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Finance Your Invoices, or Finance Your Purchase Orders?

Finance Your Invoices, or Finance Your Purchase Orders?

Finding the working capital you need to take on challenging orders can be tough, but there are options that you can tap into your business assets. This sidesteps the lengthy approval processes for traditional loans and in some cases, the cash advance does not even appear on a credit report. For businesses that use purchase orders and invoice billing, the question of which asset to finance often comes up. Understanding when each one is best used will help you to get the most out of purchase order financing.

Consider Your Capital Needs

If you need general operating capital to meet your regular obligations, you might want to lean toward AR financing. By sending out all your invoices at once, you stand to get a larger advance than if you finance all your purchase orders, at least in most cases. If you do not have a lot of unpaid invoices but have recently gotten a lot of orders, then the situation is reversed and you’re going to want to finance those orders.

When you need money to take on the orders themselves without disrupting your other cash flow obligations, that is generally when purchase order financing works best. You can finance a large rush order with its own value, allowing you to isolate its costs and profits from the general flow of business. The result is a windfall opportunity that does not disrupt your regular processes.

In some cases, you may even want to finance both purchase orders and invoices to raise as much capital as possible at once. You would need to apply for each separately, but nothing stops you from using both if you qualify.

Who Can Use Purchase Order Financing?

Invoice financing is the more popular choice in large part because it is accessible to a wider range of companies. Almost every company that uses purchase orders also uses invoice billing for at least some of its transactions. Only a fraction of the companies that use invoice billing use purchase orders, however. That asset tends to be limited to manufacturing and import trade companies, with a few rare exceptions in other areas.

Make the Most of Your Business Assets

The best cash management solutions are the ones that make use of all the available tools at your disposal. That means you should work out a strategy for financing your working capital needs with options for everyday cash management, rush orders, repair and maintenance emergencies, and industry-specific key need categories. That way, you’ll know exactly when to use purchase order financing and when to opt into another financial product.

3 Differences Between MCAs and Business Loans

3 Differences Between MCAs and Business Loans

If your business relies on credit and debit transactions for a lot of its income, you probably already know you can finance your merchant account income to access a cash advance when you need working capital. The big question is, how is that more useful than a traditional business loan, and under what circumstances does the MCA work better than business loans?

1. MCA Payments Flex With Your Income

Business loans generally come in one of two formats. Either the loan amortizes over its repayment term or there are interest-only payments with a principal payoff at the end of the term. Some banks and other lenders create niche loans beyond these formats, but most loans fit one or the other. The only way those loans have variable payments would be if the interest rate fluctuates. By contrast, a merchant cash advance payment agreement sets the payment at a percentage of your income, so if you make more money, you repay the advance faster.

2. Approvals Take a Fraction of the Time

Banks tend to make business loan approval a lengthy process because they weigh a lot of factors. It makes sense when you consider most bank loans are designed to be repaid over the course of years. In the case of some asset purchase loans, it could even be a decades-long debt, lenders naturally want to take care of. Since the merchant cash advance is designed to be repaid in just a few months, the risks to the lender and the timeline for approval are much shorter. Many businesses see the cash in as little as five business days from the date of application.

3. MCA Limits Grow With Your Income

Most business loans are tied to the value of an asset, which is how their interest rates are controlled. Short-term financing like your MCA gets based on your income, so as long as you can afford to repay the advance, you are likely to get what you need when you apply. That also means when your business grows, the size of the cash advance you can access grows too. For that reason, many retail businesses use a merchant cash advance to finance seasonal remodeling and inventory restocking processes a couple of times a year.

When Is the MCA More Efficient Than a Loan?

If you foresee an upturn in your company’s regular demand cycle or you need cash quickly to deal with a short-term emergency when you are busy, then the MCA is going to work better than a loan. Not only will you get approved faster, but paying the advance down quickly minimizes the finance charges.

Stuck in the Web

Stuck in the Web

As technology advances, changes in everyone’s work environments are inevitable. Cars aren’t manufactured the same way they were when Henry Ford started his assembly line and phones have progressed well beyond Thomas Edison’s first call. The same has to be true for careers in web development, right? Since the internet has been around so long, the careers that it first spawned are no longer relevant, right? Not really. A job in web development is still a viable path towards both career stability and financial security.

