Contact Information: Media Contact: Kristin Gabriel MarCom New Media T: 323.650.2838; E: Headquarters: The Interface Financial Group, Inc. 7910 Woodmont Avenue, Suite 1430 Bethesda, MD 20154 T: Toll Free: USA; 877.210.9748 Canada; 877.340.6893
Single Invoice Factoring Provides Cash Flow for Small Businesses
Invoice Factoring Can Make the Difference Between Staying in Business or Not for Some Small Businesses Today, as Report Notes Decline in Business-for-Sale Transactions and Valuations
| Source: The Interface Financial Group (IFG)
BETHESDA, MD--(Marketwire - May 13, 2009) - The Interface Financial Group (IFG), North
America's largest alternative funding source for small business, reports
instances where invoice factoring, when a business sells its accounts
receivable invoices at a discount, has helped a company stay in business in
the midst of the current global economic downturn.
A recent report by BizBuySell.com, which tracks the health of small
business, indicates that there has been a decline in business-for-sale
transactions and valuations. Additionally, the number of closed
transactions reported in the first quarter decreased by 36 percent as
compared to the same 2008 time period. As many small business owners
across the country are struggling, many looking for answers on how tough
times are affecting the value of their businesses.
Also dropping during this current economic environment are the value
metrics for businesses. Revenue multiples for closed transactions dropped
5.5 percent to .69 in the first quarter of 2009, while cash flow multiples
fell 3.8 percent to 2.69. This is determined by dividing the selling price
of a business by its annual revenue or cash flow. The report also
indicates that median business sale price for closed transactions decreased
17.3 percent to $165,500.
According to The Interface Financial Group's Chief Operating Officer Steven
DeYoe, "Valuation multiples are going down and now buyers are hesitant to
pay the asking prices for a business. Uncertainty causes concerns about a
business and its future revenues and cash flow."
It also appears that many buyers are having difficulty accessing the
capital they need to purchase a business, and in some cases, to keep it
going. Traditional banks, angels or venture capitalists, and even
SBA-backed loans have all but dried up. When there are fewer buyers able
to bid on most businesses, there's less pressure for upward pricing.
Economic conditions have made it more difficult to close deals, but a
number of business brokers are reporting a record number of buyer inquiries
due to an increasing number of corporate layoffs.
The good news includes the fact that market conditions for small business
transactions should improve as selling prices continue to decline, because
credit will slowly become available to new buyers.
Standard factoring has
been around for more than 4,000 years, and it is a highly effective cash
management strategy, allowing businesses to obtain funds based on their
current accounts receivables and benefit immediately from 90 percent
advances against invoices that would otherwise not be paid for 30, 60 or 90
days.
A business often times doesn't get paid right away for a product or service
that it has already delivered, so the bottom line is that accounts receivable
factoring, also known as single invoice or spot factoring, might just
be the answer. Factoring is an extremely quick way to turn a company's
receivables into cash rather than waiting up to 90 days for an invoice to
be paid. Factoring companies like IFG will look at your customers' credit
rather than yours.
IFG begins the single invoice
factoring process with due diligence that typically takes one to two
business days. Once completed the client is at liberty to offer invoices to
IFG for purchase. Factoring is not a loan -- it is the purchase of a
financial asset, or the receivable. Factoring varies from a bank loan in
several ways. Banks base their decisions on a company's credit worthiness,
whereas factoring is based on the value of the receivables. Bank loans
involve two parties, while factoring involves three parties.
IFG will typically look at the creditworthiness of a client's customers and
does not expect to buy 100 percent of a company's receivables. There are no
minimum or maximum sales volume requirements. IFG's professional rates are
competitive because each client's circumstances vary, which may have an
impact on the fees charged. The program allows choices of invoices to be
factored, enabling customers to retain most of their money, while spending
the minimum fees to guarantee adequate cash flow.
Upon receipt of invoices, IFG checks the credit of the debtor named on the
invoice and makes sure that the sale represented has been satisfactorily
completed. Once this is done the debtor is advised of the purchase by IFG
and the client receives their funding. At the end of the credit period, the
debtor pays IFG directly completing the transaction.
About The Interface Financial Group (www.ifgnetwork.com)
The Interface Financial Group (IFG) is North America's largest alternative
funding source for small business, providing short-term financial resources
including spot factoring (invoice discounting). The company serves clients
in more than 30 industries in the United States, Canada, Australia, and New
Zealand, and offers cross-border transaction facilities between the U.S.
and Canada. With more than 140 offices across North America and over 35
years of experience, IFG provides innovative invoice factoring solutions by
offering short-term working capital to growing businesses. Single invoice
factoring, or spot factoring, is an extremely fast way to turn receivables
into cash.
IFG was founded in 1972 to provide short-term working capital to help small
to medium sized businesses grow. The IFG organization operates on a local
level, providing clients with local knowledge and experience and business
expertise in numerous diverse areas including accounting, finance, law,
marketing and banking.