Invoice Factoring

Making the Most of Your Finance Network With Invoice Factoring

07:46 24 March in Blog, Business Funding
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Most small and mid-sized business owners know someone who offers financing options. When you are running a business, there are occasional times when keeping up with cash flow needs feels like an impossible hurdle to overcome. Companies understand how long it takes to apply for and gain approval for a traditional bank loan. Since your lines of credit are often needed to ensure you have materials for future orders, what other options do you have to get the cash you need quickly? Factoring is the answer — invoice factoring is one of the easiest and fastest methods of getting a quick infusion of cash into your business.

Tap Your Financing Network

If you are like most business owners, you either know someone who offers short-term financing, or you are working through a broker who handles short-term loans. If you are working with anyone who provides this type of financing, you should ask them about invoice factoring and how you can take advantage of it for your immediate needs.

What Factoring Can Accomplish

When you are facing a cash crunch because orders are fulfilled but unpaid, you may not know how to get the cash you need. Invoice factoring can help you meet your immediate cash needs without entering into debt you will have to repay later.

First, you decide which invoice or invoices you want to factor. Then you or your financial broker have those invoices vetted by a factoring partner and within a few days, you have the cash you need to meet your obligations.

The best thing about finding the right factoring partner is you retain a great deal of control over your accounts receivable. For example, if you decide to work with Capstone, you are not committed to factoring all of your invoices. You determine which invoices you want to use, we vet them, and we send you the agreed-upon amount upon approval. Yes, it is really that easy.

You do not need to continue to attempt to run your business from job to job. Instead, you can take advantage of factoring options and accelerate your cash flow starting today. Please email us at [email protected] or call us at 347-410-9697 and let us help you create a customized plan that enables you to reach your full potential.

 

Stake for Small Business Owners this Election Season

What’s at Stake for Small Business Owners this Election Season

19:40 29 June in Blog
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Stake for Small Business Owners this Election SeasonU.S. presidential elections are a marathon, not a sprint, and this race has been exceptionally grueling—both for the candidates and the public at large. But more concerned than the average U.S. citizen are small business owners, who have responded to the uncertainty by delaying new hires, forgoing new equipment orders, and avoiding all but the most essential investments. We’ll tell you why confidence is slipping and what small businesses can do to buck the trend.

An Unprecedented Election Season?

Every presidential election captures the nation’s attention, but this year’s race seems to have no precedent. Whereas most Americans tune into the race after the primaries are over and the Republicans and Democrats have chosen their respective nominees, both parties saw unconventional candidates challenge the status quo during the primaries and capture the attention—and votes—of millions. Now that the primaries are over and Donald Trump and Hillary Clinton are set to face off in the general election, the future and the direction we’re heading remains as unclear as ever.

Small Business Owners Uncertain

According to a survey conducted by the Wall Street Journal and Vistage Worldwide Inc, one-third of business owners report that uncertainty over the coming election is negatively impacting their business.

Though small business owners are responding in different ways, the overarching theme is this: they have opportunities to grow their businesses, but they’re hesitant to spend the money. It’s not just the election causing concerns—there’s also global concerns, like the recent exit of the U.K. from the European Union, which threw global markets into a brief tailspin and the tenuous state of the Chinese economy. Closer to home, there’s also uncertainty over the timing and impact of future interest rate hikes.

Small-Business Confidence, by the Numbers

Given the picture we’ve just painted, it’s no surprise that small-business confidence fell to its lowest level since November of 2012 this month. Even industries that consider themselves ‘immune’ to political drama, like real estate, construction and development, are seeing activity dwindle. In the end, small businesses off all types face higher cost of capital than their larger counterparts, and that’s why they bear the lion’s share of the burden when uncertainty prevails and consumers reduce spending.

Luckily, there are several tools that small businesses can use to seize opportunities for growth—regardless of the prevailing political and economic climate.

