Ever dreamed of that bug sales? You know the one I am talking about, the one that would put your company on the map in your industry as a player. Be careful for what you wish for. Many companies have wished for that very thing until it actually happens. What would you do if you received that order and it was for more than you entire last 2 yeas of sales in one Purchase Order?

This has happened to other companies and it can happen to you to. After you get over the initial rush of the big order and you think of all the cash that will be coming in, then you think How can I possibly pull this order off? You will need to hire staff, buy equipment, pay for materials and you do not have the money for that. That is exactly what happened to a company in New York State USA. The owner of the company just figured he would go to the bank and they would lend him the money he needed, but the bank declined him.

The customer in this case had to have 30 day terms on the invoice. To make it worse, the suppliers needed to be paid before they would ship the goods. Big problem. If you look at a 10 day delivery time on top of the 30 day sale terms, he would have 40 long days that needs to be gapped. With the though of having to refuse the order in your mind, consider this. What if there were a way to finance this gap in funding that would not involve major financial statements, appraisals and other types of documents?

The owner of the company did speak with some Accounts Receivable Factoring Companies but they were not able to help out due to the time lag between the timing of the advance requirement and the delivery of the goods to the customer. They could not Factor the Accounts Receivable until the product was delivered, and they could not deliver the product until they received an advance to pay for the product.

The owner of the company spoke with a Professional Commercial Finance Broker who knew exactly what to do. He put together a Purchase Order Finance facility with a lender that specialized in the product that the company was selling. In a very short period of time, the financing was approved and the transaction was completed without an issue, and now the company was in the position to take any size order without the fear of not being able to afford to take the business.

Imagine this: You are the Ops Manager at a Trucking company doing about $1.0 million dollars in sales per month, you have kept your receivables under 60days for the most part, you are making your financial obligations and you get a registered letter from your bank calling your Line of Credit.

This is a real event for a Texas based Freight Carrier recently. After a brief panic attack, the CEO called his bank and the account manager told him that due to revisions of the banks risk structures are laid out, he has no choice but to pull the financing. He has 2 weeks from the receipt of the letter to repay the loan of $1.0 million. Upon dealing with a Professional Commercial Finance Broker, not only was the loan paid off at the bank on time, but the trucking company had a new Line of Credit of $1.75 million now.

This is a popular scenario today with the tightening restrictions on lending today. Even with the announcement of Presidents Obamas grand plans, banks are still pulling the plug on companies that are making it, forcing some to close down and put people out of work.

Most companies do not need more debt; they usually have enough of that. What they do need is cash flow. If this sounds similar to your situation, please, speak to a Commercial Finance Broker. They are trained professionals whose career is based on keeping on top of the new finance options coming out and knowing which lender does what deals the best.

It really does not matter if you are in Canada or United States; it is the same story all over. Commercial Lenders do vary in regards to the products they carry and the strengths they posses in the various industries. Just because a lender is good in Commercial Equipment Loans does not mean they can handle you Line of Credit in your trucking company. Commercial Finance Brokers have the experience to know who does what the best.

Commercial Finance Brokers are up to date with the latest changes and options available. Many Commercial Finance Brokers can handle Financing options ranging from Accounts Receivable Factoring, Purchase Order Finance, Export Finance, Commercial Equipment Loans or Commercial Mortgage.

The weekend is here and the President has been busy all week.

AIG execs received their bonuses, and then lost them; new rules being developed for bailout takers, more funds available for small and medium sized business and the US Government has entered the Accounts Receivable Factoring Industry.

Our President has really been busy this week and I will be very interested to see what the survey say about the confidence level in North America now that all this has been happening.

The President has done more in the last week than I have seem most elected officials do in an entire term of office. I am sure there will be more to come and quickly because the work that Mr. Obama has put into motion has just started and there is no end in sight to what has been going on in the US politics recently.

I have not met one person that is not impressed by the results of the AIG bonus issue (since I do not personally know any AIG execs). Most people are impressed by President Obamas strength and determination to get the economy back on track.

In regards to the additional funding for small and medium sized business, this has been a long time coming. I must say it is not a surprise to see this developing but most people in the Commercial Finance Industry are very pleased to see it. The economy need stimulation and the best place to do this is not with the major corporations but rather the small to medium sized companies as these are the employers of most people in North America.

The US Government getting into Accounts Receivable Factoring did come as a shocker thoughnever saw that coming. I have always said that the economy is going to see a major increase in the use of Accounts Receivable Factoring and Purchase Order Financing but for the government to handling the invoices from the parts suppliers to the automotive makerwow. That being said, not all companies will have access to the government funding however, but the use and acceptance of the government in using the Accounts Receivable Factoring method will make other companies use this type of financing and will help diffuse the stigma sometimes associated with Factoring.

Can not wait to see what happens next week

Getting a Business loan at your bank is a terribly difficult task these days regardless if you are in Canada or the United States. Because of this many businesses feel they need to seek the operating cash they need from Angel Investors. But are you ready to turn your business over to an Angel Investor?

