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.

Invoicing Do’s and Don'ts - Advice from the Experts

You've done the work, now it's time to get paid! Are your invoices encouraging your clients to pay quickly and on time? Your invoice is part of your customer's experience with your business and doing it well will encourage them to pay you faster. 

It's important to be paid quickly – a good payment turnaround can benefit your business because strong cash flow lets you pay your bills, capitalize on opportunities, and remain stable. It all starts with invoicing. Here are our invoicing tips and guide on how to get paid quickly.

Include a Due Date

You shouldn’t think of your invoice due date as optional. Clients absolutely need a reminder of when the invoice is due whenever they look at it, or there’s no real motivation to go and pay it. You should also think carefully about the terms of your invoice. If your industry standard is 60 or even 90 days, you may want to buck the trend with something more reasonable, such as 30 or 15 days. These terms help you get paid faster and help you get on missing payments faster, too.

Also, keep your due dates consistent so your clients understand when they should pay.

Create a Self-Service Portal

Mailing or hand delivering invoices is outdated, and even emailing them creates the opportunity for them to get buried or land in someone's spam box. Try a self-service portal instead that offers payment methods to customers. Deliver the invoice through the portal, so that your customer is immediately able to pay the moment that they get the invoice.

Choose a portal with lots of payment options, or you will discourage your customers from using it.

Direct Your Invoice Properly

Sometimes your point of contact in the company is not the best person to send the invoice to. When you start working with a client, ask them who should receive the invoice. Often, you’ll have a dedicated contact in accounting who should get all of your invoices. This can save you time, as you won’t be relying on your contact to send your invoice to the right person. That extra step can actually add a lot of time if your contact is busy.

Offer Early Pay Discounts

If it is affordable for your business, offering a small discount for early payment can really help you get paid faster. Try offering a two percent discount for payment before the 15-day mark, or even earlier. Customers who want to take advantage of this discount will often pay the moment they get their invoice. That can save you a tremendous amount of time and work in collecting the invoice.

Don’t offer too much of a discount, or a discount for common pay terms like 30, 60, or 90 days. Those who pay exactly on-time should be motivated by late fees. Use a discount only to encourage the fastest turnaround possible, or you may simply be losing money without getting enough benefit.

Are you still struggling to get paid quickly, even when using these best practices? You can get paid even faster and have a healthier cash flow with invoice factoring! At J D Factors, we pay you as soon as you send your invoice, which can have huge benefits to your business. Reach out to learn more about factoring today.

Negotiating Better Credit Terms

As a small or medium sized business, you deal with credit all of the time. You get credit from your bank and you may offer credit to your customers. In both instances you will benefit financially with better credit terms. Credit from your bank can end up costing a lot. Extending too much credit to your customers can cost you, too. Here are six tips for SMEs to negotiate better credit terms. 

Negotiate with your Bank

Negotiating interest rates and other terms with a bank can be challenging. In fact, many businesses do not attempt to negotiate with banks at all. You may be surprised to learn businesses have a little more wiggle room than consumers when it comes to accepting a bank's terms. Here’s how to better negotiate:

• Understand your situation: You must negotiate with reference to your credit score, your finances, and your projected future. These are the areas that your bank is most interested in.
• Start early: If you’re negotiating terms on an existing credit product, start talking to the bank as soon as possible. On new products, try to negotiate well before you need to use the credit, so you have more time to come to an agreement. 
• Know your options: If you feel like you don’t have any other options, you might agree to terms that aren’t favorable. Understand your bank’s range of credit options and ask about them. Know that you can go to other banks and financial institutions, too. 