Capstone Helps Small Businesses Boost Working Capital and Grow

For qualified clients, Capstone provides purchase order factoring, single invoice factoring, and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. Please visit our homepage or contact us directly for more information.

How to Grow Business in an Unnatural Economy - Capstone

How to Grow Business in an Unnatural Economy

21:58 15 June in Blog
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How to Grow Business in an Unnatural EconomyStalled growth, disappearing jobs and a sense of foreboding are the defining characteristics of today’s economy. So, what or who is to blame? According to one theorist, the process of “creative destructions,” whereby the death of one business or industry gives rise to another, is failing. We’ll tell you why it’s happening and show you how Capstone’s single invoice and full-contract factoring allow businesses to grow along with demand, avoid taking on additional debt, and improve their balance sheets organically—even in an economy stuck in limbo.

The Numbers

A sobering job report released earlier this month showed the creation of only 38,000 new jobs —124,000 fewer than had been predicted — which is the lowest monthly total since September 2010. Furthermore, the Bureau of Labor Statistics reported that 94,708 Americans were not participating in the labor force during the month of May, bringing the participation rate to 62.6%.

A Limited Recovery

There’s no doubt that we’ve recovered from the Great Recession. The stock market has been on a 7-year bull run—although it has been tested recently. If you’ve tuned into the rhetoric coming out of the presidential race, you’ve heard the conviction that the recovery has been rather one-sided—that the gains of the last 7 years have benefitted a select few while the majority of the population has been left on the sidelines. No matter where you stand politically, the notion of a limited recovery seems to be supported by an analysis of Census Bureau data.

A Tale of Two Counties

According to the Census Bureau, the net increase of new business establishments is just 2.3% since 2010. Compare that with a 6.7% net increase during the 1990 recovery and a 5.6% net increase during the 2000 recovery. What’s worse—over half of the 166,000 new businesses formed in the United States since 2010 are located in just 20 counties. In short, a select few geographic areas are prospering, and the rest of the country is losing businesses and losing jobs at an alarming rate.

Aggressive Oversight and Misplaced Regulation

Touted as the culprits of the financial crash, banks and financial institutions, the drivers of growth since time immemorial, have been forced to tighten their lending requirements. The unintended consequence, of course, is that businesses’ traditional sources of credit have dried up. An enduring irony of the Dodd-Frank Act, which among other things was designed to limit the size of financial institutions, is that its burdensome requirements have actually forced many small community banks out of business—making the Big Banks BIGGER, not smaller.

If a lack of funding weren’t bad enough, businesses are now contending with rising federal regulatory compliance costs and state licensing requirements. And here the bitter irony continues. The new wave of regulations have disproportionally harmed small businesses—the symbol of the American Dream and American industriousness—not the large corporations the regulations were meant to control. A report ordered by the U.S. Small Business Administration found that the per-employee cost of federal regulatory compliance was $10,585 for companies with 19 or fewer employees. Companies with 500 or more employees, by contrast, paid an average of $7,755 per employee to stay compliant. Added to compliance costs are a rapidly multiplying number of state and local licensing requirements. 5% of employees required certificates or licenses in 1950. Today, the number stands at 30%.

A Metaphor for our Economic Ecosystem

There are many apt metaphors that describe what’s happening to the U.S. economy, but one of our favorites has to do with Smoky the Bear and forest fire prevention. Forest fires aren’t pretty, but they’re a natural and necessary phenomenon. They clear away the old, dead wood and give new generations of plants the space they need to grow. If the old, dead wood remains propped up for too long, the ecosystem ends up with less growth, less diversity, and a few individuals soaking up all the sunlight. And when a fire does finally come along, it’s much bigger and more destructive than it ever needed to be.

Boost Working Capital with Capstone

Capstone gives small and midsize businesses that are negatively impacted by Dodd-Frank and other constrictive legislation the working capital needed to seize opportunities for growth. For qualified clients, we provide single invoice factoring, construction factoring and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. Please visit our homepage for more information.

