Category Archives: Cash Flow Management

Understanding the Ins and Outs of Invoice Factoring

Copy of Invoice

Invoice factoring allows small companies to borrow against receivables without the normal credit check hassles.

Thanks to invoice factoring companies, small and newly started up businesses can access almost instant capital. This allows them to continue operating their business. Invoice factoring is very different from a loan, which is what makes it such an interest concept. Rather than borrowing money that has to be repaid with an interest rate, the business actually sells their invoice to the factoring company at a discounted rate. The rate varies depending on the factoring company, the financial standing of the business, the type of invoice, the creditor and more. Essentially, however, an invoice is usually purchased for between 98.8% and 65% of the actual value. The factoring company then pays that amount directly to the company, and they will then become responsible for collecting the money.

Why Choose Invoice Factoring

In most cases, businesses choose invoice factoring over loans because it is so much easier and quicker to get your hands on the funds. Furthermore, the credit worthiness of the business is irrelevant. Rather, the factoring company looks at the credit worthiness of the client. This means that, on paper, the company is not actually increasing their debt.

This system offers a number of clear advantages. Most notably, the business can continue to operate as there is no cash flow interruption. This can be very important, because businesses often have to invest before they are able to complete a next job, and they can only do so if an invoice gets paid. Another great advantage is the fact that the business is not liable for any non-payment. Once the factoring company purchases the invoice, it becomes theirs. So, if the client then decides not to pay, or has to go through a lengthy chasing procedure, this will not affect the business in any way.

Clearly, it is very beneficial for a business to be able to access money without having to plunge into debt. Yes, the cost of using a factoring company can be quite high, particularly for the first few invoices, when the percentage paid as a fee may be slightly higher. On the other hand, there is no need to worry about making monthly repayments and there is no debt in the name of the business. This system is far more beneficial than those offered by capital venture lenders of angel investors. Once the funds have been received, the business can spend them anyway they can, as they have simply been paid for a product, being the invoice in this case. The debt continues to exist until the invoice is fully paid by the creditor, but it is a debt that then belongs to the factoring company.

Clearly, factoring is a great option. It ensures small businesses are able to continue with their operations and that they don’t have to turn customers away because they are unable to fulfill new orders. Meanwhile, the factoring company is able to earn their money, as they purchase the invoice for slightly less than its actual value. A win-win situation.

PayMe from Celtrino

early payment in 2 clicks

Easily eliminate your cash flow conundrums with “PayMe” the early invoice payment solution

Businesses face a common issue when it comes to their cash flow – they often have a short window to pay their invoices, while the companies they supply may not pay their invoices for months. This presents a problem when it comes to getting the working capital they need to operate and grow. That’s when early payment enters the picture.

Early payment is a way to shorten the time between when you issue an invoice and get paid for it. While it can traditionally take up to 90- days to get paid, with early payment, a third party purchases the invoice and you get your cash in a matter of days. You’ll receive approximately 80 – 85 % of the face value of the invoice upfront and get the balance (less fees and discount charges) when the invoice is settled by the buyer.

More and more business owners and their advisers are becoming aware of the benefits that Invoice Discounting can bring.  As well as providing companies with a reliable source of cashflow, it gives business owners the confidence and the capital they need to expand efficiently and react quickly to market conditions and opportunities. As increasing numbers of business owners realise that they can maximise their cashflow by leveraging their debtors’ ledger, it’s no surprise that Invoice Discounting is growing into a mainstream funding option.

Watch how easily the process works by clicking on the play button below:

Click on this > Pay Me PDF Brochure <  for information

 by Kevin Faulkner – Marketing Executive

supply chain automation, accounts payable automation, saas, b2b, automated accounts,

Accounts Payable Automation and “What’s In It For You?”

Help your Accounts Payable department to save any time spent chasing lost documentation, by seeing the light and embracing the cloud!

sky-sunny-clouds-cloudy copy

The Staff who work in your accounts payable department love their job. It gives you peace of mind to think that they get your payable’s paid on time. You also like how they know where in the process, any invoice is at every moment in time right?