Negotiate with your Customers 

When you offer customers an invoice and are delayed payment, you are essentially extending them credit. You may also extend credit to customers with a monthly payment plan for your products or services. In either case, negotiating more favorable terms will result in better cash flow. How do you negotiate successfully, especially if favorable terms mean working against industry standards? Here are some tips:

• Set expectations early: Afraid of losing business by asking for unusual credit terms upfront? Most customers won’t walk and will negotiate when you ask for unusual terms. It’s easier to negotiate when the customer isn’t used to your existing arrangement, so ask for better terms up front. 
• Offer services: There are many services you may be able to offer that cost you nothing, but which matter to your customer. Offer these services in exchange for better credit terms. For example, offer 24/7 customer service, better processing times, or free shipping for invoices paid up front. 
• Offer a discount: If you can afford to, then consider offering a small discount (two percent) for clients who pay their invoices very quickly (within five days). Having invoices paid quickly is an important step to securing better cash flow for your business. 

If your discussions of new credit terms don't generate a lot of interest amongst your customers, then consider using other tools to improve your cash flow. Invoice factoring is one strong option. Your invoices are paid upfront, and the factoring company worries about collecting on those payments from your clients. The result is an improved cash flow and more time to focus on your business. 

Call the team at J D Factors to learn more about the benefits of factoring and for tips and advice when it comes to negotiating better credit.

These Industries Benefit the Most from Factoring

Non-recourse invoice factoring is a powerful tool for many businesses. Those that need better cash flow, more protection from the risk of bad debt, and general flexibility will appreciate the convenience of invoice factoring. However, there is a reason that factoring is more popular in certain industries. 

Some industries present unique challenges to businesses that factoring alleviates, which ultimately makes the business more competitive and stable. Here are four industries that benefit greatly from factoring:

1. Transportation

Trucking is all about time. You need to make your deliveries on time, but customers don’t always pay on time. Even when they do, the industry standard is payment 60 to 90 days after delivery. Afterall, whoever you deliver to needs to use the goods you deliver to run their business and then get money from their clients or customers to pay you, right?

It's this expectation that causes trucking companies to often suffer from a lack of liquidity, which in many cases can prevent them from expanding. Anyone in the trucking industry knows that there are many large, upfront costs to pay for, including staffing, regulations and fuel. Getting cash upfront from your invoice factoring company can help you meet your costs and invest in your expanding business at the same time.

2. Food Manufacturing

Food manufacturers often have large costs and large inventories. You may be worried about new labelling and container regulations, how to meet consumer demands for wellness-focused food, and much more. Selling the value of your invoices through invoice factoring can help you get the supplies you need to fulfill customer orders. In turn this allows you to take on more work, expand when you need to, and make bolder moves in ingredients and packaging. If you’re so inclined, the cash flow strength from invoice factoring can help you innovate, too.

3. Staffing

Digital tools like automation and artificial intelligence are the future of the staffing industry. You’re crunched for time and are tasked with handling large volumes of information while finding just the right talent prior to getting paid. You need capital to invest in the resources to automate, which will help you succeed. With invoice factoring, you get access to invoices upfront, and can use that money to run your business more efficiently.

4. SMEs

While not an industry per se, small and medium sized enterprises do have unique needs that invoice factoring can fulfill. For example, many SMEs cannot qualify for traditional sources of funding, such as loans from a bank. Instead of lending, you can sell the value of your invoicing and get the capital you need to invest in your business and its growth. Non-recourse factoring can also provide you with valuable protection from loss and bad debt, which in some cases can make or break an SME.

Whatever industry you operate within, talk to the team at J D Factors about the challenges you're facing. We work with many businesses within the transportation, food manufacturing and staffing industries as well as owners of SMEs who are looking for a customized financial solution like factoring.

Financial Solutions for SMEs

Small and medium sized enterprises (SMEs) don’t have access to the kinds of bulk financial solutions that large enterprises can use. Instead, small businesses need more focused tools that can sub in for what might be an essential in-house function in a large corporation. Otherwise, you spend too much money on functionality designed to streamline efficiency that you often don't need. Here are five ways to save money and carry out business as if you had many more employees than you do.

