Why Factor Companies Will Request Bank Statements From Their Clients

11:37 31 May in Blog

When applying for business funding, you’ll need to provide supporting documentation as part of the application and due diligence process no matter the type of financing. One item lenders and alternative funding sources, such as factoring companies, will request is your company bank statements.

Bank statements play an important role if you are looking to get business funding which may come as a surprise to many business owners.

If you’re looking to understand how bank statements impact the application approval process for new clients and the ongoing due diligence process, then this blog is for you.

Using Bank Statements to Evaluate Applications

During the initial underwriting process, factoring companies (“factors”) will request and review your bank statements to determine if you meet their qualification requirements to become a new client.

Bank statements provide a track record of your business activity and are used to confirm the validity of the information in your application as well as supporting documents.

The sections of the bank statements that will be evaluated include:

Business name and address, account number, and type – making sure it’s not a personal bank account and verify that they are the same as the information on the application.
Average daily balances – to verify what the prospective client is telling the factoring company makes sense or is unrealistic or possibly fabricated. Factors also look for instances of insufficient funds and assess the financial health of the prospective client and whether there is a going concern risk. An occasional NSF may be acceptable, but frequent NSFs usually indicate a serious problem.
Financial history – to confirm that information lines up with forecasts. For example, if a prospective client is projecting $10 Million in annual revenues, however, their average bank balance is $10,000, and deposits for the previous year were only $60,000, this may be a red flag. It may also indicate that the transaction may not be worth the factor’s time or indicate potential fraud. In either case, the factoring company may discontinue the due diligence and underwriting process.
Daily deposits – to look for unusual transactions that may indicate undisclosed information or illegal or fraudulent transactions. They may also be used to confirm the dates and amounts of payments by the client’s customer (aka “account debtor”).
Recurring payments/ automatic withdrawals – to verify that there are no undisclosed loans, other material financial obligations, or improper payments. Recurring withdrawals may indicate the business is repaying pre-existing debt or that prior business funding or financing is already in place. It may also identify automatic payments taken for judgments or tax payments. This is especially important in determining if the prospective client has not disclosed previous funding (which may include merchant cash advances), tax liens, or judgments.

Bank statements can help to identify potential red flags, such as the account being recently opened, low account balances, and the business name and address not lining up. Verification ensures the name of the client matches the name on the account with cash coming in and out and reduces the risk of fraud. Bank statements can also identify instances where funds may have been misappropriated and used outside the general scope of the business. For example, if a staffing company has expenditures for a pool installation, this may indicate misappropriation of the company’s funds.

Bank statements are used to help factors verify that a client is not a fraud risk or that they will one day disappear and default on their financial obligations.

Can a Business Obtain a Factoring or PO Financing Facility Without Providing Bank Statements?

No, that is not likely. It will be difficult for business owners to find funding sources that do not have bank statement requirements. By having a business bank account and providing this information to the factor, you will be able to start building trust and create financial transparency for your business. Factoring companies will want to see this when they are evaluating you as a client.

Bank statements should indicate your company is healthy and consistent in the way it conducts business. NSFs should be the exception, not the rule. Average daily balances and deposits should be commensurate with the amount of business you are doing. Payments should be consistent with the nature of your business and the sources of your funding, leases, and service providers. Your business history and bank statement activity should support the assumptions in your business plans and the amount of funding that you are requesting.

Ongoing Due Diligence Using Bank Statements

Due diligence is part of a healthy ongoing relationship between a factor and a client. After a client is approved for invoice factoring or a PO financing facility, circumstances may change. Economic recessions, natural disasters, geopolitical events, pandemics, and other events can negatively impact a client’s business and financial health.

Factoring companies use a number of resources to monitor a client relationship on an ongoing basis, including the review of bank statements. Keeping track of clients helps to ensure a healthy factoring relationship and alert factors to situations that may require actions to help the client.

Bank statements will help the factor determine if the client is in compliance with the covenants of their facility. For example, a factor may check to see if the client is misdirecting payments (pocketing payments that are meant for the factoring company) or if they are not submitting all their invoices as required under the factoring agreement. They can be used to monitor for unapproved or undisclosed junior financing/ debt taken out by the client, which may impair the factoring company’s collateral. For example, merchant cash advances are typically repaid through recurring payments.

Bank statements will be used to determine if the client is misappropriating funds for the company, especially advances provided by the factor company. For companies in the construction industry, this is particularly important as there are trust fund laws that govern what a business can do with proceeds. Typically, contractors will need to pay payroll, taxes, subcontractors, material and service providers, and other vendors that provided work to a particular worksite and may have lien rights.

Due diligence is an initial and ongoing process of reviewing a client’s financial, legal, and other critical business information to ensure a healthy factoring relationship. Bank statements are a key tool used for this process. Capstone has experienced personnel who will work with you to be sure the qualification, due diligence, and onboarding processes are handled efficiently every step of the way. Please contact a Capstone representative today to see how we can help you achieve your business funding objectives.

The Big Picture: Bank Workouts and Opportunities Created by Bank Failures

14:39 11 May in Blog, Broker Resources

The recent bank failures, finance regulations, and an ever-changing economic climate are impacting lending practices all across the country. Lending from U.S. banks and other traditional financial institutions has contracted significantly indicating a tightening of lending standards. This has resulted in more bank turn-downs and loan workouts leaving many small to medium-sized businesses in distress as they seek out alternative business funding solutions. For financial brokers and ISOs looking to help their clients manage these issues, one practical strategy is invoice factoring.

Commercial Loan Workouts

In the banking and finance sense, the term “workout” is given to the special process implemented by a bank or other traditional lender in order to keep close monitoring of a borrower’s financial situation. It occurs when an account or commercial loan is classified as nonperforming and a lender does not believe their customer will be able to repay the debt.

When a borrower is late on payments or misses them completely, the workout process is triggered. The lender will first attempt to figure out why the borrower’s payments were late or missed. If necessary, the lender will default the borrower and attempt to come up with a resolution through a Workout Agreement that includes restructuring of the loan, renegotiating terms and covenants, temporary forbearance, taking of additional collateral, and so forth.

The purpose of doing this is to accommodate the borrower and provide some measure of relief so that the lender has a better chance of collecting out on the loan and interest without needing to foreclose. It mitigates the risk of loss and is mutually beneficial for both parties. Commercial loan workouts can be challenging as issues can be complex so lenders will carefully need to consider the impact of the proposed strategy. Should this fail to remedy the situation, the lender may then begin to foreclose and enforce rights under the financing agreements. The lender will close the loan facility and have their customer find financing elsewhere.

