Understanding Cash Against Documents (CAD)

Doing business internationally is risky. Suppliers and buyers alike face risks; for the buyer, it means putting up money without a guarantee of delivery and for sellers, shipping products without cash upfront could mean they lose product to non-payment. Cash against documents (CAD) is used to ensure an importer pays for goods before they are in receipt of those goods.

Minimizing Importing/Exporting Risks

The best explanation of how an import/export transaction works is to think about the process you go through when purchasing a home. There is an escrow agent that holds funds until the transaction is complete. Once the seller has signed the appropriate documents, and the buyer has signed the mortgage notes, then the escrow agent releases the funds for the transaction. This is similar to how an international transaction would work.

The seller of products maintains the ownership rights to the items they are selling until such time as the buyer makes payment. Prior to that, an intermediary, which is generally a bank, holds the documents that include import papers, invoices, and bills of lading. The intermediary also holds the funds for the transaction. Once the buyer has accepted delivery of the product, the funds are released to the seller.

Your  Partner for Import Financing

Capstone has extensive experience dealing with international transactions. We understand sometimes the best, cost-effective materials must be purchased overseas. We also understand, in many cases, you are buying large quantities of materials which can involve a significant investment. We can help you with a broad range of import financing solutions and assistance including:

• Setting up the required import services
• Assistance with air and sea shipping
• Making inland freight arrangements,
• preparation of shipping documents
• Preparation of export licenses
• Establishment of letters of credit

We provide these services to businesses in a range of fields. Small and medium-sized business owners often do not have the resources necessary to have an internal department to handle these challenging transactions; Capstone can help.

How Letters of Credit Work

A letter of credit has specific elements. The issuer of the letter of credit, acting for the buyer, agrees to pay the seller a specific amount of money under specific conditions. Before these funds are released, however, the seller must present the appropriate documents providing that the number of goods has shipped, the quality of the goods has been verified and the goods have shipped on time. There are time limits for meeting this obligation. Once the documents have been verified, assuming they conform to the terms and conditions set out in the letter of credit, and the buyer takes possession of the goods, the funds are released to the beneficiary, the seller.

How Does Capstone Help?

Capstone is committed to assisting clients with financing for their business. We understand how difficult international transactions can be and we are committed to ensuring your hard-earned money is protected. We can help provide you various services including helping you secure a letter of credit to ensure your international transactions go smoothly.

Our goal is to make sure you can get the presold goods you need without having to put up the full amount of the purchase up front.

Letters of credit can be used for a single transaction or may be used for ongoing transactions. We understand every business has different needs, and we also understand no two transactions are the same. We will customize a solution that works to meet your individual business needs.

Advantages of CAD Financing

Cash against documents provides a win/win for everyone involved. Most importantly, the buyer typically does not need a bank line of credit. The costs involved in these transactions are usually lower than with other international financing options. We also make sure the process is easy to implement and fast. We understand how important it is for you to have the materials you need for your business and the risks involved in international transactions. Let us help you take advantage of this important tool for your international business needs.

Capstone understands every business owner, business, and the transaction is unique. This is one of the reasons we work tirelessly to find a solution that works for your business. Whether you need a one-time customized solution for a big shipment, or your business will be accepting international deliveries on an ongoing basis, we can help. For more information on how Capstone Capital Group can help you with your international transactions, or to receive a quote, please email us at [email protected] or call us at (212) 755-3636 to speak with one of our skilled representatives today.

Skills Shortage May Require More Training

Unemployment continues its downward trend and there are over 6 million job openings nationwide. While this might seem ideal, hiring has actually slowed. Only 5.05 million hires were reported in April by the JOLT survey. This means that will companies need workers, they aren’t finding the right matches.

While increased jobs are generally a good thing, what can companies looking to hire do when those looking for work don’t have the right skill set?

Skill shortages are nothing new, and if companies manage to bring more manufacturing jobs back to the U.S., there will be even more skill shortages. Thankfully, the picture isn’t completely bleak. By investing in one’s current workforce and training new hires, companies can ensure they will have a pool of skilled labor when needed.

Reassess Job Roles

There are still many Americans who are underemployed. Ensure your company is utilizing the individuals you already employ in the best manner. You may find that some of your employees have additional training that can help them transition into another role and fill a gap that you hadn’t been able to hire for.

Train Your Current Staff

Similarly, some employees may be willing to attain further training if it is subsidized or offered. Employees will feel like the company cares about their development and the company will effectively increase its employees’ skill sets.This may also assist with retaining employees as employees who feel they have growth opportunities and that their company cares about them are more likely to stay with the same company.

Train New Hires

If you can’t find individuals with all the skills you are looking for, determine which skills are the most essential and which you may be able to provide training for. As you hire, keep this baseline in mind and implement a program to get your new hires up to speed.