Angel Investors look at deals differently than banks, or most other lenders for that matter. Their focus is to net between 5 and 10 times their initial investment in a period not to exceed 5 years. They do this by carefully plotting their exit strategy to recover their funds within the specific time period they define which can take the form of public offerings of stock, takeover or liquidating the assets of the company. What ever it takes.

Due to the current market conditions in our economy Angel Investors are looking for higher than a 10 times ROI. This is because of all the business failures versus the successful ones. When you consider the failure rate in the Angel Investor portfolio, the effective ROI for a successful Angel Investor is about 20% to 30%.

Since the ROI for and Angel Investment is so high but the lower costing financing at the credit union and banks are not available, especially for business start-ups it makes being in business even more difficult. The reason the banks and credit unions are not interested in financing start-ups is because they lack the history and asset backing required by their underwriting guidelines.

So you are declined at the bank and you can not afford Angel Investors now what?

Regardless if your company is in the United States or Canada, there are options. The following is a real life situation that I was involved in to avert an Angel Investor situation. There is a company in Alberta Canada that possesses a unique product that he was planning to market across North America. He went to the usual places to inquire about financing for his business. After the banks turned him away, he spoke to a few Angel Investors. After considering their proposals he continued his search for financing when I presented him with an option called Accounts Receivable Factoring and Purchase Order Finance.

When I had initially spoken to the owner of the company, he had shipped out one large order and was about to ship out his second large order which was going to wipe out his entire inventory and he would have to wait to receive payment from the customers before he could replenish his stock but he had several additional orders to be filled and he had no way to fill them without cash.

After I received the application from him it was about a week when he received his first advance on his new Line of Credit using Accounts Receivable Factoring and now he has the cash to make his business run more smoothly.

In short, if your company has been turned down by the banks and credit unions plus there is no comfort for you in dealing with an Angel Investor due to their terms, be sure to check with a Professional Commercial Finance Broker so they can put together the proper financing for your business.

In another bold move to assist the economy the US Government released its intention to start Factoring US Auto suppliers invoices to the automotive sector.

NY Times (03/19/2009):

DETROIT ” The Obama administration moved on Thursday to stabilize the American auto industry by creating a $5 billion fund to support troubled parts suppliers.

The program will provide supply companies with much-needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need, the Treasury announcement said.

So what does this mean for the industry? Until the details are rolled out is hard to say specifically, but the announcement to get into the Accounts Receivable Factoring business is the latest installment of how far the US Government will go to get the economy back on track.

As I mentioned in a prior article that I predicted that Accounts Receivable Factoring is going to play a major role in the rebuilding of our economy ended up to be quite accurate.

Not everyone is familiar with Accounts Receivable Factoring so I will give you a quick overview. In it basic form, Accounts Receivable is a Line of Credit for Businesses which advances companies funds based on their Invoices that are outstanding.

In an average Accounts Receivable Factoring facility, the company that is financing their receivables will be eligible to receive between 80% and 90% of the invoice face value. One the end customer pays they will receive the balance of the funds less the finance fee,

The Factoring fee will vary depending on the advance rate and the days the funds are outstanding but the average is around 2% to 4% per month.

What is often used with Accounts Receivable Factoring is Purchase Order Finance. If you do get Purchase Order Finance you will need an Accounts Receivable Factoring line to go along with it in 99% of the cases I have seen.

This option works best for distributors but Accounts Receivable Factoring can work for companies in nearly any sector. If your company needs financing like this, the best option is to speak to a Professional Commercial Finance Broker because they will be up on all the trends and latest programs available through the various lender channels.

Generally speaking, the service of the Professional Commercial Finance Broker will not cost you anything as they are paid by the lender.

As promised the Federal Reserve lashed out at the economy doing another bold move today proving that they are not going to sit back and wait for the economy to fix itself.

Today, the NY Times reported:

WASHINGTON ” Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.

If the Federal Reserve keeps up its attach on the recession the days until we start to see a recovery will come sooner than many economists predicted.

Last fall the Central Bank held $900 billion on its balance sheet and just prior to this announcement it was sitting at $2 trillion which proved the strong measures that the Fed is prepared to take to get the economy back on track.

More from the NY Times:

Fed officials have said they hope to expand the program next month, possibly to include the huge market for commercial mortgages, and both the Fed and Treasury hope the program will eventually provide up to $1 trillion in total financing.

So what does all this mean? Well for starters, it is expected that the Financial Institutions will be able to write more loans for people to buy more products to put more people to work so they can buy more and get more loans.and so on.

The biggest question is how will the process get started? We all know that companies are not going to hire with the expectation of future orders, and consumers are not going to start buying until they know they have jobs to cover the bills they createbut someone has to go first. Any volunteers?

