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How Purchase Order Financing Can Save Your Business

February 27th, 2013

It seems counterintuitive that a company could have too much business. A big order, more customers, and growth are what every upstart dreams of. More business means more opportunity for profit. It can be the big break that puts a company on solid financial footing or propels it from a startup to a serious player. Yet a big order, new customers, or growth can also be the death of a business.

Imagine a shoe company that has hot new designs and moves from being a boutique brand worn by a few hip kids to the style everyone wants to wear. More retailers start putting in orders for the shoes, but the company doesn’t have the capacity to produce enough to fit demand or enough cash on hand to increase that capacity. The window of opportunity in fashion doesn’t last long, and the company knows if customers can’t find their product, they will be forgotten before they ever get their next design out.

Or take the case of a small town construction distribution center in North Dakota. The oil boom has been good for business and clientele continues to grow. Then an oil company comes in with a purchase order for 500 construction helmets. It’s five times larger than any order the distribution center has ever had. They don’t have near that many helmets in stock and don’t have enough cash to get the helmets from their supplier. If they say yes, they won’t be able to fulfill the order and will be in for a lot of trouble. If they say no, the oil company will find another distributor, or maybe go straight to their supplier for this order and for future orders.

So we see big orders and new customers can wreak havoc on small businesses. But with a little help, even the situations above can be the big breaks that catapult a business to the next tier of success—and that help can come from Purchase Order Financing.

The basic concept of Purchase Order Financing is simple yet profound. A third party—a lender like Millennium Funding—takes the purchase order and gives that money upfront to the provider. In the cases above, the shoe company and the distribution center receive purchase orders from their buyers. They then turn the purchase orders—for the shoes and the 500 construction helmets—over to the PO financing company. The financing company will front the money promised in the PO so the companies have the cash flow they need to take and fulfill the orders. In this way, the companies not only get the business—and the profit—for these transactions, but also gain valuable clients for the long haul and continued growth potential.

When the orders are fulfilled with the help of the added cash flow, the buyers—the retail shoe stores and the oil company—will pay the purchase orders. The financing company will take a small percentage, and the companies who were so close to missing a big break will instead be that much closer to success.

The terms of Purchase Order Financing—the rate and length of repayment, as well as what information is required to begin—can vary. But Millennium Funding can help. With years of expertise and a track record of success, Millennium Funding can take your company from being “oh so close” to achieving your goals. Purchase Order Financing can not only save your business, it can be a catalyst to help you thrive.

The North Dakota Oil Boom [Infographic]

January 31st, 2013

The North Dakota oil boom in 2008 changed the history and economy of North Dakota forever. The business environment grew as the population grew over the years. With this increase, of course, costs went up.

Providing business invoice factoring services, we at Millennium Funding wanted to illustrate this massive growth in the North Dakota oil industry along with the need many oil companies have of making sure funds stay alive and employees get paid.

The North Dakota Oil Boom [Infographic]

The North Dakota Oil Boom

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The Story of an Unfortunate Lending Nightmare

January 16th, 2013

We recently read an article featured in Inc. Magazine called “Hard Lessons in Modern Lending” written by Burt Helm. In the article, we learn about a man named Joe Bliss. Bliss is a hard working American doing his very best to keep his business afloat during an economic crisis.

His company, JBC Technologies, took a big hit; a 40% hit during the recession. He had to cut costs. He had to let 96 of his dedicated employees go. He himself had to start working for almost nothing.

Even with those losses, JBC Technologies weathered the storms, started patching up, and began another journey of success in 2010.

Employees were hired again. An expansion of manufacturing space was in the works. Things were looking bright for Joe Bliss until his bank knocked on the door.

The bank wanted its loans paid off. Bliss was in $6 million with them, but he had never missed a payment. He had never violated any small print that he knew of. Why was thing happening? Why was the bank disturbing such an extraordinary comeback after such an awful economic downfall?

