The US will have the highest growth in the oil and gas industry. Paragon has been financing oil and gas suppliers through invoice factoring for nearly 20 years. We understand your industry, we know your needs.
Located in Boston, MA, a forward-thinking lighting company provides cost-effective turnkey lighting solutions from design through installation and ongoing service. Working for commercial, industrial and utility markets, each project is a huge, labor-intensive undertaking, and they relied on factoring to meet payroll. They had been working with Paragon on a steady basis until they perceived they needed to move toward a more traditional finance relationship, but we kept in touch. After four years with another finance company, the Company called Paragon and asked to come back “home.” The relationship with the other finance company had soured. Read more on how Paragon helped this Boston company meet their payroll needs.
While factoring can be a great way for a business to raise money, it can also be a huge pain if a company chooses the wrong factor to work with. A bad factor company can cost a business a lot of money, threaten the relationship between that business and their clients. It is very important for a business to perform due diligence when choosing a factor company. Even when a business is desperate for money, it is imperative that they carefully investigate not only the factor but their offer as well.
1) Look for a factoring firm that has has been in the business for more than 10 years. Obviously experience and time spent in the industry is important and reflects on how effective they have been with successfully helping businesses grow. Good factoring services should be strong financially so that they are able to buy invoices and/or purchase orders. This financial strength comes with age and experience.
2) Does the factor company offer term contracts? Factoring companies that provide term contracts will typically offer better rates and fee structures. This can potentially save a company a good amount of money. There are some disadvantages to term contracts as well. If a company finds that they are not pleased with the factor, for example, how they deal with their customers or because of a lack of adequate reporting, it can be a difficult or expensive to get out of the contract.
3) Does the factor service bulk receivables? A factor may not pay back any of the money they receive until all of the invoices are collected, while others or will pay them back as they come in. The former is an example of bulking receivables. It is best to be paid as the invoices are paid rather then having to wait until all of them come. One late payment can drastically affect when a company receives its money.
4) What fees do the factor company charge? Factors that require service charges, large upfront fees and additional monies should be avoided. It is very important to carefully comb through any proposal or contract prior to accepting or signing it so that a company does not find itself drowning in unexpected fees.
Working with an experienced factor with an outstanding reputation can help companies grow successfully while avoiding many potential pitfalls. Those factors that are established and well respected in the industry will have upfront and clear fee structures and will not attempt to inundate businesses with hidden fees and charge orders. Their reputation is important to them and to their success of their own business. A good factor will work hard to maintain that reputation and live up to it.
Letters of Credit Combined with Purchase Order Financing Can Help Seal the Deal to Obtain Needed Working Capital
In today’s global business environment, working capital is often in short supply, as customers often take longer to pay their invoices than in the past. A lack of working capital can stunt a company’s growth if it does not have the funds to purchase goods and supplies to meet its customers’ orders.
Purchase order financing (PO funding) provides the cash that many businesses need to both fill their customers’ orders and expand their business at the same time. In essence, it advances funds to a company’s suppliers against a purchase order from a qualified customer so that the company can deliver the product to its customers on time and with the quality required.
Particularly in international transactions, however, the combination of PO funding and the issuance of a letter of credit can often provide the crucial difference needed to complete a necessary purchase of supplies.
PO funding is especially useful for companies that cannot obtain traditional funding based on their own financial condition or balance sheet, for example, startups, turnarounds, and others whose balance sheets cannot support traditional banking relationships. That’s because PO financing is based on the creditworthiness of the customer, rather than that of the company selling the goods and being funded.
A Letter of Credit Provides Added Assurance of Payment
Purchase order funding is a viable strategy to obtain working capital for both domestic and export/import transactions. For international trade in particular, however, using a letter of credit to complement PO funding can be the essential lubricant to close a transaction that might otherwise not occur.
In global trade today, suppliers want to be extra certain that you are good for payment. While PO financing provides assurance that your supplier will get paid, suppliers often want an additional guarantee to ensure prompt payment. That is where a letter of credit enters the picture.
Due to the globalization of business and the nature of international transactions, where such factors as distance, differing laws in each country and difficulty in knowing each party personally play an important role, the use of letters of credit has become a very important aspect of international trade.
A letter of credit is a document issued by a financing firm assuring payment to a supplier of goods or services. It serves as a guarantee to the seller that it will be paid regardless of whether or not the purchaser ultimately pays for the order. The risk that the buyer will not pay is thus transferred from the seller to the issuer of the letter of credit. The letter of credit also ensures that all the agreed-upon standards and quality of goods are met by the supplier.
Paragon Financial Provides Both PO Funding and Letters of Credit
In addition to providing purchase order financing, Paragon Financial has extensive experience in combining PO funding with letters of credit. The addition of a letter of credit to PO financing can often make the difference in whether or not you can get the supplies you need to complete a major order for a customer.