The US and Canadian Governments need to start buying more since they are the ones with the money. One they get the orders in then the suppliers will start hiring and the people that are hired will start buying so the suppliers will start hiring and so on

Since we are seeing such bold moves on the available funds, I am certain they are gearing up to do just that. Get the money ready and then start buying.

So the next hurdle will be for companies to get the financing they need to accept these orders. Even with the abundance of funds for companies, many companies will not qualify for bank loans due to their financials over the last couple of year.

Now is the time to sit down with a Professional Commercial Finance Broker as they will have far more financial products available to them than the banks have so you can actually accept the orders that come in and be able to produce them.

My prediction is that Accounts Receivable Factoring and Purchase Order Finance will play a huge role in our immediate economy so it will not be a bad idea to get set up for it so you are not scrambling to find a funder.

All I can say is WOW.

Yesterday, President Obama ordered to pursue every single legal avenue to block these bonuses to AIG Executives.

This is turning into your typical scandal now as the word is that The Treasury and Federal Reserve officials said they had known about the bonus program as far back as last fall. The program has provoked public protests from a handful of critics and at least one Democratic lawmaker in Congress ” Representative Elijah E. Cummings of Maryland, a member of the House Committee on Government Oversight, who demanded without success in December that A.I.G. provide information about the bonuses.

Did we see this coming? Many people including myself expect that at least some level of the administration knew about the bonuses before last Friday the 13th of March, and that was right.

We obviously need to go back and see where the ball was dropped and why; perhaps the disclosure of the fund allocation can help with that as the US Government admitted that it did not get into the business of AIG to see where the payments were going. This is a bit disturbing. If you are an 80% shareholder, should you not care where the money that you have just invested is being spent?

It really surprises me that such key issues such as extraordinarily large bonus payments like this can get overlooked. In my years in the Commercial Finance Industry, I know the lengths that we go through investigating and verifying information prior to funding a deal and it really looks like there were some due diligence short comes on this venture.

Next issue is what will happen due to this? Will heads roll? They should. If this sort of thing were to happen at a normal lending institution and there were material items like this that were disclosed and not dealt with appropriately, there definitely would have been visits to HR.

This appears to be a tactic we have seen too many times now where a company gets funding and then the executives bleed it dry, then when the funding runs out, the investors looseproblem in this circumstance is the investors are you and I.

Since November, A.I.G.s financial products unit has been led by Gerry Pasciucco, a former vice chairman of Morgan Stanley who was brought in by Mr. Liddy with instructions to wind down the unit. Company executives said they faced a need to keep skilled professionals in the business unit, which traded trillions of dollars worth of financial derivatives, because it would take great expertise to shut down the business in an orderly manner and without causing more turmoil.

Over the course of the next month or so I am sure we will see developments as to who knew about this and what was done in the lines of damage control because I am sure that if we just learned of this now, there will be more to come.

You need to keep a scorecard to keep up with the AIG issues in regards to the finance practices that are in question, that the US Taxpayers are ultimately responsible for.

The latest item was announced Sunday March 15, 2009 on the NY Times:

WASHINGTON ” The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

AIG defenders stated that these payouts are required because the contracts were drawn up prior to the financial collapse of AIG and that the government is not about to renege on contracts as this would lead to legal issues Here is a question for you, had we not bailed them out, what would have happened to the contracts then? Would they not have been voided out? Maybe these types of contracts are the reason AIG is in such terrible shape to begin with

Seems like dj vu doesnt it? Remember the Sub-Prime Mortgage meltdown that happened a couple of years agodid we learn anything from that at all?

Regardless of the fact there were these pre-existing contracts there are circumstances where these contracts still need to be revisedcollapse of the company is one of them. Even the automotive industry is renegotiating with the workers and suppliers, what makes AIG so special that they do not fall under the same reality as the rest of the world? I am not saying that when it become inconvenient for us to honor a contract that we should have an easy out, but there is a time and place when this needs to happen. After all, any Angel Investor that looks at a company to decide to whether or not to invest will look at the current obligations in order to determine as to whether they want to invest or notapparently that part of the deal was missed otherwise we would not be talking about this.

There needs to be some changes to the policies in place with the AIG deal, if this is a loan, then there are covenants that should have capped the payments to the Executives and if the AIG is looked upon as an Investment, majority shareholders can make changes to policy. If these contracts should have been a point of negation prior to any funding. I understand that the bonuses are in place to keep top producers on, I get that, but there are many top producers that have taken pay cuts too. Perhaps the negotiation skills of the people that put the deal together should be reviewed as is seems as though the deal is not in the best interest of the American public.

There are so many financing alternatives today that are offered by Commercial Finance Brokers as they access to funds for Accounts Receivable Financing, Export Factoring, Purchase Order Finance, Commercial Equipment Loans and Commercial Real Estate Mortgages. Be sure to do you checking around into the various options available to you as there is a loan available for most circumstances if you have the right Finance Broker.