Working capital is defined as the difference between current assets (such as cash, receivables and inventory) and current liabilities (payables, credit lines, notes). It measures how many liquid assets are available for a business to use for growth opportunities. A lack of working capital can really hold a business back from reaching their full potential. There are many different ways Hyland Capital can help to obtain working capital for your business.

Working capital includes credit card receipt advances, account receivable factoring, business credit cards, sale and leaseback, and a standard business bank loan.

Businesses use working capital for construction, renovation, furniture, software, equipment, or machinery. It is also commonly used to purchase inventory, or to make payroll. Working capital is also used often by businesses to put a down payment down on a piece of commercial real estate. Working capital is essential for any business to succeed. It is becoming increasingly important to have access to more working capital, from many sources, when you need it.

WORKING CAPITAL IS THE FOUNDATION OF A SUCCESSFUL CASH FLOW MANAGEMENT STRATEGY.

FACTORING:

Factoring, or accounts receivable financing is the selling of outstanding invoices or receivables at a discount to a finance or factoring company. These invoices are business to business. The factoring company will then assumes the risk on the receivables and provide quick cash to your business (typically in 2-3 days and without the personal guarantees required by banks). The amount of value assigned to the account depends on the age of a receivable, and can be as high as 90%. A more current invoice will pay more. Any accounts receivable over 90 days typically are not financed, unless they are from a very large, well known and reputable company.

There are a number of advantages to using factoring for your business:

Pass off Collections: Outsourcing your accounts receivable management to another company will free up your resources to focus on other more productive activities such as selling your product/service.

Free up Working Capital: Many companies have the majority of capital tied up in inventory. Accounts receivable funding allows a company to free up capital tied up in inventory and inject it into running the business

Quick Financing: Accounts receivable factoring will not require a business plan or tax statements. It's a quick form of cash often used for businesses experiencing a cash crunch.

While these are some of the many benefits to factoring your accounts receivable, there are potential drawbacks to using this method to finance your small business. One of the biggest factors (and misconceptions) that deters business owners from accounts receivable financing is the cost. There tends to be a misunderstanding that a 5% fee on each month’s invoices would equal 60% per year, but that is not the case, as the fee is only a one time charge on that particular invoice.

Hyland Capital will conduct a complete cost/benefit analysis to understand both the cost of different sources of financing as well as the added benefit of having funds available immediately for your business. This analysis will show you that rates can be deceiving, and that the most important financial aspect of your business is cash flow management.

Before you embark on using accounts receivable financing for your small business, Hyland Capital will guide you through the following questions:

1. Is the money needed necessary for your company survival (ie payroll or service and supply payments), or moreover to take advantage of an opportunity?
2. How does this financing strategy match with your business plan? If you have no business plan, we recommend putting together a plan prior to taking on additional money.
3. Is your business ready for more money and expansion?
4. Have you explored all possible sources of small business financing?
5. What are the current economic and industry conditions? Is now a favorable time to finance?

Factoring can quite literally be the difference between company survival and bankruptcy. We will help to carefully consider all your options. The factoring industry is not as regulated as banking. We will guide you every step of the way, and have spent the necessary time to investigate the companies we work with. Hyland Capital will fully inspect contracts and due to the large number of funding sources, will secure the best rates. In the end, if factoring is not the right choice, we can look to securing regular lines of credit from non-bank sources, or from banks themselves. As we move down that path however, the criteria typically become much more restrictive.

Line of Credit Financing:

This is a standard, widely used type of financing in the business world today, and is quite suitable for many companies. It typically involves calculating a percentage of sales and/or accounts receivable and establishing a limit based on these amounts (usually 10% of sales and/or 75% of receivables). Hyland Capital has a number of sources that can provide financing in excess of these standard rates. Please contact us today to discuss your options.

Purchase Order Financing:

In much the same way the Hyland Capital can secure financing for your accounts receivable through factoring, we can help to finance your purchase orders. In fact many of the same companies who do factoring will also be able to help in this area. Purchase Order Financing is typically required during growth and expansion, when your cash flow reserves become insufficient. It pays for the cost of your goods directly to your supplier and frees up your cash for other more immediate and critical business expenses.

The most common occurrence is when your suppliers want you to pay COD and your customers usually take 30 to 60 days to pay. That is where we come in, we will arrange financing so that the goods are paid immediately.

The Benefits of Purchase Order Financing:

• Allows companies to grow without increased bank debt or selling equity
• Helps ensure timely deliveries to customers
• Increase market share
• Allows companies to make larger profits by fulfilling larger orders
• Fast flexible funding

Inventory Loans and Financing:

Hyland Capital can arrange financing for inventory that you may hold. Typically it is only for finished inventory, but occasionally work-in-progress inventory may be financed as well. This is most suited to businesses in the manufacturing sector, where inventory may be an input to complete other projects or products. Contact us today to explore this option.