The combined effectiveness of PO financing and a letter of credit applies across the board to a wide range of industries and transactions, from manufacturing to printing, and from wines & spirits to automotive suppliers.
Check with Paragon when you need PO financing and your supplier requires a letter of credit to seal the deal.
Entrepreneurs engaged in the wines, spirits and beer industries often find it very difficult to finance their working capital needs. The reason is the time lag between the production, importing, distributing or selling of the alcoholic beverages, and the time when they get paid by their customers.
Whether you are importing wines from Chile; distributing beverages to big box stores, specialty stores or wholesalers; producing wines in California or Washington State; or brewing beer in microbreweries in Massachusetts, New York or anywhere in between, a shortage of working capital can slow your business down, reduce annual sales, and thus overall business profitability.
Get the Capital You Need as Demand Rises
Whatever your end of the industry, your business should not have to be slowed or your sales reduced because of inadequate cash flow. That’s especially true when the global demand for alcoholic beverages is forecast to be on the rise in 2013 and beyond, according to a recent analysis from Moody’s Investor’s Service. Moody’s raised the outlook for the industry to “positive” from “stable,” saying that commodity cost pressures in the industry are abating, and that the demand is growing, particularly in emerging markets.
Just observe what’s happening in your area — how demand for wines, spirits and beer is rising. You don’t want to lose out simply because of a shortage of working capital.
To help maintain and grow your business a factoring company can be the funding solution. You can use funding programs such as invoice factoring to obtain cash now without waiting the typical 60+ days until your customer pays their invoice. You can use purchase order financing to obtain the goods and supplies you need. Alternatively, you can use a vendor guarantee from a high-quality finance company to obtain needed supplies.
Paragon Understands Your Business and We Can Help
All aspects of the wines, spirits and beer businesses are highly competitive. When you’re seeking to grow your business, there is no time to lose with concerns about being underfinanced. A qualified alternative financing and asset-based lending firm such as Paragon Financial can provide for all of your funding needs.
For more than 19 years, Paragon Financial has been providing wine industry financing, beer factoring, alcoholic beverage factoring, craft beer factoring and microbrewery factoring across the US.
We understand the wine and spirits industry. And we understand the complexities and differences in state-by-state regulatory requirements, which can often delay or prevent new business opportunities if they are not properly followed.
We provide working capital through factoring to entrepreneurs who need the cash to move their business ahead in the constantly-competitive alcoholic beverage environment. By obtaining cash immediately following invoicing through factoring rather than waiting 60+ days for invoice payment, you can easily fund payroll, pay suppliers and invest in growing your business.
We can buy your supplies for you through our purchase order financing program. We can guarantee credit with your vendors through our vendor guarantee program.
And we can fund your invoices to your downstream customers at very high advance rates through our factoring program.
As the demand for wines, spirits and beer heats up going forward, as anticipated, you will be glad that you have a service-oriented financing firm at your side helping you to meet your current needs and expand your business to the next level.
Purchase order financing(po financing) allows you to fund your purchase orders. All you need is a solid purchase order from a credit worthy client. Lets say you have a purchase order from a credit worthy source like US Government, City of LA or a big box retailer like Walmart. For example, you have t-shirts sold to Walmart for $50,000 that costs you $35,000. Through vendor guarantees, cash against stocks or writing a letter of credit, we fund the purchase of your goods. Walmart pays Paragon and Paragon pays you minus a small fee. If you sell hard goods to credit worthy clients we can help you. We’ve been helping entrepreneurs all over the US for almost 20 years.
Paragon Financial enjoyed meeting so many great partners and vendors at the 19th Annual Factoring Conference(IFA) Miami Beach. Pictured here are Chris Curtin, Paragon’s National Sales Manager on the left, Jon Anselma, Paragon’s Managing Partner in the middle and Bert Goldberg, Executive Director of the International Factoring Association.
An interim final rule published in the Federal Register and effective immediately will amend regulations to the U.S. Small Business Administration’s Women-Owned Small Business Federal Contract Program allowing for greater access to federal contracting opportunities for women-owned businesses as a result of the National Defense Authorization Act of 2013 (NDAA) signed in January.
The interim final rule removes the anticipated award price of the contract thresholds for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB) to allow them greater access to federal contracting opportunities without limitations to the size of the contract. The rule can be accessed at: http://www.gpo.gov/fdsys/pkg/FR-2013-05-07/html/2013-10841.htm and comments can be submitted on or before June 6, 2013, at www.regulations.gov, identified by the following RIN number: RIN 3245-AG55.
As a result of the rule change, contracting officers will be able to set aside specific contracts for certified WOSBs and EDWOSBs at any dollar level which will help federal agencies achieve the existing statutory goal of five percent of federal contracting dollars being awarded to WOSBs. The SBA is currently working on the changes to the Federal Acquisition Regulations.