Interest Rates Predicted to Rise - Capstone Explained

U.S. Economy Picking Up Momentum in Q2; Interest Rates Predicted to Rise

19:56 27 May in Blog
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Interest Rates Predicted to Rise - Capstone ExplainedAfter another harsh winter, the American economy is stabilizing and beginning to shrug off concerns of a prolonged slowdown or recession.

According to the latest economic gauges, industrial production is increasing, inflation is firming, and the housing sector is continuing to pick up momentum. All of these factors, combined with data reflecting retail sales rebounds, job gains, and rising consumer confidence, point to improved — though still less than spectacular — growth potential for the second quarter of 2016.

Interest Rates

Fed officials afraid of financial market volatility and poorly performing overseas economies have kept a steady hand on short-term interest rates throughout 2016. A domestic growth rebound in Q2 could be just the inspiration they’ve been looking for to raise rates this summer. Their next opportunities come at the policy meetings scheduled for June, July, and September.

John Williams, President of the San Francisco Fed, recently told the Wall Street Journal that the data is starting to make a strong case for rate increases not just in June, but potentially more than once in the next few policy meetings.

Despite Positives, Some Forecasters Remain Cautious

First quarter 2016 gross domestic product (GDP) increased only 0.5 percent over Q1 2015, but growth might be poised to accelerate.

Since the end of the recession, Q1 GDP growth has consistently been weak, followed by a rebound in Q2. The latest reports of modest but definite growth in highly important sectors would suggest that the same pattern is about to repeat itself in 2016.

Macroeconomic Advisers, a forecasting firm, estimates that GDP will expand at a rate of 2.3 percent this quarter. The Federal Reserve Bank of Atlanta estimated an even higher growth rate of 2.5 percent.

However, it’s not all sunshine and roses. Despite all the positive data starting to roll in, many forecasters are still leery about the economy’s current health as well as its general outlook for the future. Earlier in May, a Wall Street Journal survey of economists revealed an estimated 20 percent chance of a recession taking place in the U.S. sometime in the next 12 months.

Boost Working Capital with Capstone

For qualified clients, we provide purchase order factoring, single invoice factoring and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. To learn more, please visit our homepage.

Novel Way for Subcontractors to Find Financing from Capstone

A Novel Way for Subcontractors to Find Financing

20:13 11 May in Blog
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Novel Way for Subcontractors to Find Financing from Capstone2015 was a picture-perfect year for construction, a banner year for the post-recession. Yet in 2016, many contractors in the United States are struggling to find financing for construction projects.

The lack of financing has been a reality even over the past several years with the economy recovering by leaps and bounds. It was a reality throughout the housing crisis and even prior to the recession when construction and development were booming. Contractor business financing has been a struggle, but it’s clearly nothing new.

Banks’ Aversion to Construction Financing

Banks are perennially gun-shy when it comes to lending to construction firms. They cite the industry’s volatile revenue fluctuations, the unpredictable nature of construction, contractors’ sensitivity to economic cycles, and excess competition as reason to stay away. The recent failure of several prominent construction firms has only strengthened banks’ resolve to avoid offering lines of credit to construction firms, contractors and subcontractors.

Contractors & Underwriting Issues

Steady bank relationships are often out of reach for construction firms with a poor ratio of accounts receivable to accounts payable and limited liquidity in working capital. But when construction firms and contractors struggle to find financing, subcontractors tend to suffer even more. Banks are hesitant to allow subcontractors’ bonded accounts receivable to serve as collateral for lines of credit, and those who primarily engage in bonded work often find it difficult or impossible to provide additional collateral.

Is there any hope for subcontractors in today’s construction industry?

Factoring: A Solution for Subcontractors

Factoring is a finance technique that allows a company to leverage its accounts receivable and accelerate its working capital through the sale of its accounts receivable to a third party. Specifically, a factor gives a business an advance on a customer invoice — generally between 70 to 90% of the invoice amount – so they can create a backlog of work without equity or debt financing. As the company improves their balance sheet, they increase the likelihood of receiving a traditional line of credit from a bank.