Connect with Schools

High schools, community colleges, universities, and vocational programs across the nation partner with employers to help ensure their graduates are able to find employment once they graduate. Connecting with local schools and discussing what your needs are may help increase your pool of applicants.

Training isn’t an inexpensive endeavor. It is, however, a worthwhile investment in the future of your company and industry. In addition, it can help promote retention with your employees and ensure that work is being completed to your specifications.

If you’re interested in training your employees, you may find that you need additional cash flow to cover payroll for the training hours or other operating expenses as some of your staff focus on learning new skills. If you’re in the manufacturing or construction sectors, consider purchase order financing or factoring to increase your cash flow. It can be difficult and frustrating to apply for a bank loan even when the benefits of increased capital are clear. Rather than relying on the traditional banking system, speak with a business funding group that offers PO financing and invoice factoring to see how you can increase your cash flow to grow your business.

Business funding groups like Capstone Capital Group, LLC work with companies in particular industries to provide needed cash flow in a timely manner. If you work on an invoicing system, you may be eligible for a factoring program. To find out more, visit the Capstone Capital Group, LLC website or contact us today.

“Stimulative Monetary Policy” is Ending: What Does That Mean For Small Business?

Janet Yellen is the Chair of the Board of Governors of the Federal Reserve. You may have seen her in the financial news over the past few months as she introduced recent Fed rate hikes. She is expected to make an appearance again in June 2017 for another rate hike, the fourth since the Great Recession and the second this year. These hikes are a clear indicator that the “Era of Stimulative Monetary Policy” is ending and that the Fed believes the economy is in a good position.

What does this mean?

And, perhaps more importantly, what does it mean for small businesses in need of financing?

The stimulative monetary policy adopted by the Fed in mid-2006 was aimed at buttressing the economy. The goal was to create an environment that encouraged lending, though small businesses did not see much help by way of bank loans. Even SBA-supported loans dropped precipitously.

At a speech at the University of Michigan in April, Chairwoman Yellen remarked, “Where before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now [we’re] allowing the economy to kind of coast and remain on an even keel. To give it some gas, but not so much that we’re pressing down hard on the accelerator.”

The previously mentioned fed rate hikes are those small bursts of gas Chairwoman Yellen refers to. The Fed is poised to tap the pedal two more times this year. While some think it will spur bank lending, others aren’t so sure.

While bank lending has remained low despite a change in economic climate, there’s no clear indication how banks will react to a higher fed rate—at least in regards to lending to small businesses. There is a chance that, because banks will be able to see a larger profit off their loans, they may increase their small business lending activities. However, the loosening of financial regulations may not make that the most attractive market for large banks who have plenty of other options.

Where does that leave small and medium business owners?

Business owners should be aware of all the financing options available to them. While bank loans may seem the traditional route, they aren’t the most effective way to quickly attain necessary capital. Rather than running through the obstacle course of the loan application process, business owners may be better served investigating private business funding companies like Capstone Capital Group, LLC.

Capstone Capital Group, LLC is a financing company that provides factoring and purchase order financing services to help small business. Often times, growing businesses that are trying to establish themselves find it difficult to wait for payment on large jobs as that payment is frequently required to pay employees or pay for goods. Factoring and PO financing can ease this burden by providing eligible businesses with quick capital. It’s faster than a bank loan and easier to attain.

The best way to determine whether factoring or purchase order financing are suitable for your business is to speak to a representative. If you’d like to learn more about these financial services, you can also visit our website.

Whichever path large banks choose—whether they start lending more, less, or remain in their slump—you have other financing options available to you. Take the time to learn about factoring and purchase order financing so you have these tools in your toolbox when necessary. Give us a call today for more information.

Small Businesses Feel Uncertain About the Future

The National Federation of Independent Business (NFIB) is an advocacy group for small businesses that consistently surveys its members to get a reading on the current business climate from small businesses. Currently, around 325,000 small business owners are members of the organization. While the group is clearly political in nature, its surveys can help provide some insight into the state of small businesses.

The Uncertainty Index

One of the surveys the group does is called the Uncertainty Index. The goal of the Uncertainty Index is to determine how business owners feel about the future. According to the group’s 2016 Small Business Problems and Priorities survey, two of the biggest concerns for small business owners are uncertainty about the economy and government actions.

NFIB defines uncertainty as “the inability to anticipate the outcomes of important future events which are critical to planning and forecasting for the firm.”

Shortly before the election, the uncertainty index rose to a 42 year high as business owners were clearly unsure of the path the nation was about to embark on and what it could mean for the economy. In March, the Uncertainty Index remained high at 93, its 2nd highest level since it was first measured.