To-Do List

What does a web developer do, anyway? Simply put, a web developer designs and builds websites. That’s deceptively simple, though, because a lot more goes into it. Think about all the components of a site you’ve recently visited. Did the pages load correctly? How about graphics? Were those relevant, eye-catching and informative? Also, consider how easy it was to find what you needed on the site. It’s the web developers who ensure that those pages load correctly. They also pick the graphics and design the layout. If your site had a shopping option, the web developers have to tie that into not only the website, but also the store’s actual inventory program and shipping procedures.

Pursuing the Path

If you’re thinking about a career in web development, you’ll need to know how to pursue that for yourself. The job outlook for someone who trains in web development is higher than average. These skills continue to be in demand and will be for the foreseeable future. You can typically enter the job market for web careers after completing just your Associate’s Degree. Double-check, though. Some jobs only require a high school diploma and other employers look for Bachelor’s degrees.

Work It

You’ll have a variety of places where you can find a job with web development training, too. Think about all the places that have websites. They each need a qualified professional to maintain those. You can choose to work in a field like publishing, advertising or consulting. Companies who perform those services need capable and reliable web developers because frequently their internet presence forms the backbone of their business. If you’re not excited about branching out, many web developers stay in computer-related fields. Still others branch out into self-employment. This allows you flexibility in where you choose to live, also, because web professionals are in demand everywhere.

A career in web development can carve you a path towards the life you’ve dreamed of living.

Multifamily Financing Options 

Multifamily Financing Options 

Multifamily financing provides the means for serious real estate investors to purchase or refinance structures or properties that typically have five or more residential units. 

According to Statista, the multifamily real estate market has boomed in recent years. The value of multifamily financing in the U.S. reached over $487 billion in 2021. 

Benefits of Investing in Multifamily Properties 

The benefits of investing in multifamily properties include: 

  • Investors have an opportunity to live in one of the units while renting out the others. Thus, tenant payments help the investor to pay down his/her mortgage. 
  • Multifamily properties share some of the same amenities, so potential maintenance costs can be lower. 
  • Investors can leverage multiple units to mitigate the risk of vacancies. 
  • Growing an investment portfolio can be accelerated because purchasing a 10-unit apartment complex, for example, will take less time and effort than purchasing 10 single-family homes. 
  • While multifamily properties will be more expensive to purchase than single-family homes, multifamily financing will be easier to obtain because those loans are viewed as less risky due to the potential for consistent monthly cash flow generation. 

Multifamily Financing Options 

Multifamily financing options include: 

  • Fannie Mae and Freddie Mac loans. These loans, typically called “agency loans,” operate under a federal charter and must be accessed through approved lenders. 
  • FHA loans. These are government-insured loans and they typically take a long time for approval due to the extensive government requirements. 
  • CMBS loans. These are commercial loans that are secured by a first lien against the specific commercial property. They are available through commercial banks, conduit lenders, and investment banks. 
  • Traditional bank loans. Bank loans typically have stringent loan requirements. 
  • Loans from alternative lenders. Alternative lenders are an appealing multifamily financing option because they have less strict lending requirements, a streamlined approval process and they can be more agile and responsive. 

Seek Expert Financing Assistance 

Contact WHW Capital, based in Denver, CO. We have a great reputation for helping our customers get the loans they need as quickly as possible and that are easy to qualify for. 

Here is How to Finance a Roofing Company

Here is How to Finance a Roofing Company

When it comes to running a roofing company, one of the biggest challenges is the fact that most general contractors and commercial clients require net-30 or net-60 terms on their invoices. This means that the company won’t get payment on an invoice for 30 to 60 days, which can be a problem since most roofing companies can’t wait that long for payment. Unfortunately, most of the time, roofing companies do not have a cash reserve or a line of credit to pay their expenses while they wait for customers to pay.

When a company can’t cover its expenses, they are in a precarious situation, juggling payments to meet its obligations. However, this can be extremely difficult in the long run- you may end up missing payments or payroll, which is when the real problems start.

Improving Cash Flow

Consider Offering Early Payment Discounts

If cash flow problems are not critical, you may want to consider offering discounts for clients who pay their invoices early. If done properly, this can significantly improve cash flow.

As the name indicates, early payment discounts give clients a discount on invoices paid within 10 days. There is no standard discount amount, but most companies do typically offer a 2% discount. If possible, get the agreement in writing to avoid issues.