Seize Opportunities for Growth with Capstone

For qualified subcontractors, Capstone offers contractor financing and provides a single invoice and full-contract factoring for work performed under contract with a creditworthy general contractor. Capstone has highly experienced construction professionals on staff to facilitate the purchase of construction-related accounts receivable. To learn more about our contractor business financing and other services, please visit our homepage.

Invoice Factoring

Understanding Invoice Factoring

18:42 20 May in Blog
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Invoice FactoringInvoice factoring is a common practice that enables businesses to receive immediate payment in exchange for selling accounts receivables at a discount to their face value. Once an invoice is“ “Factored” and it is time for the customer pays for a product or service, the payment is forwarded to the factoring company. One of the most significant advantages of factoring is that businesses can receive immediate cash flow with no additional debt that appears on balance sheets.  Therefore Factoring is an off balance sheet transaction. Factoring can also be advantageous for businesses looking to obtain initial working capital without having to demand immediate payment from their customers.

The Invoice Factoring Process

Factoring is a rapid process that usually takes less than 24 hours to complete. The factoring process starts after a business delivers a product or service and sends an invoice to their customer. A copy of the invoice is then sent to the factoring company, which will purchase the invoice in exchange for an immediate cash payment. Most factoring companies offer up to 80 percent of the invoice value with the balance going into a reserve account. Once the purchase of the invoice has been completed, businesses can have the money, minus nominal fees, sent directly to their bank account.

Advantages of Factoring

Many businesses choose to use factoring because it can provide a predictable, immediate revenue stream than can be used to fulfill an order. While many businesses request prompt payment, they can rarely expect it in the real world. Even when discount incentives are offered, many customers will still choose to pay later. These problems can be especially challenging for newly established businesses that struggle to convince customers that they can deliver. Businesses that use factoring can receive immediate revenue without having to demand upfront payment or incur excessive risks.

Additional advantages of factoring with Capstone include:

  • Insurance against customers that fail to pay.
  • No penalties for failing to meet a minimum invoice sales volumes.
  • No contractual restrictions on how funds can be used.
  • Practically unlimited financing that scales with business growth.
  • Additional working capital with no additional debt.
  • Take advantage of supplier discounts by paying early.
  • Add more value to customers though attractive payment terms.

How Factoring Affects the Bottom Line

Factoring fees are an average of about two percent, which many business owners argue can add up to a lot of money in the long run. In reality, most businesses that use factoring can earn several times more than the factoring fees that they pay. Studies indicate that a majority of businesses can scale their production capacity by more than 25 percent without increasing fixed costs. Since limited capital is the primary constraint for most businesses, immediate payment can enable businesses to operate at full capacity and earn several times more than the factoring fees.

Business Requirements for Factoring

As with any other credit service, businesses will need to be pre-qualified. Factoring services are only available to legal business entities that sell business-to-business services to governments or other companies. Businesses will need to have customers with good credit to qualify for a factoring service.   It is also important to have no outstanding invoice leans. Most businesses that meet these basic requirements can be approved to take advantage of invoice factoring services.

Promising Numbers Mask True Problems for Big Banks

19:38 30 October in Blog
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A recently released report on the economic conditions and earnings of big banks seem to paint a picture of stability. However, a more plausible interpretation would attribute it to stagnation and the difficulties that lie ahead. Overall, investors see a rather unimpressive rate of return in terms of equity. Meanwhile, among the big banks, Citigroup came out slightly above expectations and J.P. Morgan Chase and Wells Fargo slumped a little in the third quarter.


Wells Fargo’s returns fared somewhat better, which is mostly due to the nature of banking versus more volatile capital markets. Even with this advantage, returns still didn’t live up to those from the year before, which were almost a whole point higher. J.P. Morgan, on the other hand, has hit a plateau at a 10% return rate, casting a more negative shadow on the recent numbers. Conversely, Citigroup looked strong in many areas. They even registered profits through legacy holdings and downsizing, but still only managed a 6.5% return.