Wrong!

Now that we are finished dreaming let’s face the facts. The Accounts Payable process can be challenging, particularly if all you have to work with is a manual, paper-based AP process. That’s where Accounts Payable Automation comes in.

AP people are hard-working (we like them a lot) but they spend wasted time chasing lost documentation and requesting copies of invoices which is impacting on their work flow. You may not be aware of that fact but it’s true, go ahead and ask them.

We have spoken to enough companies before and after they changed over to accounts payable automation to know its true. So below I will outline the facts of how AP automation can make a difference:

The Benefits of Accounts Payable Automation on behalf of your AP staff:)

1.You can reduce your costs by streamlining your accounts payable process and you can deliver an immediate reduction in administrative costs

2.You can have an efficient world class accounts payable department that processes invoices with greater efficiency and accuracy than can be achieved with a manual, costly and error prone approach

3.You can improve profits (hooray!) by reducing accounts payable processing transaction costs, taking advantage of supplier discounts and eliminating late-payment penalties

Lady with money

4.You can clean up your data as only approved invoices are fed into your back office system reducing errors and speeding up the accounts payable process

5.You can eliminate paper and help to save the environment by automating your Accounts Payable process.  You will eliminate the need to track, trace and store paper invoices making your staff extremely happy.

Celtrino Accounts Payable Solution Here>

Each step of the Accounts Payable process is time consuming and the cost of one error can be significant.

Automating your AP process will allow you to take advantage of the cloud based technology that is currently evolving. It will tidy up the paper trail and make your accounts payable staff very happy.

In short, it will free up your staff to be more productive in the areas that matter like revenue growth. Which is never a bad thing.

If you would like more information then check out our  white paper “The Business Case for Accounts Payable Automation” to find out more.

www.celtrino.com

 Visit us for more information or follow @Celtrino

by Kevin Faulkner – Marketing Executive

How to Improve Your Cash-Flow: Part 2

In the first part of this blog we talked about the main components of good cash-flow management.

The components were: forecasting your cash-flow, evaluating terms with your trading partners and having a good system to enforce payment discipline from your customers. They are essential to improving your cash-flow and making your balance sheet healthier.

 

Here are three best practices that help you achieve a stronger balance sheet:Cash flow

1. Full Visibility

In order to have full visibility you must be able to see if your invoices have been sent, received, read, queried and resolved. A real-time tracking system allows you to trace all invoices from the moment they’re sent up to the time that payment is received. This means that you can deal with any invoice issues or queries as they arise and speed up the dispute resolution process. Continue reading

Deloitte CFO Survey 2013: UK Outlook

In the Deloitte 2012 CFO survey the main worry highlighted was the break-up of the single Euro-zone currency with disastrous consequences for all; that fear has now subsided somewhat and as a result predictions for 2013 are more optimistic. This is according to the 2013 Deloitte CFO survey, which questioned 112 CFOs of leading UK companies.

Deloitte CFO Survey 2013 graph representing corporate priorities in 2013

Source: Deloitte

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How to Improve Your Cash-Flow: Part 1

Cash-flow problems are the number one reason why businesses fail; so it is vital that companies prioritise their cash-flow management. In this blog we examine the main components of a healthy cash flow management system.

Cash flowThe main issue with cash-flow is that every company is trying to do the same thing and not everyone can succeed.  Companies try and get their receivables in as fast as possible while also delaying their payables in order to keep as much cash on their books.  Somebody loses out in the end and it’s usually the company that has not prioritised cash-flow management.

So what are the main components of a healthy cash-flow management system?

 

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Dynamic Discounting / Invoice We Trust

Dynamic Discounting - Invoice We Trust

Regardless of how “good” a business may be, ultimately its fate rests on a solid cash flow. In order to continue trading, every company needs money to come in so that they can purchase raw materials, which can be processed and converted into saleable goods and in turn create more cash.

As harsh economic conditions continue to bite, businesses are delaying payment to their suppliers to moderate their own cash flow, but in doing so jeopardise the viability of the other members of their supply chain. So how does a business encourage its customers to pay on time, or better yet, early?