The Driving Force Behind Failures, Bank Turn-Downs, and Loan Workouts

Starting in 2022, the Federal Reserve’s campaign to reduce inflation included large and rapid increases in interest rates which drove the yield on money market funds, two-year U.S. Treasuries, and CDs from near zero to over 4.00% in one year, triggering a massive shift of deposits out of low-yielding accounts at banks into money market instruments and U.S. Treasuries.

Prior to the start of the Fed’s interest rate hikes, many banks had invested a large amount of their low-cost deposits in longer-term U.S. Treasuries and mortgages. When interest rates increased, these investments lost value leaving the banks with large unrealized losses on their balance sheets.

When depositors withdrew large amounts of money to take advantage of higher yields available on short-term instruments, the banks had to sell longer-term assets and realize the losses on their balance sheets. The outflows accelerated when depositors became aware that some banks were having difficulties. Many banks will now be constrained in their ability to make new loans and have less flexibility in situations where a loan is classified as in workout. They will be forced to turn down loan applications, call loans and reclassify riskier loans as workout loans in order to meet stress test requirements and avoid sales of investments at a loss that could jeopardize their solvency.

What This Means for Your Clients

For many small and medium-sized companies, this means they will need to find alternative funding sources for working capital until banks loosen their credit requirements again.

Finding a replacement lender may be difficult because most banks are tightening their credit criteria, and taking on a borrower in a workout at another bank will only make it more difficult to pass stress tests. Banks and other lending institutions can be unhelpful with providing guidance on other forms of financing. It can prove to be a difficult time as it’s easy for borrowers to fall prey to predatory financing. These business owners need support and professional financial advice from someone skilled in these situations.

In these cases, placing a borrower with an alternative funding source, such as an invoice factoring company, which is not subject to the same restrictions as banks is a more viable solution. Invoice factoring facilities are an excellent solution for transitioning clients through a period of tight credit or those in need of assistance while in workout.

Invoice Factoring with Capstone is the Solution

Invoice factoring can be a mutually beneficial solution for banks and loan-workout customers. Valuable banking relationships continue with reduced risk, while the customer benefits from the cash flow generated from factoring their accounts receivable. With a factoring facility, bank loans or lines of credit can be paid off, and the customer will have the cash flow to stabilize their business or sustain operations. Invoice factoring also provides businesses with immediate access to the cash flow they need, without a lengthy application and approval process.

As a financial broker or ISO, you can work with local banks in your area and provide them with a valuable service by removing troubled loans from their portfolio while at the same time keeping the client in business.

Capstone has originated many new factoring facilities to refinance loans from banks that were being classified or in workout and restated them as factoring facilities. Typically a borrower stays with Capstone for two to three years until bank credit requirements loosened up, which allowed them to go to another bank for an asset-based loan.

You can help the many small and medium-sized businesses that are being cut off from bank lending and scrambling to remain solvent until the Federal Reserve reverses course and begins to lower interest rates. If you would like to discuss invoice factoring for your client’s business, please contact us at your earliest convenience.

The Role of a Notice of Assignment in Invoice Factoring

12:25 27 April in Blog

When using invoice factoring, you sell and assign the rights, title, and interest in your accounts receivable to a factoring company. The rights you assign include the right to receive payment for the accounts receivable. A Notice of Assignment is a document that is used to notify your customers that you have sold accounts receivable to a factor.

What is Included in a Notice of Assignment?

A Notice of Assignment (“NOA”) is a letter sent by the factoring company (“factor”) to your customers (aka “account debtors”) notifying them that the ownership of your accounts receivable, or invoices, has changed hands to the factor, and payments should be made in accordance with the instructions provided.

The Uniform Commercial Code (UCC) provides guidance on certain information that must be included in the NOA in order to make it effective. The notice must:

Advise your customer, the account debtor, that the amount/ invoice due has been assigned to the factoring company
Advise that payment is to be made to the factoring company and not any other party
Include remittance details so your customer is informed how payment should be made
Be signed by the factoring company or the client

In some cases, the NOA may include language that deems continued use of your services to be consent to the terms of the NOA. The factor can, however, require your customers to sign and return a copy of the NOA to acknowledge receipt. Enforceability of a NOA is reliant on proof of receipt by the account debtor therefore, it is important to send the notice in a manner that provides proof of receipt by the account debtor.

The factor may revoke an NOA by sending a signed and notarized release notification to your customers. They will revoke an NOA if you decide not to factor an account any longer or if the factoring relationship has been terminated. An NOA can only be revoked if the account has no outstanding invoice balances.

The Importance of Sending a NOA to Your Customers

The NOA informs the parties to a factoring transaction of their responsibilities and provides the remittance details needed to make payments, so your factoring relationship flows smoothly without interruption. It also protects the factor in case you, the client, receive the payment instead of the factoring company.

From a legal perspective, a NOA explains to your customers that any payments made to you instead of the factor will not satisfy their obligation to pay outstanding invoices. Your customers may be held liable for payments made to you if they ignore the NOA or do not update accounts payable information.

If your customers continue to pay you for factored invoices, and you deposit those payments into your bank account, it is important to note that you may be responsible for penalties and additional fees for the extra time it takes for the factor to receive payment. Your factoring agreement may also include a misdirected payment fee you will have to pay if you fail to send the misdirected payments to the factor.

The best way to avoid any penalties or additional fees is to monitor customer compliance with the terms of the NOA, and take steps immediately to correct any situations where customers are misdirecting payments to your company instead of the factoring company.

Handling of Payments for Non-Factored Invoices

When you factor your accounts receivable, you agree to direct all payments for all current and future invoices to the factor, including payments for invoices you did not factor. This avoids the confusion that would otherwise occur, ensures the factoring company receives every payment, and streamlines the payment process. It prevents your customer from needing to maintain two vendors in their accounting system with differing payment instructions and reduces the likelihood of misdirected payments.

Your factoring agreement will include a procedure for handling payments for non-factored invoices. This may include sending you the total amount in a reserve release or applying the payments to open invoices and sending you the difference. Typically, when a factor receives payment for a non-factored invoice, the proceeds will be forwarded to you once the funds clear their bank account. Make sure you understand the procedure so that you comply with the NOA and avoid possible confusion affecting your relationship with your customer and the factor.

Explaining Your Decision to Factor to Your Customers

Before you begin a factoring relationship and your customers receive a NOA, it is always a good idea to explain to your customers why you have decided to factor their invoices.

