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 T: Toll Free: Canada -- 877.340.6893
Accounts Receivable Factoring Can Relieve 51 Percent of U.S. Small Businesses With Cash Flow Issues
The Interface Financial Group (IFG) Encourages Small to Medium-Sized Companies to Employ Accounts Receivable Factoring in the Wake of Banks' Cuts in Small Business Lending
BETHESDA, MD--(Marketwire - January 22, 2010) - The Interface Financial Group (IFG), North
America's largest alternative funding source for small businesses,
announced it is stepping up marketing activities offering accounts receivable
factoring as an alternative form of financing to the reported 51
percent of small businesses that have experienced cash flow issues in the
last 90 days. According to the December Discover Small Business Watch
report, the remaining 45 percent of the 700 small business owners surveyed
have not experienced cash flow issues, leaving 4 percent who are not sure.
In the wake of banks' cuts in small business lending, small businesses are
seeking alternative means of funding to ensure success in 2010.
In today's credit restricted economy, it is more important than ever for
small to medium-sized businesses to know what forms of financing are
available to them. The recent Treasury report verified the country's
largest banks cut their collective small business lending balance by
another $1 billion in November. Twenty-two banks have cut their small
business loan balances $12.5 billion since last April. Since that time the
banks' total lending has fallen 4.6 percent in that seven-month period, to
$256.8 billion.
Banks are protecting their internal balance sheets and not taking on the
risk in the form of loans to small businesses; therefore, emerging growth
companies need to rely on alternative forms of financing like accounts
receivable factoring to ensure their success.
"Given these declines banks are saying the reason they are lending less is
because small businesses are risky borrowers. In reality, when sales are
slow, the last thing people want, or need, is debt," said IFG's Chief
Executive Officer George Shapiro. "I also believe this is why we've seen a
number of small to medium-sized companies begin to employ accounts receivable
factoring."
The Discover survey also revealed 35 percent of small business owners rate
the current economy as fair, which is up from 30 percent in November.
Sixty-one percent rate it as poor, while there are 4 percent who believe it
is good or excellent. Overall economic confidence among small business
owners in America held steady in December as fewer of them believed the
U.S. economy was getting worse compared to November and more saw conditions
for their own businesses getting better over the next six months of 2010.
There is one small business strategy that a number of small business owners
have started to employ -- and that's invoice
factoring, a form of commercial financing or debt financing which has
collateral as a basis for borrowing money. Factoring aids small businesses
as they need funds, since the money received is based on accounts
receivables, and there are no obligations like there are with loans, while
borrowing simply puts them in debt. This financial strategy is ideal for
businesses with customers who pay 60 to 90 days out, as it leverages small
businesses accounts receivables. IFG makes arrangements to purchase a
company's invoice, or invoices, pays immediately, and in essence, loans
money until the company's customer's invoice is paid.
IFG looks at the creditworthiness of the client's customers and can fund
within as little as 24 hours. There are basically three parts to a
factoring transaction: 1) Advance -- the percentage of the total amount of
the invoice the company has access to when they are funded, which is around
80 percent, and depending on the industry, it can be 90 percent; 2) Reserve
-- the remaining funds from the invoice are held back and released when the
customer pays the invoice; and 3) Discount fee -- the fee associated with
doing the transaction which gets deducted from the reserve. Based on how
long it takes to receive payment of the invoice, the fee can be from 2 to 5
percent of the total value of the invoice.
The Interface Financial Group specializes in construction
factoring, and today IFG is finding that single invoice factoring is a
popular new tactic, allowing companies to factor one invoice at a time. The
company does not expect to buy 100 percent of a company's receivables, and
there are no minimum or maximum sales volume requirements.
IFG's recent private label factoring products include: Export Factoring,
providing factoring services for companies who export from the United
States and Canada; P.O. Funding to finance purchase orders when a company
receives a purchase order and needs to purchase supplies to fulfill the
order; and Inventory Financing, a solution promoting a company's growth by
funding them when they must expand and purchase inventory.
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 invoice 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 in addition to accounts receivable
factoring, including accounting, finance, law, marketing and banking.