Three Ways To Cover Payroll Funding

by Crestmark 8. October 2012 10:03

Payroll funding can be one of the biggest financial obligations that your business faces. Depending on your size and your industry, payroll financing may be one of your biggest expenses alongside materials. But how do you cover it? And what can you do if your staff frequently changes? The answer may be a line of credit. There are three major types that offer the flexible kind of funding that works best for payroll.

Accounts Receivable Financing

A/R financing, also known as a ledgered line of credit, is a flexible option that works for a wide variety of businesses. Every invoice you issue is recorded and funding is issued based on that. This structure means that it's a highly adaptable form of credit, but it also means that it can exactly match your current needs. As you issue more invoices, you're going to need to spend more to finance them – and accounts receivable financing provides the funds you need.

Invoice Factoring

Factoring offers flexible financing that functions very similarly to a line of credit but is not technically considered one. Under an invoice factoring agreement Crestmark structures your funding facility based on accounts receivable/invoices. The invoices are purchased at a discount to provide immediate availability of funds to your company.

Asset Based Lending

This form of line of credit is secured based on inventory, invoices, or a combination of the two. The amount available through a line of credit varies according to how much inventory is owned or how many invoices are issued. The main difference between asset-based lending and accounts receivable financing is how much funding is issued. With ABL, assets (including invoices) are reported in batches, whereas accounts receivable financing will involve submitting each invoice individually. 

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Term Loans Or Line Of Credit?

by Crestmark 11. July 2012 05:45

There are two basic types of credit that are available from most lenders. The first is a basic term loan, where you receive a set amount of money at a certain time and repay it incrementally over a longer period of time. The second option is a business line of credit. Here you have a maximum amount, beyond which you may not borrow. But up to that maximum you are permitted to borrow as much or as little as you need. Depending on what type of business line of credit you have, the upper limit may be able to be adjusted.

The main difference between the two is their flexibility. Term loans are a one-time thing; you can't simply request more money without negotiating a separate loan and all the associated paperwork. But with a business line of credit, raising the credit limit can be much simpler.

These differences mean that they're best suited to disparate applications. If you're making a one-time purchase or a one-time investment, then go with a term loan. You'll be able to pay for the entire purchase at once, and you'll know exactly how much you'll owe on it over the coming months. But be certain that you're really going to need it just once. Don't get caught with a loan that's smaller than what you actually need because the amount you get isn't negotiable after you've signed the agreement.

A line of credit offers more flexibility. It's great for creating a bridge between your current financial resources and what's necessary to finance a new project. You can pay it back on your own schedule and you can easily expand the amount you're borrowing to fit potentially unforeseen costs. 

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Asset Based Loans | working capital

Alternatives To Term Loans

by Crestmark 8. May 2012 04:57

There are a number of reasons why a company may not want to take a term loan. They may want to pledge personal collateral, find it difficult to obtain this more traditional form of financing, they may simply not want to accept the terms that are available, or they may simply prefer these non-traditional financing options as a way to meet their financing needs. Whatever your situation, if you're looking outside the term loan box, you should look at these potential solutions.

Accounts Receivable Financing

A/R financing is a flexible line of credit solution available to most businesses. This type of financing leverages the money you are due to receive from invoices you have sent to your customers. A/R financing helps bridge the gap between your cost of sales  and when you get paid for your goods or services.

Asset Based Lending

This line of credit is secured by an asset that your business currently holds. Asset based lending is a line of credit, meaning that you can use as much or as little of your potential credit as you select up to the value of the collateral pledged. You can change it monthly, weekly, or even daily depending on your needs.

Factoring

In this type of financing, a third party factor actually purchases your unpaid invoices. You receive a portion of the value upfront, with the rest of it being delivered, less an administrative fee, when your client makes good on the debt. Factoring may be traditional, where the factor fully purchases the invoice and assumes both the credit risk and responsibility for collection of the receivable. Or  on a recourse basis where the receivable is sold back to the seller after a certain period of time elapses. Unlike other types of financing there are less restrictive covenants inherent in factoring transactions.

 

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Crestmark's Jim Rothman featured in April 2012 "ABF Journal"

by Lisa 24. April 2012 13:48
 
East Region Group President Jim Rothman was interviewed for the April issue of the ABF Journal in an article about how companies who finance the staffing industry are on the forefront of economy shifts, and what that means for their businesses.
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Accounts Receivable Financing | Asset Based Loans | Types of Factoring | working capital

Crestmark's Pat Haney featured in April 2012 "The Secured Lender"

by Lisa 24. April 2012 13:44
South Region Group President Pat Haney was interviewed for the April 2012 issue of The Secured Lender in an article about how economic shifts affect factoring companies, and how financial service companies are staying competitive. http://www.nxtbook.com/ygsreprints/CFA/p25720_tsl_april_2012/#/26 
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