Factoring to Leverage Client Invoices

How Subcontractors Can Leverage Client Invoices

07:47 17 March in Blog, Business Funding
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As a subcontractor, you are typically waiting to be paid until other people finish a specific task on a project. This can cause painful delays in getting invoices paid, making meeting your accounts payable obligations difficult. However, you may be able to leverage client invoices by taking advantage of factoring.

Subcontractors often face challenges taking on large jobs because they lack the needed capital to purchase materials. This can be a significant issue as this challenge can stifle growth. However, if you are working with a contractor who has a bond in place to secure the completion of the project, you could leverage client invoices.

Cash Flow Improvement by Factoring Client Invoices

One of the challenges many subcontractors face when they are bidding on jobs is having the cash available to secure the materials necessary. This can be problematic when you are trying to grow your company by bidding on larger jobs. Because banks and other financial institutions are reluctant to make loans to a subcontractor, you may not know where to turn. Factoring client invoices can be the right solution.

When you secure a job, your contractor likely had to place a deposit and a bond with their client. The result is the contractor is guaranteeing completion of the project, as well as guaranteeing payment for your portion of the work. You can leverage this by using spot factoring — selling your invoice to a factoring company.

Selling Invoices One at a Time

Common concerns about factoring include the possibility of forfeiting your right to pick and choose which invoices you factor. However, when you work with Capstone, we allow you to make the decision whether you factor a single invoice or multiple invoices. We will spend the time needed to understand what your goals are, how much cash you need to bid on the next contract and design a financing package that helps you reach your goals.

The goal at Capstone is to help you accomplish your business goals by making sure you have the cash flow you need. Contact one of our highly trained representatives today at (212) 755-3636 or via email at [email protected] and let us answer your questions about how our products can help your business.

invoice factoring partner

How Brokers Can Identify the Right Invoice Factoring Partner

07:19 13 March in Blog, Broker Resources
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As a financial services broker, identifying the right partners is essential. Too often, brokers offer leads to providers of financing and find themselves on the outside looking in. Therefore, identifying capable and trustworthy invoice factoring partners early in your career is essential.

Most brokers are looking for an ongoing relationship that does not cost them future revenue; exceptional communication between the funding company and themselves; training when needed; and tools to help them maximize their business potential.

This model holds regardless of the amount of business the broker is referring and which products they need to meet the needs of their clients. That is why for years, brokers have learned to rely on Capstone.

Capstone Values Broker Relationships

If your business focuses on small companies and embraces minority-owned firms, you need a trusted partner. Your clients’ needs come before anything. You often seek opportunities to provide them with unique methods of obtaining the cash they need to keep their business functioning. Some of the ways Capstone demonstrates their commitment to broker relationships include:

  • Custom packages for your clients – every customer has unique needs and we will work with you and with your client to make sure we offer them a package that meets those needs.
  • Local services – regardless of where your client is located, we can help.
  • Regular commission checks – if we are doing business with your customer, you will get a regular commission check from us.
  • Training – you need never worry about any uncertainty with our products. We provide you with training, educational materials, and brochures, so you know which products you can safely offer.

If you are looking for a partner you can trust to help you grow your business by assisting your customers, today is the day to reach out to Capstone. Contact Capstone Capital Group today at (212) 755-3636 and see how we can enable you the opportunity to grow your own business while providing your clients with the financing they need to grow their businesses.

Leverage Client Credit for Cash Flow

Leverage Client Credit to Maximize Cash Flow

07:59 04 February in Blog, Business Funding
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Businesses often face significant financial challenges. Startup costs, hiring employees, use of contractors, and expenses with growth can quickly mount. As a result, companies often have a lower than expected credit rating. They may find it challenging accessing new lines of credit, despite meeting all of their financial obligations. Did you know you can use client credit to improve cash flow?