It’s important to note that while offering an early payment discount can potentially improve cash flow, there’s no guarantee. Early payments are optional- your clients can choose to pay early or pay later based on their cash flow. Still, discounts are a step in the right direction for improving working capital.

Finance Slow-Paying Invoices with Factoring

For many roofing companies, it’s better to finance slow-paying invoices. This immediately improves cash flow, providing you with instant access to working capital. You can use the funds to pay your suppliers, and employees, or fund new projects.

This can be done through financing known as construction receivables factoring. The invoices are broken up into two installments: up to 80% is deposited as soon as the invoice is issued. The second installment covers the remaining 20%, minus the factoring fee, and is paid when your client pays the invoice.

Can You Finance All Invoices?

To qualify for construction receivables financing, you must meet the criteria listed below:

  • An invoice should be payable by a creditworthy commercial client or general contractor
  • Work listed on the invoice must be completed
  • Invoices should be up to net-60 terms
  • Invoices should be unencumbered by liens
  • Your company must be a direct contractor or a subcontractor under a general contractor

Advantages of Construction Receivables Financing

The primary advantage of this type of financing for a roofing company is that it’s much easier to qualify for than traditional funding. The most important thing is that your clients are creditworthy, so you can use your client credit to your advantage.

Another advantage is that it’s flexible and can be increased, as long as your invoices meet the above criteria. This will help when you land larger projects.

Choosing the Right Lender

Since roofing companies work with general contractors and direct commercial clients, it can be difficult to find the right factoring company.

A conventional factoring company may be able to finance invoices for commercial clients, but not for general contractors. This is because most general contractors make progress payments, and the contracts often include a “pay-when-paid” clause- and most conventional factoring companies can’t work with this.

A roofing company needs to find a factoring company that can finance both commercial and general contractor invoices. When interviewing a factoring company, ask the following:

  • How long have you been in business?
  • Do you work with general contractors?
  • Do you work with progress payment invoices?
  • How do you deal with “pay-when-paid” clauses?

If you are interested in learning more about construction receivables financing or moving forward with finding the right company for you, contact WHW Capital today. We are familiar with factoring and can help you determine the right way to go.

Why Business Owners Should Be Cautious of Venture Capital

Why Business Owners Should Be Cautious of Venture Capital

Tech startups and other companies with high growth potential that need capital but are unable to secure conventional financing often turn to venture capital. However, it’s important to note that this is not always the best option because it requires that the business owner give up equity in the business and sometimes control.

In this blog, we’ll define venture capital, including where it comes from and the advantages and disadvantages.

Defining Venture Capital

Venture capital is money that is invested in a small business by an established firm that specializes in finding promising young companies. The investment is typically made before the company has produced meaningful revenue.

Why Do Small Businesses Seek Venture Capital?

The primary reason that small business owners turn to venture capital is that they do not qualify for traditional funding. Companies that successfully secure venture capital have developed rapidly scalable tech, though any investment in an ambitious startup could be considered venture capital.

Whereas other forms of financing must be paid back with interest, venture capital funding is provided in exchange for equity in the company. This ensures that the venture capital firm earns a profit on its investment. In addition, they are often given a seat on the board, which allows them a say in the company’s direction.

Where Does it Come From?

The primary source of venture capital is a venture capital firm, which is comprised of professional investors that understand financing and how to build a successful company.

The money comes from various public and private sources, including pension funds, foundations, endowment funds, wealthy individuals, and corporations. In 2021, venture capital firms in the United States raised over $100 billion and invested over $300 billion.

Individuals who invest in venture capital funds are limited partners, while venture capitalists are general partners who manage the fund and work directly with the companies. General partners actively work with the founders and executives of the company to ensure the business is growing and making a profit.

In exchange for the funding, venture capitalists expect a return on their investment, usually as a stake in the company. The relationship between the parties is typically long-term. Instead of recouping their money immediately, venture capitalists usually work with the company for 5 to 10 years.

When the company goes public or is acquired, the venture capitalist typically sells their shares with the hope that they will get more back than they paid.