Analysts have pinpointed several reasons for this lackluster performance.  J.P. Morgan and Citigroup both still face legal challenges in the midst of the global slowdown. Also, interest rates have remained extremely low while demand for loans has remained steady.  All this as regulations and the required amounts of capital have gone up. 


Some experts cite these facts as proof that this reflects a permanent shift in returns that investors can expect in the future. Of course, banks also have to conform to stress tests performed by the Federal Reserve, which makes them less flexible than firms in other industries. Other macroeconomic factors don’t seem to bode well either, as new mortgages issued at J.P. Morgan, Citigroup and Wells Fargo fell by 14%, 51%, and 40%, respectively.


Trading in certain commodities and currencies has generated some growth. But these mostly signify slightly less anemic banks as opposed to strong ones. Some hold out hope for increased rates in the near future, although many investors have become restless due to the impact of current low rates on net interest margins.


Banks are still finding growth opportunities hard to come by without higher returns. Price-to-book multiples for J.P. Morgan and Citigroup have averaged 1.07 and .076 times, respectively. So, for the time being, the only solution for banks is to rely on cutting costs and looking for gains elsewhere. Despite the initial appearance of the numbers, they really just show that sometimes silver clouds have dark linings.

As the major money center banks continue to adjust their operations to Dodd-Frank’s lower earnings environment, cost cuts translate into less personal service.  For small business owners, less personal service means a higher likelihood that their loan applications will be processed automatically through computer software. Thus, removing any discretion from the loan approval process.  Capstone Capital Group, LLC., on the other hand, provides the personal service of an old time banker and does not rely on the credit of its clients to make their credit decisions.  Capstone relies on the credit of its client’s customers to determine whether or not they will get the working capital they need.
As the Feds continue to scrutinize and further regulate the activity of Big Banks, and with interest rate increases looming in the future, small to midsized business loans are becoming increasingly more difficult to obtain.  What is a business owner to do if he or she needs working capital to make payroll or expand operations?  Capstone Capital Group, LLC has the solution.  We have been helping small to mid-sized businesses for years obtain the necessary working capital they need to sustain and grow during uncertain economic times without all the red tape you normally get from most banks.
 
Capstone Capital Group, LLC specializes in Single Invoice Factoring (“Spot Factoring”) for firms in need of immediate cash. Spot Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group.  For more information about our business funding solutions and how we can help your business grow and succeed, give us a call today at (212) 755-3636, or visit our website at www.capstonetrade.com.

 

Capstone Wishes You a Safe and Happy 4th of July!

18:51 03 July in Blog
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The 4th of July is dedicated to honoring our great nation and taking the time to appreciate and celebrate our independence and freedom.

 

Thanks to all of our loyal customers and partners, we continually work together to help this country thrive. Together we build, fund and grow better businesses that benefit our economy and our country as a whole.

 

Look to Capstone Capital Group, LLC, to help your business start, grow and thrive. Capstone prides itself as a factor whose objective is to help its clients succeed. Our partnership, along with optimism and dedication in our free market society, is the catalyst which spurs economic growth and a more prosperous U.S.A!

 

Thank you for your continued loyalty and support. We wish you all a safe and happy 4th of July!
For more information on how to partner with Capstone, please email [email protected] or call (212) 755-3636 to speak with a representative today.

Small Businesses, beware the “Advance-Fee Loan Scheme”!

21:04 05 June in Blog
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The “Advance-fee loan scheme”, as the scam is more commonly known, has been around for years.  However scammers have recently intensified their efforts in part due to the current financial crisis in addition to tighter underwriting requirements in regards to small business loan financing created by Dodd-Frank (Too Big To Fail ) Legislation.
 