The lack of ability of a business owner to secure new lines of credit can cripple a company. Not only will it face obstacles to growth. It can often mean they will be unable to bid on more lucrative contracts. They simply lack the financial backing to fulfill the initial terms of the agreement. Additionally, businesses with little savings and staggered cash flow often miss out on opportunities presented by vendors to take advantage of lower costs of credit by paying their outstanding invoices at a discount with early payment.

A business with poor cash flow may not even be able to complete the projects or contracts they have taken on. When this occurs, it destroys the reputation of the business and future business opportunities diminish quickly.

Each of these circumstances can lead to additional cash flow problems and can keep a business from growing. They create situations where a company is only meeting its current financial obligations to employees, vendors, and clients. This is the time when business owners should consider the potential of leveraging their clients’ creditworthiness.

Maximize Cash Flow Without Negative Credit Implications

Leverage matters in business. Whether you are negotiating a contract, working with a contractor, or finding a consultant, the more information you have at your disposal, the better your opportunities for successful negotiations. Leverage also works when you are considering your financing options.

Some company owners fail to realize they can leverage their clients’ credit standing to help improve their own credit. This maximizes their cash flow and avoids incurring additional debt. Specifically, a company has the option to take their client invoices and turn those invoices into immediate cash. However, it is also possible to use the creditworthiness of a client to help improve other forms of financing. This includes obtaining lines of credit.

Lines of Credit and Strength of Leverage

Larger contracts that are not supported by your balance sheet may necessitate a line of credit. Bringing on additional investors can dilute your portion of ownership. Rather, you can apply for a line of credit based on the creditworthiness of the contract which you agree to. This means the stronger your client, the more likely you are to gain approval. For example, some small and disadvantaged businesses may have access to lucrative government contracts. However, because of the size of the business, they may not have a balance sheet that proves they can meet the terms of the agreement. Leveraging the strength of the contract of the U.S. government can provide access to lines of credit or other financing options.

This type of leverage does not just apply to those who are eligible for government financing. Staffing agencies, construction companies, and other firms that have contracts with top companies have an opportunity to use those contracts to increase their cash flow immediately. This is where Capstone comes in.

At Capstone Capital Group, LLC we understand the struggles company owners can face when trying to grow their business. A vicious circle begins nearly immediately. You need capital to meet your day-to-day obligations, but you also need access to capital to help facilitate that growth.

Capstone takes your growth seriously. Our representatives are well-versed in various markets, and we take the time to understand your company goals. Once we have a complete understanding of your goals, we can help put a custom financing package together. One which fully leverages the creditworthiness of your clients and helps put you on a path to continued company growth. To learn more about Capstone and the programs we offer, contact us at (212) 755-3636.

You can also email [email protected]. Let us help you find the right financing program to meet your needs, including improving your cash flow.

Purchase Order Funding

Fund Large Orders with PO Financing

07:59 28 January in Blog, Business Funding
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Nearly all companies, regardless of size, want to grow their business. Accepting orders can help you grow your business. However, if you lack the capital to fulfill the order, this can be problematic. At a minimum, large orders require an expenditure of capital to purchase supplies. Large orders may require a business to hire new staff members or purchase equipment, often an issue. What many business owners overlook is the potential to access the capital they need through purchase order financing.

What is Purchase Order Financing?

Purchase order financing or funding is a commercial loan option that some businesses turn to for necessary capital while growing. Generally, this type of financing is considered short-term and does not have a negative impact on the balance sheet of a company.

Companies typically use purchase order funding in specific business categories including:

• Distribution Businesses
• Import and Export Businesses
• Manufacturing Businesses
• Wholesale and Reseller Businesses

Other businesses may overlook PO financing, including concrete, landscaping, HVAC, and plumbing contractors that may be eligible. Staffing agencies may also find that the new purchase order they are considering is eligible for PO funding. Anyone who is considering providing any type of deliverable, with a pay period of 60 to 90 days, may have the option of using PO funding.

The basis for this type of innovative financing is that once a business has a qualified purchase order, it can borrow money against the terms of the PO. It can then use those funds to provide upfront payments to suppliers, ramp up production schedules, or meet other financial needs.

