factoring

One of the biggest business trends of the past 20 to 30 years has been the move toward outsourcing.

There was a time not so many years ago when most companies handled almost all business functions internally themselves: payroll, hiring, human resources, financials, accounting, IT, etc. Well, do the names ADP, Paychex, Randstad, or Tatum ring a bell? Each has become a leader in providing specialized business services for companies on an outsourced basis.

In today’s difficult credit environment, companies are turning over every stone and looking in every nook and cranny in their efforts to obtain the financing they need to grow and prosper.

Skip Green sees it first-hand. The founder and president of Alden Green, Associates in Oakville, Ontario, has been helping companies obtain financing for nearly two decades. The primary financing tools Green recommends are venture capital, private or angel financing, government guaranteed loans and grants—and factoring.

The concept of “core competency” refers to the things done by a business that lie at the heart of its ability to manufacture a product or deliver a service. They are strengths relative to other organizations that are not easily imitated and that can be leveraged across different products and markets.

In many industries, an important cash flow strategy is to take advantage of what are often referred to as early pay discounts, or “2/10, net-30 discounts.” Such discounts allow companies to subtract 2 percent (and sometimes more) from the invoice amount if it is paid within 10 days instead of the normal 30.

These discounts can really add up, especially for companies with thin profit margins. The challenge for many companies, however, is managing their cash flow system in a way that enables them to take advantage of these discounts on a regular basis.