1. Staffing Instead of Human Resources

Hiring employees can be a huge time investment. Often, if you don’t give this task enough attention, your whole business will suffer. So, it may seem like a human resources person, or whole department is a top priority. Not necessarily so. You can save money without sacrificing employee quality by using outside staffing solutions. Try a solution you can access on your smartphone, like GoodHire, to get started.

2. Invoice Financing Instead of Financing and Collections

Invoice financing is a two-part tool. First, you may not need to pursue traditional loans if you use invoice financing, because you'll get money from the invoice as soon as you issue it, so that you can fulfill the work with the benefit of having cash on hand. You don’t need the same credit rating or company history to take advantage of invoice financing as you may if you were approaching a bank for a loan instead.

The second problem that invoice financing can solve is the hassle of having a collections team, or of asking your receptionist (or other staff) to track down your payments. The factoring company will do the work of tracking down the payment on your behalf. With nonrecourse factoring you have even more security if the factoring company is unable to receive payment.

3. Hootsuite Instead of a Social Media Team

Having a diverse social media strategy is smart, because some platforms get more and less popular with different demographics overtime. However, you likely find that it would be too much work for your marketing team, or for you, to post to any more channels than you already have. Inactivity can be more harmful to a brand than just not having the account at all. Use Hootsuite to post to multiple accounts all at once, and schedule your posts for the future, so that you don’t have to interrupt every day with your posting schedule.

4. Loyverse Instead of Paid Point-of-Sale

Loyverse is a free option for companies without a point-of-sale solution and those that don't have the resources to dedicate to a loyalty program. This POS and inventory management software will show you basic sales analytics, making it a very useful software option for SMEs.

5. Telzio Instead of a Phone Network

Sometimes, even when you want to stay lean, you’re tempted to invest in business infrastructure, like a phone network. If you absolutely need one, try using Telzio instead. It allows you to set up a system over the Internet, which allows your team to take calls anywhere. It’s more flexible and suitable for the realities of modern business.

Whether you'd like to learn more, or you're ready to take the jump and reap the advantages of financial solutions like invoice financing and non-recourse factoring, reach out to us at J D Factors. Our experienced team is here to help SME's like yours.

5 Ways Factoring Can Reduce Your Operating Costs

We normally think of factoring as a way to fix cash flow problems. While that's true, factoring can also reduce your operating costs. Simply having consistent cash flow on hand and reducing the overhead you need to manage your accounts receivable can significantly lower your operating costs, making your business that much more efficient and profitable. Here are five ways that you can use factoring to reduce your operating costs: 

1. Outsource or Better Manage Staff

Do you currently use subcontractors to fulfill the larger orders you get? Do you have to lay off staff sometimes when your cash flow dries up? Factoring ensures a consistent cash flow, which allows you to manage your payroll or outsource some tasks to make your business more efficient.

Consistent cash flow may also mean that you can keep more, higher quality staff on hand. Creating a better work environment will enable your employees to give you their best, which can reduce overtime payments and the high one-time costs of hiring and training.

However, it can be even more cost-efficient to outsource specific tasks, including IT, accounting, and marketing, all of which can substantially decrease your operating costs. 

2. Buy Materials in Bulk

For some industries buying in bulk can be a huge savings. Suppliers can afford to give you significant discounts when you buy up more of their product, and this can even lead to a better working relationship with the supplier over time. You become a better customer, who gets more of their time and attention.

Unfortunately, not every business has the cash on-hand to buy in bulk, even when they know they’ll use all the material quickly. Invoice factoring can give you the cash boost you need to make better purchasing decisions, including getting those bulk discounts.

3. Buy Based on Subscription

Working with perishable goods? Those in food manufacturing and similar industries may not be able to buy in bulk because they won’t use all of the supplies in time. In this case, suppliers are more likely to work out discounts based on how consistently you purchase from them. Some suppliers have moved to subscription models; however, you may not be able to take advantage if you have an inconsistent cash flow. Invoice factoring can help. 