The scam is fairly straightforward.  By way of telephone, email or internet communication , these so called  “loan broker” con artists target small business owners and entrepreneurs by promising them they can secure a sizable business loan for them and all they have to do is pay the loan broker a fee “in advance”.  According to Alabama Securities Director Joseph Borg, businesses with $1 million to $50 million in revenue are the most common targets because under the new legislation banks have the most difficult time lending to these microcap companies. 
 
What happens next is that the small business owner will pay a substantial upfront fee up to the loan broker with a loan never actually materializing.  The small businessman is ultimately met with dozens of unanswered phone calls and unresponsive emails, with the con man eventually leaving town.  According to Federal Trade Commission (“FTC”), this type of scam has been happening with more and more frequency. In 2013, the FTC booked a record 53,833 complaints about advance-fee loans filed by entrepreneurs and consumers.  This number is up from 43,070 in 2012 and 44,504 in 2011. 
 
As mentioned above, these scams typically target desperate business owners who feel like they have no other options.  Paying a broker a fee in advance without any guarantees of success is not the wisest of business moves.  If you are a small business owner looking for additional capital and have been denied a loan by your bank, it is not the end of the world.  Alternatives, such as invoice factoring offered by Capstone Capital Group, LLC, exist which can provide you with the capital you need to get your business back on track and do not require the advancing of upfront fees with the hope your loan will be approved and funded, if at all. 
 
For more information on Capstone’s services, please email at [email protected] or call (212) 755-3636 to speak with a representative today.

Let the Borrower Beware

20:38 29 May in Blog
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Capstone Capital Group, LLC prides itself on providing funding for its clients that run viable businesses but are in need of working capital and will grow as a result of funding.  Unfortunately, there are new lenders who pop up every day to take advantage of the latest trends in high yield lending that do not always have their client’s best interests at heart.

 

The most recent trend is called “Merchant Cash Advance”.  This segment of the lending industry dates back to the early 1990’s, but did not hit widespread acceptance until about five years ago.

 

When the Merchant Cash Advance business began, it was a method of providing liquidity to retail businesses that did not have significant assets that could be pledged to a bank in exchange for a line of credit.  The idea was to make an advance to a business in exchange for an assignment of the credit card receipts that were typical for the business.  For example, if a restaurant had monthly sales of $500,000 and needed $300,000, the Merchant Advance lender would structure a payment of $15,000 to $17,000 twice a week for 12 to 16 weeks.  These payments did not starve the company of its cash flow and as long as business was consistent and stable, the business owner who could not get a loan anywhere else had access to a willing lender.  If all went well, the lender would be paid back and the restaurateur could return to the lender at a later date and borrow again.  If the lender was not paid back, the company would be pursued by the lender to the extent the lender thought it prudent. With this method, more than the entire portfolio losses on one account could be covered by gains on many other accounts.

 

18 years later the business has now morphed into a high risk high return lending process with full recourse.  In the Sunday Bergen Record, the newspaper highlights the trials and tribulations of borrowers who fall prey to unscrupulous lenders in this market.  Like all businesses, there are those who operate ethically and those who are only in it for the money.  The Bergen Record article highlights what the pitfalls are of getting in bed with the bad apples of the industry. The article also explains why so many companies are entering the space and what their backgrounds might be.

 

Capstone Capital Group, LLC prides itself as a factor whose objective is to help its clients grow.  Unlike the merchant cash advance companies, we are able to factor sums from millions to hundreds of thousands with no personal guaranties or the pledging of real property, automobiles, etc.

 

Capstone specializes in Single Invoice Factoring (“Spot Factoring”) for firms in need of immediate cash. Single Invoice Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group, LLC.

 

The next time you are looking for business funding solutions, be careful.  Our process may take five business days while theirs only takes one hour, but we will help you grow your business through our funding process.  Depending on whom you contract with in that business could mean the end of yours.

 

 
For more information on how Capstone can help, please email [email protected] or call (212) 755-3636 to speak with a representative today.

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