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The Impact of Celtrino Express on Cash Flow

For a successful business, a healthy cash flow is essential. Delayed payments can prove catastrophic, so anything which can be done to prevent late payments becomes a business priority. Here are a few potential payment protractors and how Celtrino Express can help negate them:

Processing issues

Celtrino Express and Cash Flow

Every paper invoice your business sends out needs to be entered manually into your customer’s accounts system. Unfortunately, any process which requires manual intervention introduces the chance for human error to creep in. A typing error can quickly become a payment dispute, which then delays payment. Delayed payments often create cashflow problems which then have a much larger impact on your business.

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5 Ways to Reduce Administration Costs

Despite the turn of the year, 2012 looks set to be another year of austerity and cost reductions. Several well known names from the UK high street have set the tone by reporting less than impressive Q4 results and some are even entering administration.

Here are five suggested ways to reduce operational costs through increased backroom efficiencies.

Administration costs, Smart Admin, e-Invoicing

  1. Adopt e-Invoicing
    By converting to digital invoicing, a business can make immediate savings on staffing, stationary, postage. Factor in slightly less tangible factors such as time and the argument for e-Invoicing is hard to ignore when investing to make greater savings.
  2. Create dynamic pricing and discounting structures
    Offering customers discounts for settling payments early may reduce profits, but a healthy cash flow and balance book is preferable to a sheaf of outstanding invoices. A scale of sliding charges and fees can require intensive intervention to oversee however, so companies introducing such a system should look at implementing our third recommendation simultaneously.
  3. Automate your workflow
    To combat costly human error, introducing automation can speed each step of the payment process by removing the need for manual intervention. The less manual processing that is required, the smaller the margin for error and the less workforce required for accounts payable.
  4. Centralise
    Bring your financial operations into one department. Managing finances across different departments is time consuming, and if time is money, delays in financial processing cost your business. Cut the delays by bringing financial control into a single centralised location and you will recognise associated cost savings.
  5. Digitise your paper
    Your clients may not have an electronic invoicing and payments systems and so they will continue to return physical paperwork. As a result you will need to find a way of capturing this information and getting it into your own accounts system.

Using an electronic invoicing platform like Celtrino’s Smart Admin can help achieve each of these goals and thereby slash costs as a result. Interested? Get in touch to find out more!

Electronic Invoicing – You Have to Go the Whole Hog

Electronic Invoicing – You Have to Go the Whole Hog he flexible nature of electronic invoicing allows for a phased approach, moving a tranche of accounts at a time and creating a hybrid system of physical and electronic accounts paperwork. For the small to medium business, such a system is workable but for the larger enterprise completely impossible.

For any business running physical and electronic invoicing systems in tandem, the overhead of managing such a workflow places a huge additional burden on accounts staff and thereby reduces many of the cost benefits associated with e-Invoicing. The greatest single motivator for migration to electronic invoicing tends to be the promised financial savings of the medium; if these savings are being reduced because of inefficiencies, your business loses out.

Electronic invoicing also provides a way to centralise accounts records, drawing information which would normally be held on a departmental basis into a single repository. Cash flow information can finally be retrieved immediately easing business decisions and allowing for a more agile trading model.

So although the hybrid system may work for a while, the overall goal must be a total switch to electronic invoicing. This goal may be easier to achieve in some industries than others, but with careful planning and by securing the agreement of suppliers and customers, any business can eventually manage total migration.

Unfortunately there will always be a level of resistance to change from certain key suppliers, much of which is caused by ignorance of e-Invoicing and the fact that suppliers also stand to reap benefits from electronic invoicing. Successful supplier on-boarding should therefore be a consideration when choosing a platform for electronic invoicing; if the supplier of your invoicing system can assist, so much the better.

Fortunately Celtrino are masters of outsourcing electronic invoicing services and uniting supply chains for the mutual benefit of all involved. If you need help going the whole hog with your e-Invoicing roll-out, please get in touch – we’re happy to help!