4. Accounts Receivable Management

When you use invoice factoring you do not need to manage sent invoices or chase clients to pay you. This can save a ton of time and money. Not having to remind clients about invoices and arrange for payment may mean that you can reduce your accountant or receptionist staff or freeing them up to maximize your business in other ways.

5. Save on Collections Agencies

There are some clients who just won’t pay, so you need to use collections agencies or other expensive measures to get your money from them. One great thing about non-recourse invoice factoring, is that you never have to worry about collecting from a client. If they don’t pay, your factoring company will do the work of taking them to court for you.

At J D Factors our team will work with you to create a plan to reduce your operating costs. Reach out today to learn more about how factoring can help your business.

Business Loans vs. Factoring: Why is Factoring a Good Option?

Many businesses are seeking loans right now to help deal with the challenges of COVID-19 and the quarantine. If you’re looking for financial solutions, a bank may be a great option, but it isn’t your only option. Factoring may be a more flexible and sensical option for your business right now, depending on your specific needs.

 

How is Factoring Different?

While a traditional business loan gives you a set amount of money to be repaid over time at a specific rate, factoring is a much more variable financial tool. With factoring, you send your invoices to your factoring company and not your clients. The factoring company pays you for the invoice right away and worries about getting the money from your client.

At J D Factoring, we offer non-recourse factoring, which has an extra step. Depending on the circumstances, if your client fails to pay your invoice, we don’t ask you to return the money that we already gave you for that invoice. This gives you some risk protection from your clients’ own financial woes. During COVID-19, when many companies will face challenges, this risk protection is absolutely critical.

Less History Required

When you apply for traditional financing options through a bank, you may find yourself turned away because you are too new and do not qualify for financing. That’s understandable from a bank’s perspective, but factoring companies have significantly more flexibility in this regard. We can often take on new businesses that wouldn't otherwise qualify for a traditional bank loan.

More Than Credit

We take much more than credit into account. While credit is a factor for your application, we don’t make our decision primarily based on your credit. This process is especially beneficial for businesses that have begun recovering from a spell of financial hardship, or who have recently faced difficulties.

Banks are Busy

Thanks to restrictions on businesses during COVID-19, many companies have had to reach out to banks for business loans and other financial support. As a result, banks are busier than usual. Plus, most major banks are focusing on their current clients right now, which may mean that you need to wait much longer to even find out if you qualify for a business loan.

That wait can be an even larger problem in these financially uncertain times, especially if your cash flow is strained. You may be missing out on business opportunities, or even on the opportunity to fulfil essential goods and services that people need during COVID-19. In that case, you may want to reach out to the team at J D Factors. We can process your application faster than most banks can right now.

We Help Banks, Too!

That said, J D Factors can also help banks through this challenging time. If you’re facing huge delays, like taking three or more weeks for a process than normally takes one week, consider referring clients that are unlikely to be approved for a loan at your institution to us. This referral will reduce your internal workload, increase customer satisfaction with your institution, plus we pay a commission on clients you refer to us!

Tips for Spring Cleaning Your Business' Finances

In light of COVID-19, your business may be feeling the financial stress experienced by most Canadians. Are your business' finances robust enough to hold you over until the quarantine is over? Whatever state your finances are in, now is a good time to do some financial spring cleaning. Revisit your business goals, plans and expenses to make your business more robust for this and future challenges. 

Revisit Your Long-Term Goals

Now that your short-term business has changed so dramatically, you may need to change your long-term goals. If you don't have any written down, now is a great time to start keeping a written record of the things you want to accomplish, whether it's a sales goal, creating a new website, or launching a new product.

Unfortunately, because of COVID-19, many of the long-term goals you've had for the year may need to be pushed back. And, because of the current uncertainty about when things will return to normal, you may have to leave your long-term goals on the backburner.