Your customer should understand that your decision to factor is a positive step intended to improve your finances. Factoring is not a loan. Factoring provides access to working capital and cash flow so you can purchase materials/supplies, improve staffing and facilities to meet or exceed customer requirements and take on new or larger projects.

Invoice factoring allows you to continue offering the same payment terms your customers currently enjoy. Furthermore, you may be able to offer better payment terms based on the factoring facility.

It’s important to let customers know that outside of invoicing, their relationship will not change. You will still be providing the highest level of quality products and services. Customers want to be assured their business will not be impacted by your decision. The more you can do to assure customers that most things will not change, the more likely they will be comfortable

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The NOA is an important document that facilitates invoice factoring. It explains how payments are to be handled so that transactions flow smoothly between your company, customers and the factoring company.

Capstone is a leading commercial finance company that provides a range of financial products designed to meet the cash flow and working capital needs of nearly any type of business, including trade financing, invoice factoring, and PO financing. Contact Capstone at (212) 755-3636 to learn how invoice factoring can accelerate the conversion of your accounts receivable into immediate cash.

Common Objections to Invoice Factoring and Responses to Overcome Them

10:26 18 April in Blog, Broker Resources

If you are a Financial Broker or ISO, you may have encountered some business owners who are uncomfortable with the idea of factoring their invoices. Helping prospective clients better understand the concept and clearing up misconceptions is important to help them decide if factoring is the right decision for their company.

The following are a few common objections you may come across with clients and responses to overcome them.

Invoice Factoring is too Expensive (the APR is too high)

Business owners often mistakenly think of invoice factoring in the same terms as a loan. In overcoming this objection, you must explain to the prospect that invoice factoring is not a loan, there are no liabilities created on the balance sheet, and no interest is charged.

Invoice factoring is a financial transaction where the client sells an outstanding B2B invoice at a discount to a factoring company in order to generate immediate cash flow. It represents a true sale of an asset.

As a result of this misconception, prospective clients think that it is appropriate to multiply the factoring fee per month by 12 months to arrive at an APR, which is not accurate. For example, using a hypothetical 3% factor fee for 30 days, clients may inaccurately equate as a 36% APR.

It’s common for individuals to automatically want to think in terms of annualizing percentages. You can demonstrate this is not the case by providing them with an example using their profit margin. Ask the client, if a business projects a 20% monthly profit margin, is it correct to think that at the end of the fiscal period, the business is projecting a 240% (20% x 12 months) profit margin? The answer is “No.” The business’s profit margin at the end of the period is still 20%.

Clients focus on profit margins, so another alternative way that may be more effective is to use an example of how profit margins are impacted by factoring. For example, if a business invoices $100,000 per month on Net 30 Day payment terms and factors $100,000 per month with a 3% monthly factoring fee, the cost is $3,000 per month or $36,000 per year, which is 3% of $1,200,000 in annual sales. If client profit margins are normally 40% before financing costs, in this example, profit margins after factoring costs would be 37% (40%-3%), not 4% (40%-36%).

Some additional cost mitigation techniques to explain to the prospective client:

Factor only their fast paying customers.
Factor invoices only as they need the cash flow. Single invoice (“spot”) factoring will offer them this flexibility.
Hold the invoices for a few weeks before factoring. This is useful when the client is offering their customer extended payment terms. Factor fees start accruing once the invoice is factored.
Only take a portion of the advance. Most factor companies will prorate the factor fees if the client does not take the full advance.

The “it’s too expensive” objection comes up pretty frequently, so make sure you’re comfortable with explaining these concepts in a way your client will understand.

What Will My Customers Say if I Factor Their Invoices?

Invoice factoring is widely accepted in many industries as a source of working capital for businesses. Even Fortune 500 companies use factoring in their funding strategies. Explain to them that chances are their customers have other vendors that also factor their invoices.

A client’s customer should understand that their decision to factor their accounts receivable is a positive step intended to improve their finances. Factoring is not a loan. A client’s balance sheet is strengthened by not being burdened with debt. Factoring provides access to working capital and cash flow so the client can purchase materials/supplies, improve staffing and facilities to meet or exceed their customers’ requirements and take on new or larger projects.

Invoice factoring allows the client to continue offering the same payment terms their customers currently enjoy. Furthermore, the client may be able to offer better payment terms based on the factoring facility. Clients have the added benefit of not needing to devote time and resources to collect accounts receivable.

It’s important for clients to let their customers know that outside of invoicing, their relationship will not change. The client will still be providing the highest level of quality products and services. Customers want to be assured their business will not be impacted by your client’s decision. The more the client can do to assure customers that most things will not change, the more likely they will be comfortable.

My Cash Flow Is Fine Right Now So I Don’t Need to Use Factoring

Don’t let your client think it is okay to delay applying for a factoring facility. Explain to them that accessibility of cash flow and working capital is essential and key to a successful business. It’s imperative that the client makes the most of their financing network, especially during times of economic uncertainty, rising interest rates, and banking industry turmoil.

Cash flow may slow down, or unexpected opportunities for new orders may arise, and the client may not have the cash flow to buy materials and carry accounts receivable for 60 days or more. The best time to get everything set up for invoice factoring is when the business is not operating in crisis mode.

The client should understand that invoice factoring can be used as a primary means of business funding or to supplement a traditional form of financing, including existing lines of credit, revolving credit facility, small business loan, etc.

Small business loans are an option, but the application is long and involved, and credit approval is more difficult when there is a business slowdown. With the potential for bank failures, there is concern that it will be more difficult for small and medium-size businesses to obtain working capital.

Getting a client set up with an account now does not harm the client’s business, financials, or credit profile. Clients will appreciate having easy access to cash to pay an unexpected bill, fund a large order, or expand business operations.

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If your client is in an industry unfamiliar with factoring, it would be helpful to familiarize them with the benefits that factoring has to offer, including:

Ability to Grow Business – They don’t have to wait 60 days or more for invoice payments to pursue additional contracts or orders.
Reliable and Stable Cash Flow – They have cash to pay suppliers and employees without going into debt.
Free Up Internal Resources – When an external resource is handling accounts receivable, internal staff is freed up to handle other tasks, which means lower overhead and less need to hire additional staff.

Choosing the right business funding option is an important decision that should be considered carefully. Capstone’s invoice factoring programs can ensure your clients have adequate access to cash flow to fuel growth and their long-term success. Contact Capstone at (212) 755-3636 to find the best funding option for almost any business.