Advantages of PO Financing

Business owners who are interested in growth must be able to bid on larger orders and have the means of fulfilling those orders. PO funding means a company can get the working capital it needs to support increased sales efforts. This increases product availability and provides more favorable credit terms to its customers.

Another distinct advantage of having the ability to borrow money against a large purchase order is you can more effectively compete with other businesses in the same field, regardless of size. For small businesses that are seeking ways to “stand out” from the competition, the ability to bid on large orders can make a big difference.

Effectiveness of Purchase Order Financing

Too often, a small but growing business lacks the necessary capital to take on large orders because it does not have the required cash flow to meet the customer’s terms. This can stifle growth. Unfortunately, these same businesses may not have access to lines of credit or have the ability to borrow money through their bank.

Purchase order funding allows a company to take on a larger contract because it does not have to borrow money. Instead, it is getting the financial benefits of the new agreement.

Time from Application to Funding POs

Unlike traditional bank loans, companies can obtain purchase order financing in a relatively short period of time. Capstone’s process for PO funding means your request could be approved in just a few business days. Once approved, the time to wait for financing could be as little as three business days. This is a far different timetable than banks where funding your loan application could take weeks or months.

As a small or mid-sized business, you often do not have the required capital on hand. You don’t always have access to the capital you need to bid on larger contracts or to take on large orders. Because of this lack of funding, you could lose your competitive edge. Rather than bypassing growth opportunities, contact Capstone by email at [email protected] or call us at (212) 755-3636. Let us help you take advantage of larger orders, which can help you accelerate your company growth.

Business Broker Benefits

Why Working With a Business Broker to Sell your Business Matters

08:09 23 January in Blog, Broker Resources
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When the owner or owners of a company are considering selling, they often believe the best method is to work on securing a buyer on their own. However, in nearly all cases, using a broker to sell your business is the better option. There are several advantages to working with a reputable business broker, some of which include:

Matters of Confidentiality — One of the challenges you will face is keeping your company information confidential during the sales process. Confidentiality includes maintaining corporate insider information which, if released publicly, can damage your company’s future. Business brokers will typically only release information about your company to those whom they know are financially able to purchase your business. Additionally, a business broker can keep the name of your company from potential purchasers, which helps protect owners.
Maintaining Internal Focus – The last thing you want is to have a potential sale disrupt internal processes. The focus of you and your team should always be continuing to provide the highest quality service to your customers. Should you be distracted by continually having to follow up with potential buyers, business growth takes a back seat.
Contacts Matter When Selling – Chances are your network of other business ventures who are interested in buying another company is limited. However, business brokers act as intermediaries for numerous businesses that have other contacts. Since a business broker is always acting as an intermediary, they likely have a more extensive contact base. This means your proposal will get in front of more people in less time than if you were attempting to sell on your own.
Price Tags: Business Valuations – Let’s face it, we work hard to establish a robust business, yet we typically do not know its real value. We understand what we have in terms of business, inventory, and goodwill. Putting a price tag on a company is a different matter. Business brokers offer a level of expertise that we often do not possess on our own. They can evaluate a business accurately based upon applicable variables considering the industry, sales, and age of the company. Other variables may include a client base and other relevant information that make a business appealing.
Closing and Transition – One of the concerns any business owner has when selling a business is the potential for disruption after finding a buyer. Business brokers have extensive experience assisting in the timely closing of a business sale. They also ensure a smooth transfer of ownership with little disruption to supply chains, employees, and clients.

Finding the Right Broker Also Matters

Keep in mind, not every business broker will be able to help you with your quest to identify another buyer. You will want to find a business broker with experience in your industry and who has worked with comparably sized companies. Experience, expertise, and ethics all matter as well. Make sure your business broker has a solid reputation within the industry before you agree to any contracts.