Examples of Venture Capital

As a business owner, before you approach a venture capitalist, you need to know what type of capital you need. There are several types of funding:

Seed Capital: investment required to carry out market research and form the company before launch, including administrative costs and the cost to create sample products

Startup/Early-Stage Capital: used to recruit key management, conduct research, and prepare product/service for launch. Once launched, can be used to increase sales and efficiency

Expansion/Late-Stage Capital: used to expand production and/or increase market efforts for new products. Also used to increase production capacity, ramp up marketing, and increase cash flow as the company grows

Bridge Financing: used to facilitate important milestones such as a merger or initial public offering

Advantages & Disadvantages of Venture Capital

Venture capital isn’t the only option for startups. There are others, such as bootstrapping, or self-funding. For entrepreneurs that do seek venture capital, there are advantages and disadvantages:

Advantages

  • Facilitate rapid growth
  • Valuable guidance from professionals
  • No obligations for repayment

Disadvantages

  • Loss of control
  • Conflicts of interest

Is Venture Capital Right for Your Startup?

In the right circumstances, venture capital can be a great option. However, it’s important to understand that you do give up a portion of control and profits. One of the most important decisions a company’s founder/leadership will make is whether or not to seek out and accept venture capital. If you need help determining whether or not venture capital is appropriate for your company, contact WHW Capital today. We can go over your options and help you make the best decision.

Prioritize These 3 Digital Marketing Tactics for Business Success

Prioritize These 3 Digital Marketing Tactics for Business Success

If you’re not taking advantage of online marketing in the year 2022, it’s time to start incorporating this highly lucrative tool into your business plan for your company’s success. However, it can be difficult to know where to start with such a wide array of choices, especially when it comes to determining the best methods for getting ample return on your investment. Thankfully, there are myriad avenues for getting a head start on your digital marketing strategy. Prioritizing these three tactics is the ideal way to begin creating your online presence and gathering a wealth of new customers for long-term prosperity. 

1. Share Persuasive Content Through Video Marketing

Customers love visual imagery. Beyond looking at high-res images and modern logo designs on your website (which are also very important!), you should invest your time and money into developing video content that’s easily shareable on social media pages. Most customers are prone to seeing advertisements on their mobile smartphones these days, and trying to read long-form emails or excessive blog posts isn’t ideal for such small-screen platforms. Therefore, stunningly visual videos that aim to intrigue and convince viewers into buying from your business can go a long way in promoting your brand’s product or service to the public.

2. Trust in Influencer Marketing to Gain a Bigger Audience

Anyone who uses social media knows that there are plenty of influencers who have amassed huge followings, and these individuals are perfect for improving your digital marketing strategy. Influencers have learned not only how to market themselves and earn the trust of their followers, but they engage their audience regularly, which is essential for trying to make consistent sales. Hire a social media influencer to promote your brand, and you can see a large uptick in traffic to your company website in no time.

3. Personalize Your Content to Build Customer Relationships

When you’re looking to improve visibility for your business online, you need to stand out from your competitors. Develop and share content like personalized emails instead of releasing one mass email without any emotional punch. Send out ads to specific groups of customers with suggestions for new products based on past purchases. These personal touches give your followers a reason to feel more important to your brand and therefore leave a more lasting impression that gains trust and loyalty. 

Overall, there are dozens of digital marketing techniques you can apply to your company’s marketing strategy. However, these three tactics have proven to be extremely effective for long-term success, giving you plenty of reason to test out their viability. Contact WHW Capital to learn more about how to effectively implement digital marketing tactics to boost your business.

What Funding Can You Get to Cover Franchise Costs 

What Funding Can You Get to Cover Franchise Costs 

Franchising is a popular way for entrepreneurs to achieve “The American Dream.” According to Statista, there were about 750,000 franchised establishments in operation in the U.S. at the end of 2021, and thousands more open every month. Three of the key challenges that face new franchise owners are finding the right franchise concept for them, finding the right location or territory, and securing financing to deal with franchise costs. 

Why is Franchising So Popular 

Franchising is popular because a new owner gets the huge advantage of buying into a system that has demonstrated some success from proven strategies and a defined operating system, compared to starting a business from scratch. The new owner benefits from some established brand awareness, a built-out supply chain, a defined marketing program and franchisor marketing support, peer support, franchisor training, and operating support, peer support, compliance standards, and assistance with franchise costs. 