“The problem was not Bliss’s company but his industry and region–both of which, in an effort to stem future losses, his bank had essentially written off. [The Bank], like other banks across the country, was using a sort of predictive math to sever ties with struggling borrowers before they stopped making payments. In the process, banks were abandoning businesses that were recovering, too” (brackets added).

JBC Technologies was caught in a computerized system of irony. Bliss wasn’t struggling anymore, but the bank wasn’t interested in that. They wanted their money, and they wanted it now.

So here’s the question that Helm asks in his article: Have businesses taken the proper precautions to protect themselves from instances like this one? The old ways of doing business aren’t coming back. We at Millennium Funding have prepared for that.

We help business owners, like Joe Bliss, to make sure that things don’t fall apart when the bank strikes. The experience we have and the business factoring services we have established for business in a variety of industries is what truly saves companies from living these unfortunate lending nightmares.

Click on the link below to read the full article.

Hard Lessons in Modern Lending by Bur Helm

How Does Accounts Receivable Factoring Work?

January 10th, 2013

The term accounts receivable factoring is not intuitive. It sounds at once complex and boring, reserved for Wall Street or an accountant’s office, certainly not for a growing small business. But its name is much harder to understand than the actual concept at its core—and it can help growing businesses get the cash flow they need to take off.

Accounts receivable factoring helps businesses maintain cash flow rather than waiting for the 30, 60, or 90 day pay periods of their clients. In this case, when a company has provided a service and earned money they have not yet been paid, they can work with a third party funding source to “factor” their accounts receivable. The factor company buys the accounts receivable—the invoice—from the company, paying an upfront price and taking over responsibility for collecting the payment. After 30, 60, or 90 days, when the customer/debtor pays the invoice, the funding company takes a small fee and remits the rest of the money to the company that provided the service. In the meantime, the company has cash to continue its business operations.

Take this example: John becomes famous among his family and friends for his delicious, aromatic pies and decides to open a small bakery. Perhaps he even gets a loan from the bank that he makes payments on every month from the revenue of his shop. He gets by, making ends meet until one day a hotel manager tastes John’s pie and places a huge order for a conference at the hotel. John is ecstatic. He uses up the previous month’s revenue to buy all the flour, butter, fresh fruit, and spices he will need for the big order and sets out baking from dusk to dawn. The conference arrives, the pies are delivered and delicious and John gets half a dozen referrals for more work. Life seems good.

But there is a problem. The hotel is a big company with a big finance department. It does not just open its purse and write a check. John will have to wait at least 30 days to receive payment for the conference order. Meanwhile, he has no cash on hand to keep his business running, and even has to make a payment for his bank loan. He has orders but no way to fulfill them. The big break he got with the hotel might actually break his business.

This is where accounts receivable factoring comes in. John has no cash, but he has an asset—the money that is owed to him by the hotel. And luckily for him, the hotel is a notable business with good credit. A factor (a funding group) will pay John for his invoice. In John’s case, they pay him 65% of the bill upfront, and they take responsibility for the bill. John now has the working cash to fulfill his new orders and continue growing his business. After 30 days, the funding group receives the payment from the hotel. They take out their fee and transfer John the rest of the money.

This example has played out over many needs, from commercial businesses to staffing, government suppliers to transportation and freight companies. Of course, factoring is variable. The time period, amount paid upfront, rates and fees change according to the size of the account, the credit of the customer who owes the invoice, and who takes responsibility if the account is never paid. If John’s account is factored with recourse, for example, he will receive funding but will be responsible to pay it back if the hotel never comes through on the bill. This will carry more risk for John but will offer him a lower rate than if the funding company takes responsibility. Both options are common—they simply change the rate the funding company will charge. Similarly, the rate will be lower if his client has good credit.

Factoring is different than a loan. Bank loans take into account the total value of a business—including equipment, inventory, and property—and give a lump sum that is paid back regularly with interest. Accounts receivable factoring, on the other hand, is not a loan. It is the purchasing of the actual debt owed to the company—money the company has already earned but has not been paid for.