Women’s History Month Spotlight – Ruth Abady, CPA

12:46 30 March in Blog

To commemorate Women’s History Month this year, Capstone is pleased to highlight an amazing woman’s contributions and innovative leadership success.

This year, we recognize and honor Ruth Abady, Chief Financial Officer for Capstone.

Ruth possesses strong leadership skills and problem solving capabilities. She has been a critical member of our team and has supervised the accounting staff for more than 16 years. Her responsibilities include preparing financial statements, supervision and training of the accounting staff, cash management, general ledger management, audit/tax return coordination with external accountants, and implementing internal control procedures.

Ruth is an accomplished CPA and CFP with a vast array of expertise in the Accounting industry. Prior to joining Capstone, Ruth was the lead external independent auditor for numerous Capstone entities and supervised the staff of auditors.

Outside of the office, Ruth is a dedicated wife and mother, as well as an avid animal lover. You’ll find her volunteering her time at Rescue Ridge (an animal rescue located in Spring Lake, NJ) and periodically fostering all types of animals.

We are very proud to have her on our team!

Construction Industry Overview for 2023: Navigating the Challenges and Uncertainty

23:34 28 March in Blog, Broker Resources

The U.S. engineering and construction (E&C) industry had strong results in 2021, with construction spending growing by 8%. Robust construction spending carried over into 2022 and was bolstered by passage of the Infrastructure Investment and Jobs Act and the CHIPS and Science Act (CSA) of 2022. The CSA provides $52.7 billion in funding for American semiconductor research, development, and manufacturing and is expected to propel construction in 2023 and a number of years in the future.

With this strong tailwind, the overall outlook for 2023 is favorable, but the underlying picture varies across different industry segments. Commercial construction, particularly projects funded by government spending, is projected to be strong; however, the picture for the residential segment is not as bright due to weaker consumer demand.

While some segments may outperform others, continuing challenges from inflation, supply chain issues, shortage of skilled labor, increased interest rates, and the uncertainty of bank failures will undoubtedly impact projects financed by the private sector.

Under these circumstances, those in the E&C industry could experience project completion delays, increased construction costs, reduced profit margins, extended invoice payment terms, and difficulty in obtaining capital to fund projects.

Against the backdrop of the outlook for 2023, there are five key trends in the industry to watch.

Market Developments

The market uncertainty facing the E&C industry, from inflation, high-interest rates, rising costs, supply-chain problems, material and skilled labor shortages, and possible capital constraints, could result in a different outcome for 2023. Companies are carefully monitoring their backlogs, particularly for the second half of the year. Many companies have large backlogs, including energy-related projects and data centers, but in the second half of 2023, they may see the potential impact of an economic slowdown on project completion along with the delay of plans for new projects.

Supply-Chain Issues

Supply-chain problems that have increased lead times and led to volatile material costs are likely to continue. These disruptions are expected to drive the E&C industry to adopt changes to business models that will incorporate new developments, including:

Technology: New technology to maximize inventory strategies for managing supply disruptions and increasing material costs. Advanced construction technology in 3D, virtual modeling, and robotics to develop solutions for labor shortages and control carbon emissions.

Ecosystem environment: Utilization of an ecosystem approach in order to improve the ability to respond to disruptions and enable compatibility throughout the supply chain. An ecosystem with 4.0 providers (Intel Corporation, GE, Siemens, IBM, etc.) and material suppliers uses data-sharing platforms to exchange real-time information with material suppliers to manage disruptions or supply shortages. There will be a need for digitalization, automation, data management, and IT solutions.

Supply chain management: Increased focus on reducing the length of the supply chain. Building more local capacity, getting closer to customers, and reducing dependence on foreign suppliers to reduce the risk and severity of supply-chain disruptions. Geopolitical uncertainty, the pandemic, labor shortages, and rapidly changing dynamics in energy markets have increased the cost and uncertainty of sourcing in Asia. Supply-chain disruptions can result in lost revenues and cash flow.

New Labor Strategies

Labor strategies will remain a priority in the E&C industry. Labor shortages due to an aging population, competition for workers from other industries, and declining interest in the type of work the industry offers are expected to continue. Retaining skilled labor and attracting new talent will be important goals.

Businesses will need to become purpose-driven organizations and offer a personalized career path. Adopting new construction technology could help to attract employees with new skills and retain workers with the opportunity to work with advanced technology and innovations.

Integration of New Technologies

E&C companies are leveraging emerging technology to increase business opportunities, reduce costs, improve project execution, and increase profits. Companies are investing in digital and physical technologies such as visual intelligence, sensors and Internet of Things (IoT) devices, robotics, immersive collaboration, and drones to also increase efficiency. New technology tools are essential to successfully address the challenges presented by supply-chain disruptions, skilled worker shortages, and volatile material prices.

ESG and Sustainability

Trends indicate that customers may be becoming more conscious of sustainability and exerting pressure on developers to reduce the carbon footprint of new projects. The increasing focus on environmental responsibility could motivate E&C companies to factor sustainability into their projects, construction processes, and designs. According to a survey by Associated General Contractors of America in June 2022, 78% of respondents reported having policies to promote recycling, 48% for materials reuse, and 26% for environmentally friendly or sustainable purchasing.

Knowing the business environment and challenges facing companies for 2023, along with the trends that are setting the course for the E&C industry’s future, may prove essential for success. Preparedness is the key to navigating challenges and uncertainty.

Preparation to Navigate the Challenges and Uncertainty

While the long-term financial impacts stemming from the crisis in the banking sector and a prolonged economic downturn through 2023 are still largely unknown, many engineering and construction businesses will undoubtedly be faced with steeper than normal challenges securing funding. There will continue to be a void of capital available for small to medium-sized E&C companies. Many general contractors or project owners will also extend contractor payments well beyond the typical 45 to 90 days, further compounding the cash flow crunch. It makes it even more crucial that construction contractors prepare ahead to navigate the challenges and uncertainty over the next year.

The following are some suggestions to help prepare for the year ahead:

Reduce costs and increase operating efficiency to protect profit margins.
Decrease financial leverage and increase investment capital and working capital resources.
Take steps to increase and accelerate cash flow.
Consider alternative business funding sources, including invoice factoring and P.O. financing, to increase working capital and accelerate cash flow.
Retain employees by offering a flexible and agile workforce structure.
Increase the use of digital technology to improve efficiency and minimize the impact of supply-chain disruptions, skilled labor shortages, and volatile material prices.
Take advantage of new projects arising from the Infrastructure Investment and Jobs Act, and the CSA that could provide additional opportunities in the infrastructure segment.