What Are Some Typical Franchise Costs 

The typical franchise costs start with an initial franchise fee or licensing fee which essentially provides access to the name, systems, and proprietary features of the brand. Additionally, there may be real estate and property improvement costs, furniture and fixtures, professional services costs such as accounting and legal costs, supplies and equipment, insurance, training, and marketing costs. 

Sources of Financing to Cover Franchise Costs 

Sources of financing to cover franchise costs include: 

  • Assistance from the franchisor can come from corporate funds or its lending partners. 
  • Commercial bank loans.  
  • SBA loans that are approved and funded by banks and other lenders and partially guaranteed by the Small Business administration. 
  • Self-generated funds including second mortgages and retirement funds. 
  • Loans from friends and family. 
  • Loans from alternative lenders and financing specialists.  

Seek Expert Financing Assistance 

Contact WHW Capital, based in Denver, CO. We have a wide variety of financial solutions and a great reputation for helping our customers get the loans they need as quickly as possible and that are easy to qualify for. 

Why Term Loans Are an Excellent Option for Short and Long-Term Financing Needs

Why Term Loans Are an Excellent Option for Short and Long-Term Financing Needs

Businesses often lack sufficient capital to take advantage of growth opportunities. However, these situations can be mitigated by applying for and obtaining a term loan. Here is some information that can help you determine whether a term loan can meet your company’s funding needs.

Term Loan Basics

A term loan is a one-time infusion of funding that you receive from a lender and pay back with interest over an agreed-upon period. Smaller amounts may have short payment periods of a year or more, while the payment terms for larger amounts of a million dollars or more may be up to 25 years. There are also intermediate amounts and terms between these extremes. Although in the past businesses used to look to credit unions and banks as sources of term loans, nowadays alternative online lenders are becoming increasingly popular term loan providers. Alternative lenders generally have easier application processes, quicker approval, and expeditious distribution of funding.

Advantages of a Term Loan

You can use the funding from a term loan for business or personal expenses, and these loans are versatile because they can provide financing for either short or long-term requirements. The rates are lower than for other methods of funding. Additionally, if you make timely payments each month, taking out a term loan can help you build a stronger credit score.

Obtaining a Term Loan

You will need to gather documentation such as bank statements, tax returns, business, and personal credit histories, your company’s EIN (Employer Identification Number), income statement, and profit and loss statement. Apply to a range of lenders so that you can compare the APR (annual percentage rate), terms for repayment, and any additional fees that the lender might charge. Once you have found a suitable lender, close on the loan and obtain your funding.

For more advice on financing your business with a term loan, get in touch with WHW Capital.

Should You Invest in a Hotel?

Should You Invest in a Hotel?

There are several business ventures you can try and succeed in the corporate world. One thing that brings people close is food and drink. That is why the number of hotel businesses has incredibly risen over the last few years, even in rural and remote areas. Understanding why the number of such enterprises has increased and why you should consider hotel investment as your primary entrepreneurial undertaking is essential. These reasons are explained below.

Easy Financing

Opening a hotel is similar to starting any other business – you need money. Fortunately, many lenders, especially alternative lenders, are willing to fund a hotel investment because the chances of the business failing are pretty minimal. The lender is sure that they will not lose their money.

Value Addition Levers

You can increase your hotel investment value through many channels. Operations are the key drivers of value in such a business, but other levers enhance its value. These include property renovation to attract more clients, capitalization, and sales and service contracts.

Enjoy Tax Benefits

Running a hotel is a real estate investment. Growing your equity, and enjoying the tax-free exchange, and depreciation are some incredible benefits you can enjoy with a hotel investment. All these advantages apply to all real estate investments, but a hotel takes them to a new and higher level.

Easy Expense Tracking

One of the critical reasons to consider hotel investment is the ease of following up with your business expenses. Expenditures in a hotel enterprise are divided into three categories;

Undistributed expenses – the total operational costs, including management, sales-related costs, and property maintenance.
Departmental – the total cost of the products you sell in your hotels, such as food and beverages.
Fixed – the expenses you incur regardless of revenue flow or hotel occupancy.

Enhanced CSR

Giving back to the community is essential in running a successful business. Employing people from the community in your hotel is a positive gesture and a material contribution to your enterprise’s corporate social responsibility.

The benefits and reasons above show why you should consider investing in the hotel business. You will need the proper funding to ensure the enterprise takes off. It is advisable to contact WHW Capital today for the best financial assistance to open and run a successful hotel.