late clients or customers.

Alternatively, factoring is a solution to your cash flow problems that doesn’t require you to risk souring your relationship with your customers and clients in order to get paid. Through J D Factors you can get up-front accounts receivable funding as soon as you send out an invoice, and we take care of chasing down your customers for payment. We even take on the credit risk! Contact J D Factors today to learn more.

Staying Afloat - 3 Tips to Better Manage Your Cash Flow

Managing cash flow is vital to keeping your business running, but for businesses looking to grow, cash flow is an absolute necessity. For many business owners, managing cash flow can feel like treading water in the ocean with crashing waves and undercurrents trying to pull your down. Even if you stay afloat (and statistically many companies don’t) it can be a tiring process that requires constant work and concentration.

For start-ups, SMEs and growing businesses the battle is even tougher. Failing to get a handle on your cash flow is a sure-fire way to seeing your business go under.

There are two crucial elements to cash flow:

1) Accounts receivable (i.e. the money that is owed to you)
2) Accounts payable (i.e. the money that you owe)

It is entirely possible to run a brilliant, profitable company with a negative cash flow. A big sale might be a profit on paper, but until you actually get paid that sale isn’t worth the paper it is written on.

There have been many brilliant people with fantastic products or services that have gone under simply because of poor cash flow management. Want to ensure that your business doesn’t fall victim to cash flow problems? Here’s how:

1. Track your cash flow

Ensure that your company is tracking weekly cash flows closely, know how much cash you have on hand, your break-even point, and create cash flow projections.
These projections should help you identify and counteract rough patches ahead. Pay equal attention to both projected expenses (everything from salaries and inventory to the gas bill) and sources of revenue (including sales, interest earnings, fees, collections, and incoming loans or investments).
Build projections for next month, next quarter, and next year, but remember projections are just projections - keep an eye on the balance sheet at all times.

2. Keep some cash reserves

Even the best run business will run into cash shortfalls here and there. Be prepared. Don’t let a lack of liquidity prevent your business from doing what it does best. Keep some cash reserves aside to help your business run smoothly during dry patches.

3. Prepare for shortfalls

Even businesses with extra cash on hand are bound to run into shortfalls. Sometimes shortfalls are unavoidable, even with stellar cash flow projections and a healthy cash reserve. When this happens you don’t necessarily need to go into debt. In fact, may banks won’t fund small businesses with cash flow problems. Instead, call J D Factors. We help businesses with:

• Factoring (sales of accounts receivable)
• Debt recovery
• Invoice discounting
• Non revenue – assumes risk of receivables

As cash flow management specialists, J D Factors can help you recover during periods of cash flow crisis without having to take on debt or negotiate with suppliers, customers or employees. With our help none of the people you do business with needs to know you’re having cash flow problems. Call us today to learn more about how we can help you better manage your cash flow.