By implementing a few of the above strategies, companies in the E&C industry can position themselves for sustainability and growth. With challenges from inflation, supply chain issues, a shortage of skilled labor, increased interest rates, and the uncertainty of the impact of bank failures, working capital availability will be critical for small and medium-sized businesses.

If you are a contractor in need of additional working capital or looking to grow your business, you should apply now with Capstone. Business owners will avail themselves to more funding options when they are not operating in crisis mode and when the financial health of their business is at its strongest.

How New State Disclosure Regulations Negatively Affect Funding Options for Your Clients

12:38 14 March in Blog

The New Year ushered in the implementation of newly inked commercial finance disclosure regulations (“CFDR”) in New York, Utah, and California. At least nine states across the country have, or are considering, consumer-style disclosure requirements in the form of disclosure bills, disclosure laws, and disclosure regulations. The New York State Department of Financial Services announced disclosure regulations for NY’s Commercial Finance Disclosure Law effective August 1, 2023, while compliance with California’s and Utah’s CFDR became effective January 1, 2023.

CFDR legislation has far-reaching implications for lenders, commercial finance companies, financial brokers/ISOs, and small businesses. It encompasses the full range of commercial financial products, including closed-end transactions, open-end credit plans, invoice factoring and sales-based financing, lease financing, asset-based lending transactions, and MCAs.

Providers of commercial financing will now be subject to new laws and regulations requiring that they provide consumer-style disclosures for transactions, and brokers will be responsible for fulfilling certain steps in the disclosure requirements.

Original Intent of Disclosure Regulations

The original intent of the disclosure regulations was to provide Truth in Lending-like disclosures which were designed to protect clients (small businesses), and curb predatory lending practices.

These new disclosure requirements are modeled after the disclosures required for consumer credit transactions in the Truth in Lending Act (“TILA”) despite the significant differences between the terms of consumer and commercial credit transactions. The disclosure regulations overlay consumer-style loan disclosure requirements onto commercial finance transactions which will result in negative consequences for all the parties involved – clients, providers, and brokers.

Negative Impacts on Small Businesses

Legislators, well intentioned as they might be, seem to be interpreting laws without having much knowledge of the industry. Accordingly, there are bound to be significant problems because of this. Legislators may think that TILA concepts are applicable to all financial transactions, but they do not translate exactly in the context of commercial finance transactions like sales-based financing and accounts receivable factoring transactions. These types of transactions do not typically have fixed terms or easily calculable payment amounts and APRs. In some instances, the calculations are impossible and only create confusion for all parties.

Non-bank commercial lenders and financial service companies simply do not have experience complying with consumer-style disclosure regulations. This one-size-fits-all approach to regulating consumer and commercial finance transactions will have a number of negative impacts, including:

CFDRs will freeze many small businesses out of the commercial finance market and limit their financing and business funding options.
Lenders and financial service providers will pull out of some states altogether and will not be able to provide service anymore.
Lenders won’t want to risk being penalized for funding small transactions. In New York for example, the Department of Financial Services can impose a civil penalty of $2,000 per violation of the CFDR and $10,000 per willful violation.
CFDRs will impact underwriting practices and slow the process down.
The regulations add lender/ provider compliance hurdles which increase costs and reduce incentives to provide some financial products and service segments of the market.
Brokers may not be able to find business funding for their clients in certain markets.
Fees charged by brokers may have to be disclosed to the client.
Disclosures would be inaccurate or misleading in some cases and confusing to clients which can lead to loss of business.

Scope of Commercial Finance Disclosure Requirements

The disclosure regulation’s definition of “providers” in commercial financing is overly broad and includes all types of providers of commercial finance and business funding transactions currently available in the market.

In California and New York, there are disclosures for each type of commercial finance product. They are very specific and differ depending on how the transaction is classified. Disclosures must be made at the time of extending a specific commercial financing offer (when an offer is quoted to the recipient and prior to funding), and they must be signed by the client and returned to the broker or provider.

Disclosure requirements are ongoing for every transaction over the client relationship however general exemptions are provided for large-dollar commercial loans or transactions. The exemptions will also differ by state. In New York, for example, the statutory threshold is transactions in amounts up to $2.5MM while in California that amount is $500,000. Thresholds like these leave small businesses to bear the brunt of the regulations.

Brokers are not responsible for the content of disclosures, but they are responsible for relaying the disclosures from the provider to the client, obtaining signatures, delivering signed disclosures back to the provider, and in California, retaining records.

If a broker is involved, a copy of the broker disclosure must be provided with the other disclosures. Providers may need to include warranties in the broker agreement and discontinue relationships with brokers who engage in a pattern of noncompliance with disclosure regulations.

The ink is barely dry on the new disclosure regulations so a lot of interpretation will follow from the outcome of lawsuits that will be filed by members of the industry. Brokers will need to be among the parties that need to know the latest developments.

There has been a lot of pushback from the industry with lenders even filing suits contesting California’s regulations. Commercial finance companies find it extremely difficult to have multiple financial products under one umbrella and utilize a uniform financial disclosure. It’s overly ambitious by lawmakers to try and loop all these financial products into one.

For example, invoice factoring is not a loan but yet falls under the same umbrella of a finance transaction according to the CFDR. Invoice factoring represents a true sale of an asset so therefor there is no meaningful APR to be calculated and there is no defined transaction term. A factoring fee is charged which is not the same as a typical finance charge in a loan type transaction. Payment on the accounts receivable is made by the client’s customer (account debtor) and not by the client. Factoring is a completely different financial product with many variables.

There are many important unresolved issues, including definitions, calculations, and thresholds. Required calculations are mathematically impossible to provide in certain instances, or too costly to generate.

Required Disclosures for Invoice Factoring Transactions

CFDRs generally require disclosures for the following:

Funding provided – The amount financed: This is how much the provider will disburse when the client factors an invoice with the provider.
Annual Percentage Rate – Calculation of APR: This is the estimated cost of the client’s business funding expressed as a yearly rate. APR seeks to include the amount and timing of the funding the client receives, the fees the client pays, and payments made to the provider.
Finance charge – Total finance charge: The calculation of the finance charge, with the amount and description of each expense (e.g., factoring fee, origination fee, etc.) that is included in the finance charge.
Payments – Amount, frequency, and method of payment.
Estimated term – Term of transaction: A short explanation describing how the provider calculated the term.
Prepayment terms – Description of prepayment policies and how the prepayment amount is calculated.

There are also general disclosure requirements, including formatting, font size, columns, rows, and mandatory language.

