business accounting and finance for non-specialists
Accounts Receivable Financing, yesterday
Most people intuitively understand the time value of money the first time received advantage of their parents. All other things being equal, prefer to get their franchise today instead of waiting for the weekend. Going to the movies today instead of waiting for the money. instant gratification.
In business, if you have money today are able to increase the future value of your business by increasing sales services or products over a period of time. There are several concepts mathematics to calculate the time value of money present value, future value, present value of an annuity, and the future value of an annuity. These calculations are beyond the scope of this article.
Uneven cash flow is a problem for B2B companies who meet current obligations such as salaries, rent and supplies. One solution to this problem is the financing of accounts receivable, which is also known as factoring, factoring and asset-based credit. With accounts receivable financing can get money for your bills immediately and provide its customers pay thirty, sixty or ninety days.
Financial markets are exceptionally volatile today. There are serious concerns of a crisis in the mortgage financing market and several large mortgage lenders, who reported bankrupt or out of this market. The secondary market for certain types of mortgage securities has virtually closed the door of securities known as securitization of subprime loans makes these types of bonds, no cash, virtually worthless. Why is it important for the financing of accounts receivable?
A fact little known is that many companies provide trade finance accounts receivable financing is not using his own money to finance its operations. Sometimes called "refactoring". Your funds may be available from three sources: bank credit lines, the shares of investors and the capital of the company. bank lines of credit or to borrow from commercial sources important nonbank financial companies are by far the most important source of funds for most companies that offer "refactoring" accounts receivable financing.
These companies are under more pressure to its lenders to make loans safely. The pressure comes from banks, federal regulators like the Federal Deposit Insurance Corporation and the Federal Reserve Banks. This can affect the way you need to obtain financing.
There is a process called due diligence "which is a condition sine qua non of financing accounts receivable. Several elements are: the analysis of the borrower's credit, the credit analysis customer, and manages a UCC-1 search in each Member State where the company operates. Search UCC-1 filing is required to give the lender the right to collect the receivables assigned or pledged for the financing. This may take 5-10 days depending on the state bureaucracy and how they are occupied these requests. If the UCC-1 report is "clean", meaning the first state assessment is not available for the lender there will be funding. tax liens, legal privileges sentence, and the cost of previous funding may delay funding until either paid or subordinates.
When an enterprise B2B is growing rapidly and need more cash flow from operations for the time value of money is essential. There is a common response to the question "When do you need this money?" Answer: "yesterday".
John Lennon and Paul McCartney have understood the time value of money and most important to them, the monetary value of time. They were the main songwriters of the group, The Beatles, 1960-1970. This group has experienced significant liquidity problems due to poor financial management of recording contracts cost control management of its music industry, Apple, and the pressures that led to give public performances (This is important source of income). Some of his best songs (and an important source of future income) have been created while they were on a break to meditate with the Maharishi Mahesh Yogi in India in 1965. In 1970, The Beatles disbanded due to personality differences, stress the massive popularity and the problems Financial. Paul McCartney song, yesterday, is considered the most recorded song in the history of popular music, if not the song the most People of all ages. Here are the words of yesterday
Yesterday
All my troubles seemed so far away
Now, it seems as if they were there to stay
Oh, I believe in yesterday.
Suddenly
I'm not half the man,
There is a shadow on me
Oh, yesterday came suddenly.
Why is it
Where to go I do not know, she will not say.
I said
Something wrong, now I long for yesterday.
Yesterday
Love was an easy game to play,
Now I need a place to hide,
Oh, I believe in yesterday.
Why is it
Where to go I do not know, she did not say.
I said
Something wrong, now I long for yesterday.
Yesterday
Love was an easy game to play,
Now I need a place to hide,
Oh, I believe in yesterday.
Mm mm mm mm mm mm mm.
The bottom line: If your company needs money B2B accounts receivable financing yesterday may be the answer to their financial difficulties.
Copyright © 2007 Gregg Financial Services
www.greggfinancialservices.com
About the Author
Mr. Elberg is a licensed attorney and licensed real estate broker. Gregg Financial Services is a full service brokerage for commercial finance companies and banks that fund B2B businesses. Mr. Elberg arranges funding from $25,000 to $50 million per month at competitive pricing, and works to reduce your financing costs as your company grows. For more information about GFS, please call 888 482 9221 or visit our website: http:www.greggfinancialservices.com
EEP100 – Lecture 11
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