How to Be Sure Your Business is Paid!

I just received a large order from a local company – should I take it?

This is what I call the ‘ship and hope” syndrome. In other words, fulfill an order; ship the product and ‘HOPE” to get paid.

In today’s economy, not knowing the credit (payment history) of your clients is a recipe for disaster.  Unfortunately, I would estimate that over 90% of the businesses Read more

“Hey Millennium, I have a great Purchase Order Funding Deal”

Over the years, we have fielded many calls from consultants inquiring about Purchase Order Funding opportunities (PO Funding). These types of prospects seem to garner a great deal of excitement as most prospects looking for PO Funding are in dire need of cash, and they need it now. Read more

Why Factors say YES when banks say NO

Have you ever heard this from a prospect; “Don’t waste your time, I am not bankable?”

Did you then wonder why a factor would ever consider funding a company that a bank would decline? If you have, believe me, you are not alone (I get asked this all the time). Let me see if I can help clear this up.

Let me begin by defining a strong banking prospect:

• Prospect has been in business for a minimum of 2 years
• Prospect has audited financial statements reveal solid profit margins in the previous 12 month accounting period
• Prospect has steady revenue growth with no “Peaks or Valleys”
• Prospect’s management team is strong with a proven track record of success in the industry
• Prospect has absolutely no bankruptcies or judgments in the past
• Prospect’s business collateral specifically, liquid assets (Accounts Receivable and Inventory) are sufficient enough to cover any risk of default

Now, let’s move on to defining a strong factoring prospect:

• Debtors (clients) of prospect have a positive credit history
• Debtors are multiple – no concentration with any one client
• Debtors will verify that product or service has been received and there will be no setoffs against payments

Can you see the distinction?

While banks make their credit decisions by focusing on the PROSPECT, factors make their credit decisions by focusing on the DEBTOR(S).

Although the comparison seems simple in nature, the impact of this difference is monumental. For example – Will a bank fund a new start up company (No – see point #1), will a factor (Yes); Will a bank fund a company that had loses in the past 12 months (No – see point #2), will a factor (Yes); Will a bank fund a company that is growing rapidly and needs a steady flow of cash to manage its growth (No- see point #3), will a factor (Yes).

The next time a prospect tells you to “not waste your time, I am not bankable”, tell them “I know, we have been waiting for you!”

Timothy J. Sardinia – Mr. Sardinia is currently a Partner with Canfield Capital Management, LLC, a Member of Steelkilt, LLC, a Member of Millennium Automotive Group, a Member of Millennium Legal Funding. Tim can be reached at tim@millenniumfunding.com or by calling 716-204-4800.

Reviewing Financial Statements

We are often asked to comment on how a consultant can use a company’s financial statements (Balance Sheets, Income Statements and invoice aging reports) to highlight the benefits of factoring their accounts receivables.

Below, you will find those areas of the reports that you can concentrate on and how you can best use this information to improve your chances of closing the deal!

Understanding the Balance Sheet from a Selling Perspective:

• Factoring simply turns one asset (Accounts Receivable) into another asset (Cash) – said another way. Factoring is “Off Balance Sheet” financing as you don’t incur any liabilities when financing this way (nothing to balance).
• By reducing your potential liabilities, you will increase your equity in your business “remember the equation” -  Assets = Liabilities + Owners Equity, therefore, if you decrease your liabilities, you increase your Equity!

Reviewing the Income Statement from a Selling Perspective:

• Turning the Non Performing Assets -  on the balance sheet “Accounts Receivable” into cash -  can free up the working capital to:
  • Take advantage of supplier discounts
  • Meet payroll and other expenses
  • Provide the cash needed for expansion and growth
• Millennium Funding will provide ancillary services, such as, credit, collection, invoicing and payroll which will reduce administrative expenses significantly.

Reviewing the Aging report from a selling perspective

• Can the client take on more debtors as a result of now having the cash flow to buy more supplies or hire more people?
• Can the client create more business from existing customers by allowing them to extend payment terms?
• Can the client start to bid on government contracts now that they will have the cash flow to cover the delayed payments that are inherent when working with the government?

Timothy J. Sardinia

Timothy J. Sardinia – Mr. Sardinia is currently a Partner with Canfield Capital Management, LLC, a Member of Steelkilt, LLC, a Member of Millennium Automotive Group, a Member of Millennium Legal Funding, the President and CEO of Sardinia Consulting, Inc and a Member of HighView Healthcare Partners, LLC.

Tim’s day to day responsibilities as a Partner with Canfield Capital Management LLC, a multi-million dollar commercial finance firm, include; Investor relations, Sales/Marketing, Initial file Underwriting and Portfolio Management. Tim holds a Bachelor of Science Degree in Business from Miami University.

Previously, Tim held positions in Sales and Sales Management with Cintas Corporation and Eagle International, Inc. Tim Currently resides in the Buffalo, NY area where he and his wife Margaret are the proud parents of four boys (Timmy, Jack, Benjamin and Harrison).

Tim can be reached at tim@millenniumfunding.com or by calling 716-204-4800.