Prior to the rule change, the anticipated award price of the contract for women-owned and economically disadvantaged women-owned small businesses could not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts.
Every firm that wishes to participate in the WOSB program must meet the eligibility requirements and either self-certify or obtain third party certification. There are four approved third-party certifiers that perform eligibility exams: El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U.S. Women’s Chamber of Commerce, and the Women’s Business Enterprise National Council. Additional information and links about approved third-party certifiers are available at www.sba.gov/wosb.
To qualify as a WOSB, a firm must be at least fifty-one percent owned and controlled by one or more women, and primarily managed by one or more women. The women must be U.S. citizens and the firm must be considered small according to SBA size standards. To be deemed “economically disadvantaged,” a firm’s owners must meet specific financial requirements set forth in the program regulations.
The WOSB Program identifies eighty-three four-digit North American Industry Classification Systems (NAICS) codes where WOSBs are underrepresented or substantially underrepresented. Contracting officers may set aside contracts in these industries if the contract can be awarded at a fair and reasonable price and the contracting officer has a reasonable expectation that two or more WOSBs or EDWOSBs will submit offers for the contract.
For more information on the Women-Owned Federal Small Business Contract Program or to access the instructions, applications or database, please visit www.sba.gov/wosb.
The ChallengeHER Campaign brings the resources of SBA, WIPP, and American Express OPEN together to engage Women-Owned Small Business and bring more women-owned firms into the federal government’s supply chain.
The SBA will be hosting ChallengeHER events across the country to help women business owners better understand the procurement opportunities available from the federal government, including events in:
- Phoenix, AZ
- Seattle, WA
- New Orleans, LA
- Denver, CO
- Atlanta, GA
- San Francisco, CA
- New York, NY
At these events, we’ll also be playing “matchmaker”—connecting women-owned small businesses with the decision-makers and contract opportunities housed by our federal partners, both at the national level and in their local communities. And by increasing our family of women-owned small businesses, government contracting officers will have a broader base to consider when making their purchasing decisions.
As the economy continues to gradually improve, staffing firms are seeing greater demand for their services. Staffing employment was up 2.4% in March vs. a year earlier, according to a report from the American Staffing Association. Further increases in staffing employment are anticipated throughout the year in a wide range of areas, including IT, healthcare, security personnel and other sectors.
As demand continues to grow, staffing companies will need to focus more and more on their core activities of working with client companies; identifying the best, most talented temp personnel for their clients; and deploying this staff into the field.
Further, they will want to grow their bottom line more rapidly, as they pull away from the less-profitable periods of recent years that occurred in the aftermath of the financial crisis.
Payroll Outsourcing Saves Money
To increase profitability, many staffing firms outsource their payroll function for a variety of reasons. Primarily, outsourcing can help to significantly reduce a staffing firm’s costs. Payroll companies are specialists, and can handle the firm’s payroll more quickly and efficiently than an in-house bookkeeper or other back-office personnel. Indeed, the cost of payroll outsourcing is typically much lower than having in-house people do the job.
Second, payroll firms keep themselves up-to-date on tax laws and state and federal regulations, which helps staffing firms comply more fully and completely with tax and legal requirements. A staffing firm’s in-house personnel may not be as fully current on the tax and regulatory environment, which can cost the firm dollars and cents. In some cases if the wrong paperwork is filed or if filing deadlines are not met, fines and penalties can run into the thousands of dollars.
Another benefit a staffing firm gains from working with an outsourced payroll company is a degree of industry specialization. Many payroll companies specialize in different industries and the services they need. Staffing firms hiring a payroll service provider should work with one that has specialized knowledge of the staffing industry.
Payroll Funding Through Factoring Provides Fast Cash Flow
Staffing companies also need to make sure that they can meet their payroll every week and every month, year in and year out, but they typically face cash flow shortfalls as payments from client companies often lags as much as 60-90 days behind the services rendered by temp staff they have hired.
Invoice factoring can provide low-cost, low-risk cash flow to meet your payroll and other obligations in a timely manner, and can help expand your business as well.
Paragon Financial has been providing payroll funding for staffing companies for nearly 20 years. We understand your industry and the services you need.
Our factoring services minimize credit risk. Before you take on a new staffing client, we will evaluate the firm’s credit standing, and provide you with a comprehensive report on their payment and credit history.
Paragon provides complete flexibility in factoring your invoices. You choose the receivables you wish to factor, when you want, and for as long as you want.
Further, we provide an advance rate of up to 90% against your receivables, delivering cash flow in a hurry.
Finally, the cash flow provided by factoring will enable you to take advantage of quick-pay discounts from your suppliers, which can often cover most of your factoring cost.
Put all of these benefits together and there is only one conclusion – factoring your staffing receivables through Paragon Financial is an advantageous strategy that will minimize your cost and credit risk, and provide you the cash flow you need when you need it.