Disclosures must be included when the provider communicates a specific offer directly to a client or to a broker with the expectation that the broker will share the offer with the client.

These regulations also include provisions for fines, penalties, and cease and desist orders. Willful violations may actually be considered a crime. Each state with disclosure regulations has not released an actual template for the disclosure, which is telling, and it has also been extremely difficult for commercial finance companies to obtain guidance.

Brokers/ISOs Need to Work with Knowledgeable Financial Service Providers

Because the disclosure regulations are so new, much interpretation will come later, which is not a comfort to providers or brokers who need to start complying now. Brokers/ISOs need to stay up to date on CFDRs to be in compliance, and be able to explain required documents and language to clients. Working with a knowledgeable financial service provider can help you understand the requirements of the new disclosure regulations so you may continue to grow your book of business.

Please contact Capstone today at (212) 755-3636 to see how we can help you to better serve your clients and navigate the newest requirements in commercial finance disclosure regulations.

Growth Strategies for Minority Entrepreneurs

12:03 22 February in Blog

Minority-owned business enterprises (MBEs), have played an important role in the growth of the U.S. economy. Over the last 10 years, small businesses owned by minorities, women, and veterans accounted for more than 50% of the two million new businesses started in the United States and created 4.7 million jobs. There are now more than four million MBEs in the U.S. with annual sales of approximately $700 billion.

Despite the rapid growth, these business owners continue to face disparity when it comes to access to capital, contracting opportunities, and other business opportunities for MBEs. Minorities make up 32% of the U.S. population, but MBE ownership constitutes only 18% of the population. In addition, even though MBEs have grown 35%, the average gross receipts for those companies dropped by 16%.

Sadly, many of these entrepreneurs are left wondering how to fund operations and facilitate business growth which often times leads to business stumbles or failures without sufficient planning.

Challenges and Obstacles Facing MBEs

If you are a minority small business owner, you probably have encountered the same challenges and obstacles that many MBEs face as they try to either start or grow their business.

The lack of access to sufficient financing options is a major challenge which can stunt the growth of your business. This can be due to a few reasons including:

Lower net worth
Little to no collateral and weaker credit history
Limited time in business or lack of business experience
Limitations with quality standards
Business located in an area underserved by big banks
Other tangible and intangible barriers

MBEs that are starved for working capital don’t have the funds they need to invest in their businesses and to compete successfully. Capital constraints also limit the ability of MBEs to compete in an environment where average contract/project sizes are increasing rapidly with inflation.

These challenges and obstacles make MBEs more vulnerable to business slowdowns, economic downturns, tight money, inflation, labor shortages, supply-chain problems, seasonality issues, and other operational difficulties.

What Businesses Are Classified as MBEs?

Businesses that have the following characteristics are classified as MBEs.

A minimum of 51% of the voting stock of the business is owned or controlled by one or more minority group members.
A minority individual or group must control the policy-making process, and direct the daily operations of the MBE.
The minority individual or group owner is a U.S. citizen of Black, Hispanic, Native American, Asian-Pacific American or Asian-Indian American heritage.

Minority owned businesses may have a layer or vulnerability not deemed present with other companies. In a broader sense, businesses that are classified as diverse are operated by an individual that is considered both socially and economically disadvantaged. They include women-owned businesses, veteran-owned businesses, minority-owned businesses, and LGBTQ-owned businesses. These businesses and other disadvantaged business enterprises are also collectively referred to as MWDBEs.

Minority-Owned Business Certification

MBE certification is a key credential that all minority-owned businesses should have and is used exclusively by local and federal governments. The criteria for eligibility includes the MBE characteristics identified above in addition to other certain requirements depending upon the state they are located in.

Some of the potential benefits to MBE certification include:

Certification acts as a marketing tool to increase business visibility and present a favorable public image for customers.
Provides strategic access to new markets and government programs as well as access to diversity bidding opportunities, grants, and specific loans.
Can help the business compete for larger contracts in both public and private sectors – corporations and federal and state agencies all want to do business with MBEs. Often times the ability to procure or bid on certain job opportunities is set aside specifically for certified MBEs.
Better chance of landing a government contract that can be worth thousands, hundreds of thousands or even millions of dollars. The government has goals related to MBE participation and a certain % of contract dollars needs to be awarded to them. MBEs also help larger business enterprises secure large government contracts because of this as well.
Access to leads and client databases, networking events, seminars, webinars, and business fairs.
Training and education workshops and mentorships.

The National Minority Supplier Development Council (NMSDC) can assist with the certification process and is the largest certification organization for MBEs. The NMSDC has a network of 12,000 certified MBEs that can be connected to more than 1,400 large corporate members. NMSDC certification is widely recognized in government circles, with many states and cities using NMSDC certification to help with public-sector contract selection.

The SBA also offers a diversity ownership certification known as an 8(a) certification. Businesses with 8(a) certification are eligible to win federal contracts that are reserved for “small disadvantaged businesses.”

Planning for Growth

Overcoming the challenges and obstacles as a small business owner requires planning and strategizing to grow and develop your business. Here are a few things you can be doing:

Get your minority-owned business certification – Become a certified MBE and leverage the resources and connections that it opens up for you. This certification is key for many grants and loans, business opportunities both private and public, as well as for other programs.
Seek out business opportunities set aside for MBEs – Seek out opportunities to procure or bid on jobs that have been specifically set aside for MBEs. For example, in New York state and communities, commodity procurements greater than $25,000 and construction contracts more than $100,000 are subject to Article 15-A of the Executive Law, The Minority and Women Owned Business Enterprise Program, which regulates and promotes business opportunities on state contracts for minorities and women.
Diversify your business – Seek to expand and diversify your customer base, products and service offerings to grow and avoid the risk of putting all your eggs in one basket. Your business can be gone in a flash – think back to the pandemic and businesses that were deemed “essential.” Doing this will ensure your business is able to transition and move on in the event of a major business disruption.
Focus on existing customers – Convince your existing customers that you should be their preferred source of goods or services. Inquire with customers and see if there are any other products or services that you can offer to add value. Customer loyalty and consistent branding are valuable tools in retaining your credibility in the industry. Expand your geographical footprint if you are able to.
Join minority-owned small business associations/ organizations for networking and training – Link up with agencies, other businesses, councils and industry associations that offer professional development and networking opportunities.
Apply for business grants – Apply for grants designated for small MBEs. Grant applications can be daunting so take advantage of any assistance available in filling them out. Remember, grants, unlike loans, do not have to be paid back.
Tap into additional programs and resources for MBEs – There are many programs and resources out there to assist MBEs. For example, the Minority Business Development Agency, a part of the U.S. Department of Commerce, was created to provide greater access to capital and resources to MBEs.
Utilize your marketing and advertising outlets – Utilize your website, social media, email outreaches, and other online platforms to draw potential clients and resource providers to your business. If you’re on a limited budget, get creative and find new ways to help get your name out there and attract new customers. Celebrate your status as a certified MBE and what makes your business unique. Black History Month 2023 is a great backdrop for Black MBE owners to showcase their businesses.
Develop a financing network – Seek out and develop these relationships to draw on for resources, advice and business funding that includes lenders and alternative funding sources. Planning ahead will put you at an advantage over less prepared businesses.