Buyers and sellers often do not understand the marketplace nor the processes necessary for a successful business sale or purchase. Working with a broker to sell your business provides you with the necessary skills and expertise. It enables you to continue to work hard to develop your company. It is critical to maintain a focus on growth and the future, which can only improve the value. You do not want to lose focus on your business while you are attempting to sell and jeopardize its value.

Maintaining a steady cash flow, staying current on your financial obligations, and growth during the sales process are essential. Capstone Capital Group can help you retain the cash flow you need during this critical period. For more information on Capstone, please call us at (212) 755-3636 to speak with a representative about spot factoring, and other financing programs, which can help you maintain the value of your company during this crucial time.

Purchase Order Factoring

Household Appliance Retailer Purchase Order Financing & Invoice Factoring Case Study

07:02 22 November in Case Studies
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This Ronkonkoma, NY based retailer is an industry leader in developing and executing environmentally friendly solutions through the recycling, recovery, and repair of a variety of products. The client is equipped with skilled technicians who follow strict testing, inspection and approval schedule for all products, creating like new products that continue to exceed manufacturer and customer expectations.

Background

  • Formed in 2016, the client provides damaged and returned product management, return center services, remanufacturing, reprocessing, repairing and recycling of consumer products for consumer product manufacturers such as Whirlpool, Miele, Kitchen Aid, Bosch, etc.
  • The client’s management team has experience with servicing the world’s leading consumer product manufacturers

Company Challenges

  • Highly cash flow constrained
  • Company struggled with stretched payables demand and meeting payroll

Capstone’s Solution

  • Provided a Master Invoice Factoring Facility to purchase a minimum of $4.8 million in invoices
  • Opened $500k PO Financing Facility in 2018 to facilitate Best Buy Returned Inventory Program

Progress and Future Outlook

  • Capstone has purchased over $6.0 million in total invoicing
  • Client secured Fred’s Inc., a general store chain, as a customer through the Best Buy inventory program.
    • $759k in 2019 Fred’s sales to date
  • The Client can now focus on the rapid growth of their company:
    • $1.6 million in 2017 sales
    • $3.3 million in 2018 sales
    • On pace for $5.0 million in 2019 sales

 

Remanufaturer-Recycler Purchase Order Financing _ Master Invoice Factoring

NYC Steel Erector and Fabricator Single Invoice Factoring Case Study

06:58 22 November in Case Studies
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This client provides New York, NYC and the Tri-State area with structural steel erection and fabrication services. Without sufficient cash flow, the company could be forced to turn down new projects. Capstone knew to assist this company, they would need a solution that generated immediate cash flow. Therefore, single invoice factoring made sense; the company would not need to take on additional debt, and they would have the capital they needed to ensure funds were available to cover payroll and make timely payment to vendors.

Background

Locally owned and operated full fabrication and erection service company of structural steel and one of NYC’s largest plank erectors.

  • Projects consist of large residential and commercial buildings located throughout New York City
  • Clients: Two major plank manufacturers on the East Coast
  • Since August 2015, the company has factored over 260 invoices ranging from $4,000 to $180,000
  • Total funding has been $9.2 million

Company Challenges

This company is well-established and have been in business since 1967.

They have a well-deserved reputation and yet the company was struggling to make payroll, and timely payments to vendors. The company’s growth significantly outpaced cash flow and due to this cash crunch, they were forced to turn down work from two of their main customers.

Capstone’s Solution

  • Provided a Single Invoice Factoring Facility to inject the working capital required for supporting a larger volume of contracts
  • Increased customer credit line by over 500 percent since the start of the relationship

Progress and Future Outlook

  • Cash flow constraints have been drastically eased and now the client can focus on taking on a higher volume of projects for its customers
  • Business volume has tripled since the client started factoring

 

NYC Steel Fabricator Single Invoice Factoring

Non-Profit Advocacy Organization Single Invoice Factoring Case Study

06:47 22 November in Case Studies
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One of our recent clients is a Pennsylvania-based non-profit advocacy organization dedicated to improving the futures of children in foster care. The client’s mission is to provide a safe and caring home for all at-risk children in foster care in the Philadelphia, PA region. The organization also provides food, clothing and therapeutic services to households of up to six children.