To measure uncertainty, the NFIB calculates how many business owners answer “I don’t know” or that they are uncertain to six questions from the monthly Small Business Economic Trends Survey. These six questions focus on business expansion, thoughts about business conditions in the future, sales expectations, employment planning, the ability to procure financing in the future, and whether they may make capital expenditures in the following three months.

Beat Uncertaining with Planning

While some aspects of uncertainty cannot be tackled—business owners will always be faced with some form of ambiguity—planning can help small business owners better prepare for any issues that may arise.

One way to help business owners tackle uncertainty they have about the future is through investigating funding options. Question five specifically states, “Do you expect to find it easier or harder to obtain your required financing during the next three months?” Too many business owners may interpret this question as dealing with bank financing or credit cards. While it is clear that banks do not make many loans to small businesses and that small business lending has been down, there are other options available.

For companies that invoice for their services after a job is complete, factoring may be a useful financing method. Construction companies and contractors frequently use factoring to help ensure they have the capital to cover supplier costs and payroll. There are multiple different types of factoring. To learn more, visit our website or contact one of our skilled representatives.

Manufacturers and subcontractors may be eligible for purchase order financing, which is used to finance the purchase or manufacture of goods that have been presold. By focusing on the creditworthiness of the buyer, a financing company can help newer businesses establish themselves as they take on more clients and provide the necessary capital to ensure the product is delivered as specified.

The future of small businesses doesn’t need to rely on the banking climate. While there will always be a measure of uncertainty (it’s just a part of doing business, after all), being aware of one’s financing options can help alleviate the stress that comes with not being able to know the future.

If you’re interested in learning more about factoring or purchase order financing, reach out to one of our skilled representatives today.

Bringing Manufacturing Jobs Back Requires Investment

Buying American made goods is becoming popular again across the country, however, finding them isn’t always easy. For manufacturers intent on capitalizing on the rising trend and filling the need, reshoring is often necessary. But reshoring isn’t easy—or cheap. Thankfully, private financing companies are helping fill the funding gaps.

The Hidden Costs of American Manufacturing

For companies interested in relocating more of their manufacturing activities to the U.S., whether to capitalize on the Made in the USA trend or to reduce production and shipping times, there are some issues that must be planned for adequately. In addition to the financial costs of moving or purchasing equipment, leasing new space, and hiring staff, it can also take a while to find adequately trained employees, increasing the length of time it will take to get a plant up and running.

To date, those companies that have been able to reshore more easily are those who have an established network of U.S. suppliers and have found that their production activities have been simplified thanks to the move. Companies that require skill sets that have experienced a talent shortage in the U.S. will either need to first locate schools that continue to train in those skill sets or a pool of individuals with interest in being trained in those skill sets. The textile industry and other industries that offshored their activities decades ago are hardest hit by this talent shortage.

With the added expense of either comprehensive talent searches or additional training, many companies are still looking at reshoring. Ensuring there is enough cash flow to find the right staff with the right skill set or to purchase the appropriate equipment can be difficult, however.

Smaller Firms Hardest Hit by Move

According to a 2016 survey by AlixPartners LLP, almost 70% of European and U.S. manufacturers and distributors are considering relocating their production operations closer to home. Even those companies that have limited funds for moving (primarily, smaller firms) are interested in reshoring. For these smaller firms, however, it is imperative that the move be successful and that all possibilities are planned for and properly executed upon. Their smaller budgets require strict budgeting and thorough researching of the talent pool. These firms can be helped by discussing their needs with a private business funding company.

Financing Manufacturing Activities

While bank lending activity remains low in spite of a healthy economy, other financing options prove promising for manufacturers in need of cash flow. Purchase order financing and factoring continue to provide manufacturers with the capital they need to sustain and grow their businesses. Partnering with a reputable private financing company such as Capstone Capital Group gives manufacturers the ability to actively craft their futures and plan for better, more efficient production methods.

If you’re thinking of reshoring and are interested in how PO financing or factoring work, consulting with a trained specialist at Capstone Capital Group should be your next step. Give us a call or visit or website to learn more.

Will Project Scalpel Affect Small Business Lending?

“Project Scalpel” shows that banks are still focused on cutting costs. As a business measure, this seems reasonable and plenty of business owners can probably relate to the desire to cut overhead and to trim costs wherever possible. But what could this mean for businesses wanting to borrow money? Will big banks’ desire to reduce costs lead to tighter lending requirements?

What is Project Scalpel?

At its most basic, the so-called Project Scalpel is about sharing information to help remove redundancy and allow banks to save money since they won’t have to each reinvent the wheel and maintain duplicate systems. Essentially, large banks such as Bank of America and Goldman Sachs are looking to collaborate to cut back on back-office expenses. Now, these cost-savings measures are focused on stock processing and bond transactions, but it isn’t a stretch to imagine how banks may turn a lean fiscal eye to lending.