Join Capstone’s Diverse Funding Program

Back in 2012, Capstone created its Diverse Funding Program which is designed to give minority, women, veteran owned, and other disadvantaged business entities the financing tools they need for growth and to be successful.

Capstone understands the unique challenges faced by these business owners and are able to structure a business funding program specifically tailored to support their working capital needs through Factoring Services, Purchase Order (PO) Financing, as well as Domestic and International Trade Financing. Over the last ten years, Capstone has funded in excess of $100 million to qualified disadvantaged business enterprises.

In addition to providing flexible working capital programs that are often faster and easier to obtain than loans Capstone provides their clients with access to financial and professional development support, including:

One-on-one business consulting and mentoring
Customized training, leadership, and executive development
Procurement guidance
Relationship building between MBE clients and larger corporations as well as access to government and municipal markets.
Non-legal contract review
Budgeting and forecasting development & support, and more

If you are part of one of these groups, we encourage you to contact Capstone to discuss your specific financial needs and learn more about our program.

Broker Resources: Getting the Most for Your Minority-Owned Business Clients

09:27 14 February in Blog, Broker Resources

If you have a client that is a minority-owned small business, you may have learned the hard way that equal opportunity may not always apply to ease of access for business funding options. Minority-owned small businesses, also known as Minority Business Enterprises (MBEs), grew by 79% between 2007 and 2017, to approximately 11.1 million businesses, about 10 times faster than the overall growth rate for U.S. small businesses during the same time period.

Despite the rapid growth and significance of MBEs in the U.S. economy, these business owners continue to have more difficulty accessing traditional financing, capital, and other resources for their small businesses. MBEs are much less likely to be approved for small business loans than businesses that are not minority-owned, and if they are approved for financing, MBEs are more likely to receive lower amounts and higher interest rates. This can be due to a few reasons, including lower net worth, lack of assets, a business located in an underserved area, weaker credit history, and other tangible or intangible barriers.

In this article, we’ll cover a few organizations and resources that can help your MBE clients obtain the assistance they need to grow and prosper and discuss why alternative business funding may be the right solution to their working capital needs.

Resources and Funding Alternatives

Some resources and funding alternatives available to MBEs come from a variety of sources in a number of forms, including:

Federal Resources

Minority Business Development Agency (MBDA) – This agency was created to encourage the creation and growth of MBEs.

The Small Business Administration (SBA) – The SBA is an agency of the Federal Government and one of the largest loan guarantors in the U.S. They offer several programs aimed at helping small businesses, including the SBA 8(a) Business Development Program and SBA 7(A) loans. SBA 7 (a) loans are the most common type of SBA loan. They are low-cost loans of $5 million that can be used for working capital, equipment purchases, etc.

Another SBA loan program is the Community Advantage (CA). Community Advance is a pilot loan program that is designed to meet the needs of businesses in underserved communities that may not meet the requirements for a traditional loan. Loans range up to $250,000 from lenders such as community organizations, certified development companies, microloan program intermediaries, as well as nonprofits. The SBA guarantees loans up to 85% of the amount.

Grants and other Federal Assistance – There are many government grant programs available for MBEs to take advantage of. They include:

Local Government Centers

Many states and cities have business programs and centers with minority-oriented financial education and networking programs.

Minority-Owned Small Business Associations and Organization

Asian Business Association (ABA) – organization representing divergent groups of Asian American business owners that offers business training and education to its members.

Black Business Association (BBA) – advocacy organization that offers networking and procurement resources to Black-owned businesses.

National Hispanic Business Group (NHBG) – association that provides networking and business opportunities to its Hispanic members.

Private sources such as ACCION, a microfinance organization that supports Hispanic and other MBEs through micro-loans of up to $50,000.

Alternative Financial Resources for Long-term Success

Commercial loans and revolving lines of credit from banks or other traditional lenders may not be an option for MBEs because they lack the assets required for collateral, have limited or poor credit history, and often may be located in underserved communities.

Therefore some MBEs may seek out financing through friends and family. They may even feel pressured to reach out to private investors and offer a piece of equity in their business or seek business funding through hard money lenders, credit card advances, and merchant cash advances (MCAs). These options may be available to the business owner but, in the long-run, could potentially damage the business financially as they typically come with high-interest rates and create a never-ending cycle of debt.

There are other options that MBE business owners can consider including invoice factoring and purchase order (PO) financing. Both have the potential to provide working capital on relatively short notice. The conversion of accounts receivable into immediate cash flow through invoice factoring makes sense for MBEs from a practical point of view. Here are some reasons why:

No new debt on their balance sheet
No need to give up equity in the business
Personal liability is limited
The MBE business owner retains control and flexibility – can factor all their invoices or only specific ones
The fastest method of obtaining working capital for immediate business needs
Approval is based primarily on the financial strength of the MBE’s customers, not the credit profile of the client

While traditional financial institutions prefer to lend to businesses with only positive financial performance, stable cash flows, and predictable revenues, invoice factoring companies, such as Capstone, can often work beyond these issues and provide funding based on the quality and strength of a business owner’s accounts receivable. The approval process is simpler and faster than the underwriting process at a bank or traditional lender.

Financial brokers/ISOs can help their MBE clients to grow and prosper by making them aware of the other resources and funding alternatives available to them including solutions through Capstone. Capstone is a leader in customizing business funding plans for businesses in wide range of industries to help them meet their working capital needs. For more information on how to join Capstone as a broker and referral partner, call us at (212)-755-3636.

How to Generate Business in a Down Economy

11:19 30 January in Blog

Even during an economic downturn, your business can generate revenues and experience growth. While some businesses struggle as the economy drops, those with a plan can thrive and position themselves to capture market share.

When the market fluctuates, your business practices need to adjust with it. Here are a few things you can be doing to prepare and increase your staying power.