However, you can still learn a lot about what your next steps should be by re-prioritizing your goals and identifying those that you can accomplish in the short-term. Maybe a new product launch isn't your next best step. Perhaps reaching an online audience or starting to ship your goods is now your top priority.

Better Business Management

Have you invested in new digital tools to help you manage your business? These solutions aren't just limited to finances. Cloud-based tools may be as helpful for communicating with clients as they are for invoicing or communicating with your employees.

These solutions do not have to be expensive, either. There are now many free or open-source versions of some popular business management tools. Although, depending on your current finances, now might be a great time to check out paid options too. You have the time to really get to know new software and discover if it will fit your needs moving forward.

Consider Cash Flow

Many businesses are having cash flow problems now as their sources of revenue pause or dry up. If you were already having cash flow problems before the crisis began, you may have had even less time to prepare your business to survive than you would have otherwise.

You can better manage your cash flow moving forward with factoring, a type of financing where you are paid up-front for the invoices you create, even though you have not yet been paid by your client. This arrangement gives you the capital to buy materials, tools, pay employees, and handle your other business expenses.

The team at J D Factors specializes in non-recourse factoring and remains open for business for new and existing clients. We know that the current situation has put a lot of financial stress on companies, which is why our team remains open for business and ready to help you.  Our advanced automated systems will allow you access to quick cash in under 24-hours. Simply send us your invoices and any backup documentation such as time sheets, delivery slips, etc. by email and we will fund you with a direct deposit into your bank account.

Our non-recourse factoring program will allow you to continue to work for and bill your customers with peace of mind knowing you will not have any bad debt. This is a great way to minimize your risk in times of uncertainty. Give us a call today to learn more about how we can help your business survive the financial uncertainty caused by COVID-19.

Factoring and Taxes - What SMEs Need to Know

For small or mid-size business owners, tax season can be nothing short of a headache. On top of ensuring that business continues as usual through invoicing, payroll and other current daily operating expenses, there is the added stress of making sure that all of the previous year’s budgets, expenses and revenues are aligned and accounted for, and that everything is properly deducted and filed on time. There is also the risk of penalties – more money lost – if there are delays, which can be an even greater problem for small business owners.

To help ease the strain, here are some key tax tips for 2020 that every SME should keep in mind.

4 Tax Tips for 2020

Proper Bookkeeping

If 2019 wasn’t the best year for organizing and staying on top of company documentation, 2020 is the time to start. While many SMEs can afford a bookkeeper, those who can’t and must keep track of everything on their own should be even more mindful about proper documentation. This includes having receipts and other records properly sorted in physical folders with digital copies where possible - a good practice to carry forward as more processes are being conducted online regardless. Additionally, in the event that something happens to those print documents, keeping a separate backup can be critical come tax time.

Consulting a Professional Accountant

For small business owners especially, the guidance of an accountant or CPA is useful in sorting through and organizing documentation, expenses, tax credits and even potential deductions that may have been missed. This also includes advice on what the CRA will be looking for in the case of an audit and ensuring that all of the common expenses, such as vehicle, entertainment and meal expenses, are accurately accounted for. In some situations, tax preparation and accounting fees can also be considered tax-deductible.

Requesting an Extension

If time is an issue, filing a request for a tax extension can be a helpful step to avoid missing deadlines which can be even more costly in the long run. In the event that a deadline passes and a business must pay up on penalties, accounts receivable factoring can also be a key solution.

Factoring for SMEs

With invoice factoring and accounts receivable factoring, SMEs can get the money they need to balance outstanding invoices and cover tax costs to the CRA without putting a strain on daily cash flow. At J D Factors, we pay your invoices upfront, minus a nominal discount, then handle the risk, time and energy involved in collecting payment. This service allows SMEs to continue business operations without the worry of unstable cash flow or missed payments from clients.  

Contact J D Factors to learn more about protecting your business during tax season and get more tips for invoice factoring and accounts receivable financing.

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.