Small Business Funding Alternatives

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Objections are a part of life and certainly business - especially when there is a new idea, thought, process or product.

So, learning to address them right off the bat - especially in the business sense — is critical to success in business.

Some of the most common objections heard in the cash flow industry about our non-traditional funding options:

Objection:  We don’t need it!

Response: 

What kind of terms do you give your customers?  How long does it take them to pay? Could you manage your business better as well as finance its growth if you had that money sooner rather than later? 

Objection:  It sounds too good to be true!

Just because you haven’t been exposed to this financial service doesn’t mean
that it doesn’t exist.  Its been available to big business for a while and is just now becoming available to the small business owner – as is the norm unfortunately!

A for instance, the cash flow industry is about trading paper, right?  So, are you a homeowner by chance?  And, if so, have you ever had to change the name of the mortgage company you make your payment to?  “This” is an example of paper being bought and sold (traded) in the cash flow industry and it has been going on for a long time — with BIG business and usually in “portfolios”.  Now, however, this tool has been made available to small business.  As I’ve said over and over again, the total of small business is bigger than big and the smart investors we work with have realized this and made the same financial tools available to the little guy now.

Objection:  We do that ourselves!

It may sound like our funders act like a collection agency but believe me they are not.  They advance money to your business based upon your invoices to your business customers and wait for them to pay.  Meanwhile, you have the use of the money to better manage your business and to finance it’s growth.

Objection:  I’ve heard of factoring, but I’m too small!

Businesses with cash flow issues – small or large – benefit from factoring
to keep the cash flowing in their business.

Instead of waiting for your customers to pay your invoices, would your business benefit from having most of that money right away – regardless of the size of the invoice?

Would you be more comfortable with a factoring program that doesn’t require a minimum monthly volume and doesn’t require an annual contract – no problem – we have factoring programs to fit the various sizes of small business owner (we can factor $50 limousine charges or invoice volumes of $1M and above a month).

Objection:  We already have a credit line!

Great; but how big is it?  Does it automatically increase as your receivables increase or do you have to apply for a larger line?

Would you like to have access to larger amounts of funding without having to go through the application process?

Factoring is a receivables “Only”-based line of credit that grows as your
receivables grow with no application or specific request for increased funding needed!

Factoring ALSO works in conjunction “with” your existing credit line to, in affect, allow you a “second” line of credit based solely on your receivables.

Objection:  We see the benefits of factoring, but we’re afraid our customers will think we’re in financial trouble and will look for alternative sources for our product or service.

In no uncertain terms, you can let them know that the fact that your company
“does” qualify for factoring makes a powerful and positive statement about the strength of your finances and the factor’s level of confidence in your business!

If another business owner received a multi-million dollar credit line from his bank, what would you think of him? 

Our funders provide a virtually unlimited line of credit to you based only upon your receivables as collateral.  You should remind (or inform) them that you (as the savvy business owner that you are) wish to take advantage of a funding tool of which you were previously unaware that can ease the ebb and flow of cash flow so that you can concentrate on what you do best – providing them with the quality service or product for which they have come to you and it keeps you from having to worry about cash flow issues.  As with most things, when we use the “tools” available, whatever the “process” or chore is, it is accomplished with more ease and speed when available “tools” are used.
Now that we have a hammer, will we go back to pounding nails with a stone?
You are using the tools available to you to help your business grow and
deliver the best service or product.

Objection:  We wouldn’t do that to our customers!  We’re afraid it will offend or alienate our customers!

You are dong it FOR your customers! 

Would they like it if you went out of business because of cash flow issues OR had to change your terms to COD?

You should let them know that factoring will enable you to continue to provide the high quality product or service they have come to expect without having to change payment terms so that they can continue to enjoy the generous trade terms you provide, i.e. 30 days or more, that factoring will enable you to continue to provide “for their benefit”.

Objection:  Must the customer be contacted?  If so, what do you tell them?

Yes, they must be contacted.

Generally, in the process of verifying an invoice, your customer is told that you have been provided an unlimited credit line based on your accounts receivable and we are providing receivables management in conjunction with that credit line.  Now how impressive is that?  If they are having cash flow issues themselves, they might just want to check it out themselves!

But, basically, in our communications with your customers it is referred to this way with the additional information that you have received it to accommodate the growth that you are experiencing.

Its largely, too, a part of you being confident in your choice to use this tool and the posture with which you relay this to your customers.

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Hi, All - I know it’s been a while but lots has been going on and it has kept me from blogging.

 But….I’m bbbaaaccck!

Have you ever heard the saying, “A contract (with the government) is like Money in the Bank?”

Have you ever tried going to the Bank with that contract to get an advance against it to help fulfill the huge contract you just landed but need to hire additional personnel and purchase additional inventory, raw material or the such?  Not quite as easy as you thought, right?

 Have you ever heard the saying something to the affect that, “the only time you can get money from the bank is when you HAVE money in the bank?”

Well, in the cash flow industry….it IS money in YOUR bank account!  Please check out this real life example I personally came across and I’ve previously posted but think it very much illustrates this and bears reviewing here:

Right after Katrina, a purchase order funder in the asset-based lending industry was able to help a NY power company fulfill a $2.2M order from the USACE. The power company’s bank was not able to process their funding request fast enough and they were about to lose the order. The purchase order funder (in Dallas) took the application on Wednesday and the order was being shipped by Friday of the same week. The power company was able to fill that order and other future ones due to the speed with which they were able to get the funding they needed.

Now if that contract shouldn’t have been a “Money in the Bank” situation I don’t know what would qualify!

I’m not bashing banks or bankers at all.  I get a lot of referrals from bankers.  What I’m saying is that this saying just isn’t necessarily true and I, for one, would like to say so here. 

The cash flow industry offers the flexibility and speed oftentimes required for special situations which just does not fit the banking business model and it defintely fills a gap in funding alternatives for small businesses – i.e. prior to the business having the financials required by banks and in conjunction with a banking relationship when flexibility and speed are called for and at other times as well.

Anyone else have any stories you can relate about this misconception?

Night…..Debra

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