Preparing for a Recession

The key to growing your business during periods of economic uncertainty is all about preparedness and cash flow management. If you think an economic downturn or recession is likely in the near future, start to take action to minimize the impact on your business as soon as you can. Preparations that will help your business weather a down economy include:

Accelerate Cash Flow

Use electronic invoicing to speed up the cash conversion cycle if you have not already done so. Provide more ways for customers to pay on time with credit cards, electronic funds transfers (EFTs), and fintech payment processors like PayPal and Google Pay, in addition to payment by check. Offer customers cash discounts for early payment. Review payment terms and eliminate extended terms if possible. Negotiate payment plans with past-due accounts.

Review Inventory Practices

Too much inventory in a business downturn ties up cash that will be needed to fund operations.

Bring days of inventory on hand in line with estimated sales requirements. Shorten your supply chains to reduce inventory levels. Reduce order quantities, and liquidate slow-moving and obsolete inventory for cash.

Manage Accounts Payable to Conserve Cash

Ask suppliers/ vendors for better payment terms. Discontinue paying early to earn cash discounts. Don’t pay your accounts payable any earlier than necessary. If necessary, stretch payments so long as it doesn’t negatively impact your relationship, trigger a credit hold, or affect your credit rating.

Reduce Expenses

Cut general and administrative expenses, but avoid making reductions to sales, marketing, and product program expenses. These programs are the link to your customers as well as the marketplace and your source of future growth. By resisting the urge to make cuts in these areas, your business will be positioned to capitalize on the economic downturn and potentially scoop up market share left by competitors. Focus on core competencies and what is a necessity, not on what is nice to have. Protect key programs that are vital to your future and remember – cut fat, not bone.

Maintain Quality Standards

It is important you also maintain the quality of your products and services. Your customers expect the same level of quality regardless of your financial circumstances. This will help you to not lose your customer base because you went with cheaper suppliers. Maintaining sales volume is critical to cash flow and working capital management.

Protect Personal and Business Credit Ratings

Your personal and business credit ratings are very important for obtaining additional working capital facilities. If you and your business have good credit ratings, protect and maintain them. If your credit ratings are weak, review what can be done to improve them.

Work with an Invoice Factoring Company

You can also use an invoice factoring company to accelerate your cash flow. Invoice factoring involves the conversion of your accounts receivable into immediate cash instead of waiting 60 days or more to be paid. Adequate cash flow will allow you to maintain operations and provide business funding for programs to gain news customers or enter new markets.

Increase Working Capital Facilities

Sufficient access to working capital and the right type of facility are critical. Take steps as soon as possible to obtain the working capital your business will need. Increase current limits on banking and other revolving lines of credit.

Expand your working capital facilities with an accounts receivable factoring program and purchase order (PO) financing facility. PO financing can be used to purchase inventory and supplies for new orders. These programs are easier to obtain than a bank loan and they don’t reduce credit availability under existing credit facilities. Approval is based primarily on the creditworthiness of your customers, not the financial strength of your business. It will be more difficult to increase working capital facilities during a recessionary period, so it is better to act before a business slowdown accelerates.

Generating New Business in a Down Economy

Reducing expenses, accelerating cash flow, and increasing working capital are critical to weathering a business slowdown, but you also have to find ways to generate business to offset decreases in revenues. Here are some ideas for generating business in a down economy:

Existing Customers

Don’t forget about your current customers. Protect the business you have, and try to increase your share of customer business. Convince your customers that you should be their preferred source of goods or services. Keep in mind that if your business growth has stalled, your customer behavior may have changed so you will need to adapt with it. Inquire with customers and see if there are any other products or services that you can offer to add value. Customer loyalty and consistent branding are valuable tools in retaining your credibility in the industry.

New Markets

Strategize how you can expand your customer base and even pick up business from competitors. Your competitors may lack sufficient planning and be struggling during tough economic times. If they have cut quality or reduced product/ service offerings this will become an opportunity for you to pick up market share.

If there is an international market for your business, review opportunities that would be a good fit. The growth of integrated logistics providers and assistance available from government agencies make it easier for small companies to tap into international markets. The defense industry and federal, state, and local governments use a vast array of products and services, and volume is often not impacted by the general economy. See what you need to do to become an approved supplier to these markets.

If you only do business in your local area or region, contact sales reps, state and local government agencies, and industry associations to see what would be necessary to expand your geographic footprint.

New Channels of Distribution

E-commerce has become a major B2B channel for manufacturers, wholesalers, and service providers to reach customers directly. If you have a limited web presence, consider developing an integrated internet strategy, including social media, to pull customers to your website, place orders directly, and communicate with your company.

Ease of Doing Business

Make it easier to do business with your company. Review your business terms and practices to see if there are things that can be changed to make it easier for existing and prospective customers to do business with your company. Consider reducing order minimums, improving freight terms, expanding office hours, improving communication channels, and upgrading your company website.

Marketing and Advertising

Typically one of the first things cut when money is tight is the marketing and advertising budget. Resist the urge to do this. If you’re on a limited budget, get creative and find new ways to reach new customers. Social media postings, email outreaches, your company’s website, and improving SEO are all cost effective ways that can all be utilized to help get your name out there and attract new customers. Keeping these channels open will allow you to be better positioned to scoop up market share that competitors may have left.

Bargain Shopping and Negotiations

Many vendors may be offering price concessions or willing to negotiate better rates/ terms while demand is low. Bargain shop and take advantage of reduced costs. This includes discounted rates for products and service offerings, commercial rents, deals on fixed assets and equipment, as well as hiring more qualified personnel that may have previously been out of your reach. Take the opportunity to upgrade and make improvements where possible as this can position you better in the long run.

When a business downturn is on the horizon, prepare early to protect cash flow and working capital. Reduce expenses and manage the components of working capital to minimize the possible effects on your business. Work with an invoice factoring company to accelerate cash flow and expand working capital facilities to weather the slowdown.

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Successful companies evolve when market fluctuations occur. As a business owner, you can thrive during an economic downturn and take advantage of opportunities by preparing ahead and implementing the above strategies. You will also avail yourself of more options when you are not operating in crisis mode and when the financial health of your business is at its strongest.

No matter an economic slowdown or a full-fledged recession, Capstone is here to help you stay focused on what you do best – running your business. We have the experience and resources to custom-tailor invoice factoring and P.O. financing programs for you.

Download: Infrastructure Investment & Jobs Act – Contract Opportunities and Funding Analysis

Capstone wants your business to take full advantage of the opportunities (or use projects) available through the Infrastructure Investment & Jobs Act recently signed into law.