After the recession, most large banks cut back on lending to small businesses. While it was already difficult to secure funding in this manner, business owners saw this funding source dry up before their eyes. While the economy has bounced back by most measures, lending to small businesses has only improved marginally. Many small businesses have been left in the lurch and unless the banks see an increase in revenue to justify their small business lending practices, they may not have any justification for increasing their lending at a faster clip. After all, for big banks, small business lending is a risky activity that comes with little advantage. For business owners hoping to secure funding at a bank, often times, the hoops imposed by the banks are difficult to jump through and frequently not worth the trouble. Add to that the length of time it takes to process these loans, and for many business owners, the bank lending route is not an adequate solution to their financial needs.

Seeking Alternative Funding Sources

If banks do maintain the slow growth they’ve instituted in their small business lending activities or if they cut back, business owners must be ready to investigate other options for funding their business needs. These include using a personal line of credit, borrowing from family and friends, crowdfunding, and, depending on the industry, invoice factoring and purchase order financing, among others.

While investigating these various options, it is important for small business owners to inform themselves about the pros and cons before proceeding. For example, a personal line of credit may not offer enough funding and may have a high-interest rate attached.

Similarly, borrowing money from family and friends can create rifts in those relationships and may not be sufficient to help you meet your obligations.

Working with a business funding company such as Capstone Capital Group, LLC, and Capstone Capital Group, LLC can provide companies in particular industries with funding through invoice factoring or purchase order (PO) financing. Plus, Capstone’s funding is faster—and easier—than applying for a traditional line of credit at a bank. Capstone has had the pleasure of assisting numerous construction companies, distributors, manufacturers, government contractors, importers, and more, providing growth capital for their businesses.

At Capstone, we work quickly to help businesses maintain their momentum, meet their obligations, and grow. Don’t let a lack of capital slow you down. If you’re ready to investigate whether invoice factoring or PO financing may be a good fit for your business, contact Capstone Capital Group, LLC to learn more.

Factoring and PO Purchasing Help Where Banks Don’t

According to a recent study by sociologists and economists at Harvard, Stanford, and the University of California, almost half of all U.S. 30-year-olds make less than their parents did at their age. That’s a disappointing conclusion about income in America—one that has likely had an effect on entrepreneurial activity. Combined with banks’ reticence to lend money to businesses, gathering the necessary capital to create or sustain an enterprise has become increasingly difficult.

Thankfully, bootstrapping and business loans aren’t the only solutions for business owners. Capstone provides financial services to help grow and sustain small businesses. Depending on your business and cash flow needs, there are multiple options that may work for you. If you need assistance determining which may be best for your organization, contact Capstone Capital Group for more information.

Single Invoice Factoring

One way to acquire working capital is through single invoice factoring. With single invoice factoring, also known as spot factoring, a company essentially sells its invoice to a credit group at a slightly discounted cost in order to receive an advance.

For example, if you’re a government contractor who has completed work on an invoice that won’t be paid out until 30 or 90 days after job completion but are in need of working capital to purchase supplies for another job or opportunity, you can sell your invoice to a financier to receive a percentage of the invoice as an advance. The remainder of the invoice, minus a fee, is then paid out once the invoice is paid.

If approved, single invoice factoring results in quicker cash flow than a bank loan and can be easier to apply for. One an application is approved, this credit can be applied towards purchasing supplies, payroll costs, or other business expenses.

Single invoice factoring does not require a multi-year contract or future invoice factoring.

Discount Factoring

For organizations looking for a longer term relationship with a credit group, discount factoring may be more appropriate. Whereas single invoice factoring does not involve a multi-year contract and only deals with one invoice, discount factoring can include a contract and multiple invoices. For companies intent on growth, this may be a better option than single invoice factoring. However, the best way to determine whether this is the case is to speak with a credit group to learn more about their services and requirements.

Purchase Order Financing

When cash is needed so that a company can fill an order or complete a job, purchase order financing from a reputable credit group can fill the gap. With purchase order financing, the financier pays for the necessary goods or for a portion of them. When the end buyer pays for their goods, that payment goes directly to the financier who keeps their fee and then sends the balance to their client.

Purchase order financing is extremely useful for subcontractors such as electricians, roofers, and architects.

As they attempted to quantify the American Dream, the researchers mentioned at the beginning of this article weren’t able to define direct factors for the decline in upward mobility. They did, however, imply that an economic slowdown and a widening income gap could be at fault. Whether this will change anytime soon is uncertain.

For those who have struck out on their own to create businesses, this stagnation doesn’t have to put your business in a holding pattern. While many turn to the banks in hope of SBA loans, it’s important to note that Capstone Capital Group provides the financial services necessary to help small businesses excel and succeed.