Get Cash for Structured Settlements and Annuities
   Call 1-503-643-9743 Home About National Funding Resource Associates Contact Us Examples of People We've Helped

Call Today
Notice: These articles are provided "as is." National funding Resources cannot edit or change the information provided.
Get More Information

First Name:

Last Name:

Phone Number :


Enter the code as it is shown:

Your privacy is very important to us. We will not sell your information.

Working Capital is Paramount to a Businesses Livelihood

by Dave Nighswander

All of the planning in the world is an exercise in futility without the working capital to successfully carry out the plan. If a business sells to customers on terms, then working capital availability is dependent on cash flow timing. In most instances a business will incur a cash flow gap between the time cash is required for inventory, payroll and operating expenses, and the time cash is received from customers paying on terms. Lets explore a simple example of this timing difference that makes up the cash flow gap:

Day 1: Your business orders materials from suppliers on N/30 terms; Day 3: Your business receives materials and begins production (which takes 5 days); Day 8: Your business ships product to customers on N/30 terms; Day 14: Mid month Payroll is due; Day 30: Month-end Payroll and supplier invoice are due; Day 48: Your customer remits payment to you.

In this scenario the cash gap is 34 days, which is from day 14 when payroll is due, to day 48 when customer remits payment. The cash gap encompasses two pay periods and a payment to your supplier, whereas the gap normally includes multiple payments to suppliers for ongoing customer orders. If your business is mature and growing conservatively, or less than 10% per year, then you probably have sufficient cash reserves or a bank line of credit to cover the cash gap. But, if you are a growing business with opportunity, how do you cover the cash gap? Oftentimes a bank line of credit is not sufficient to cover the cash gap for growing businesses because bankers look historically to your companys past to determine how much debt they will lend to your business in the future. Many growing businesses have found themselves caught short on working capital as their cash flow stretched during a period of growth.

Cash flow funding through account receivable factoring may be just the tool needed during periods of rapid growth. Factoring is not a loan or debt, but the selling of frozen assets (invoices) at a discount to obtain the cash in a more timely fashion (typically within 24 hours of invoicing your customer). Your business sends invoices to your customers and a copy of the invoice to the factoring company. The factoring company purchases the invoice from your company advancing 80% of the face amount of the invoice. When your customers pay the invoice, the factoring company remits to you the 20% reserved, less their fee (normally 1-5%).

In the cash gap scenario discussed above, working capital would be enhanced by providing your company with cash (80% of the invoice amount) on day 9! Your company would have cash flow to make payroll on day 14, and pay suppliers and make payroll on day 30. When your customer pays on day 48, the factoring company remits to you the 20% held less their fee.

When planning for growth in your business it is important that you assess the working capital needs and cash flow gap in order to ensure that your plans can be met. Utilizing an accounts receivable factoring program can assist in your successful growth. But, be sure to assess the cost of the accounts receivable program as a percentage of sales. And, make sure that you do not have a term contract with the factoring company so that you may exit the program whenever your business has grown to the next plateau.

Dave Nighswander is the President and Founder of Capital Access, a business factoring company specializing in working capital, cash flow funding, and factoring accounts receivables for businesses across the country. For more information on Capital Access, please visit or call (419) 732-3174.

Need Cash?
Call now and get your free analysis.

NFRA has many funding sources and can assist in finding the right one for you! For free analysis, call 24 hours a day at 1-503-643-9743 or Click here for the online conact form.

Featured Articles
5 MISTAKES People Make When Selling Structured Settlements for Cash Mistake 1: Agreeing to sell to the highest bidder. Unfortunately, some brokers or structured settlement/annuity sources will make a high offer just to get someone under contract. Then they will start making excuses and reduce the offer. Once you are under contract with a funding source, it is very difficult to back out. Even if you are able to pull out, you will have to start the whole process over again losing valuable time. Cash Now for Your Business Note People are interested in selling business notes for several reasons. Usually, the prospective seller has decided that he would rather receive the lump sum value of the business, rather than monthly payments. Often that's because he wants to invest in a new business. Other times, the prospective seller has an incentive such as an expensive wedding bill, college tuition or a retirement trip. Factoring Invoices - How to Get Off The Cash Flow Merry-Go-Round All businesses want to be successful and to be successful you must have sufficient cash flow. Are you tired of your unpredictable cash flow cycle? Is the ritual of making incoming cash receipts stretch to cover short-term obligations frustrating your business and making you dizzy? Cash Now for Your Real Estate Contract The private mortgage industry is a relatively young business with roots that can be traced directly to the emergence of seller-backed, or owner, financing. Prior to the very high interest rates of the late 70s and 80s, seller-backed financing was not a common financing option. The only loan option for most real estate buyers was through a bank or savings and loan institution. But with interest rates topping out at 22 percent, financing for real estate was either unavailable or too unattractive for most buyers. Real estate sales plummeted.

Other Related Articles

Innovative No Win--No Pay--No Risk Attorney Lawsuit Loan Provides Law Firms Savvy Financial Options Law firms work long and hard to achieve financial success. Today however a team of professional financial consultants have developed innovative tools to assist law firms achieve even greater financial success via a unique program called "No Win...No Pay...No Risk" Attorney Lawsuit Loans. J.G Wentworth Expands Annuity Purchase Program(TM) - Now Available in 47 States BRYN MAWR, Pa.--(BUSINESS WIRE)--Dec. 1, 2005--J.G. Wentworth today announced that it has expanded its Annuity Purchase Program(TM) to 47 states. The Annuity Purchase Program, offered through Brokerage General Agents (BGAs) and designed for use by insurance agents and brokers with their clients, allows consumers to sell all or part of their annuities to deal with changing investment strategies or personal circumstances. Note Basics 101- Selling Your Mortgage Note A basic understanding of what note investors look for when buying notes. Real Estate Options for Retirement Funds With your retirement funds it is possible to invest in real estate, mortgages, private notes, structured settlements, factoring, hard money lending, franchise, natural gas investments, golf courses, joint ventures, RV parks, fisheries investments, bonds, mutual funds, commodities and futures, marinas, stocks and limited partnerships. These are IRS-permitted investments. They have to be made within a qualified retirement account. Once stablished the account holder asks the Custodian or Facilitator to roll current retirement funds into a self-directed IRA owned LLC. This type of business transaction is legal and is penalty-free. Selling a Real Estate Note Is your Real Estate Note Saleable As a Premium real estate note buyer I am often asked by note sellers if their note is saleable. I cant stress enough to sellers how important it is to get the right information about your note and payment history to the potential note buyer. The potential buyer can only determine whether the note is what they want to buy if it meets the criteria they are looking for in a note purchase.

More Articles

HomeContact UsAbout UsExamplesArticles

©, All Rights Reserved

National Funding Resource Associates
2850 SW Cedar Hills Blvd, #325 | OR | 97005 | USA
Phone: 503-643-9743 | Fax: 503-671-9381