Background

  • Philadelphia, PA-based non-profit organization that fosters and assists with the adoption of children
  • Focuses on troubled children who have been fostered in multiple homes in an effort to give them stability
  • Owners of the company have fostered over eight children personally

Company Challenges

  • As a non-profit organization, the Client had a very difficult time obtaining financing
  • Wanted to expand and open additional homes for boys and girls so they could foster more children and get them adopted

Capstone’s Solution

  • Provided a single invoice financing program allowing them to obtain funding through their invoices as they needed to with no annual commitment
  • Increased the advance rate to 80% to help the client access cash quicker

Progress and Future Outlook

  • The Client has opened one additional home since we began working together for girls and has plans to open an additional home for boys later this year
  • Invoices have been increasing as they foster and tutor additional children, thereby creating more cash flow for them to continue expanding

 

Non-Profit Organization Single Invoice Factoring

Military and Emergency Services Supplier Purchase Order Financing Case Study

06:02 22 November in Case Studies
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A recent client of ours is a Spokane, WA based company that offers over one million products nationwide servicing the military, police, fire, tactical and emergency markets. The Client is known for their long-lasting relationships and continues to build relationships by providing additional services and information about products in the market to their customers.

Background

  • Formed in 1987, the client sells products to the U.S. Government
  • Was awarded a $4 billion extension to their existing contract with the
  • Defense Logistics Agency (DLA) Troop Support in 2019, expiring in 2020

Company Challenges

  • The Client was going through an acquisition and lacked sufficient credit to purchase goods ordered by the United States government
  • Needed a PO Financing Facility to continue to fulfill their obligations under the government contract
  • Certain purchase orders were partially funded by working capital but needed additional funds to get the goods released by the manufacturers and meet the significant increase in supply opportunities

Capstone’s Solution

  • Provided a temporary PO Financing Facility of up to $1 million, followed by a $20 million PO Financing Facility after their merger transaction closed
  • Introduced the Client to a new factor that specializes in buying U.S. government accounts receivables

Progress and Future Outlook

  • A Tri-Party Agreement was negotiated between Capstone, the Client, and the Factor
  • Capstone has received all funds on the financed POs on schedule
  • The Client is projected to expand rapidly and utilize much more of the
  • Purchase Order line on a going-forward basis once the new factoring relationship begins

 

Military-Emergency Services Supplier Purchase Order Financing _ Introduction to Specialty Factor Partner

Independent Mobile Game Developer Master Factoring Facility Case Study

05:43 22 November in Case Studies
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This California based client develops mobile games for major companies in the entertainment industry and has recently launched their own free-to-play mobile game for a blockbuster movie. Without sufficient cash flow, the company could have trouble covering payroll and software development related expenses needed to complete their milestones on time. Capstone provided the additional working capital they needed through a Master Factoring Facility.

Background

Projects are mainly work-for-hire service contracts that require software development and operational milestones to be met

Clients include global toy production company and a major entertainment companies

Since early 2018, the company has factored over 60 invoices totaling $7.3 million

Company Challenges

The company in the past had an exclusive customer for its software development. In order to grow, they decided to diversify their development revenues and bid on work-for-hire service contracts with major entertainment companies. Additionally, they self-published their own game which gave them additional expenses such as royalties and marketing. This produced a cash crunch and limited the amount of work-for-hire contracts they had for 2018. These work-for-hire contracts were potentially much more profitable.

Capstone’s Solution

  • Provided a Master Factoring Facility to inject the working capital required to support their work-for-hire contracts and self-published game
  • Progress and Future Outlook
  • The client has compared the performance of their work-for-hire contracts vs self-publishing and found that their work-for-hire is much more profitable
  • The client has been awarded five additional work-for-hire contracts in 2019 and will phase out self-publishing
  • Revenue is projected to increase by 50% during 2019

 

Independent Mobile Game Developer

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