In short, accounts receivable factoring is an understandable, great concept. It allows growing companies more flexibility by opening their cash flow. Rather than being stuck while they wait to be paid, these companies can work with a funding company to get cash for work they have already done so they can keep their business growing. Both sides benefit: the funding company makes a return on its investment, and the company has working cash flow.

If you have a business where waiting to collect the money owed to you is slowing down your growth, consider talking to a professional. We at Millennium Funding will sit down with you one-on-one to discuss the details of your business and work out a plan that fits your specific needs to get the money you have earned working for you faster. Our unique factoring services cater to your exact business needs.

Millennium Funding Helped Us Grow When No One Else Would

January 2nd, 2013

We at Millennium Funding help businesses stay alive. It’s not just our job but our passion. It’s not all about business, you see. When businesses thrive, people thrive. Their bills are paid. Their families are fed. Their lives move on in the right direction. That is why we do what we do.

Here’s an experience that one of our successful clients had with his business.

“About five years ago, our business was faced with a challenging problem – how do we finance all of our growth? We turned to Millennium to obtain additional funding because our bank, based upon our collateral position, could not provide the additional capital we needed to manufacture enough inventory to fill all of our orders. Millennium funding worked with our bank to provide the additional financing to ensure that we were able to ship all of our product on time.

“One million plus karaoke machines later, we are still with Millennium Funding and now use theme exclusively as our primary lender. Our success remains dependent upon fostering close relationship with our Asian suppliers. In addition to funding our A/R Millennium provides our suppliers with letters of credit – this assures them they will get paid as soon as they ship and provides us with the assurance that our goods will be delivered on time and produced to spec.
“Millennium Funding thinks outside the box and their flexibility has allowed us to thrive (and to sleep at night!).”

There’s nothing more exhilarating for us than to go above and beyond to make sure our customers’ businesses not only survive but thrive. That methodology is at the very core of our business factoring services. When our clients can sleep at night, so can we.

Cost of Electronic Medical Records: $120,000 per Physician

January 7th, 2011

A new study out by CDW outlines the estimated costs a physician medical practice will incur to fully adopt EMR (Electronic Medical Records) into their practice. Some of these costs include EMR hardware, EMR software and electronic medical records training for staff.

The summary of the study does a good job of breaking out the costs, benefits and obstacles of electronic medical record adoption. As with any technology initiative the faster you can implement the EMR system the sooner you can start earning a return on your investment.

Factoring medical claims can help a physician medical practice implement electronic medical records in several ways. The cash it frees up can be used to quickly cover the costs to purchase, implement and train employees on the EMR system. Our medical claims factoring system and be married to the EMR system from the beginning so the increase in physician billing can be directly translated into cash advances on the increase claims the practice is now able to generate.

A third benefit of factoring medical claims to further electronic medical record implementation is that it can free up the practice management to focus most of their time on the project while we do the medical billing, claims scrubbing, claims submission and follow up on any rejected claims. When used properly medical claims factoring can greatly ease the transition or upgrade to EMRs.

Consumer Electronics Show Purchase Orders and Factoring

January 6th, 2011

Over the next few days hundreds of new consumer electronic products will be unveiled at the Consumer Electronics Show known widely as CES. Some of these will be shown off by established companies with ample capital to bring them to market. Some will be almost fresh out of an inventor’s garage or basement.

Contacts will be made, deals will be done and most importantly many lucky businesses will walk away with coveted purchase orders for their new and existing products. Many times after large trade shows like CES we get calls from panicked entrepreneurs who have gotten a large purchase order and are scrambling to find capital produce and deliver their products.

One of the most rewarding parts of factoring accounts receivable is helping small businesses with this type of purchase order succeed. Our purchase order funding programs in conjunction with accounts receivable factoring solve these problems for businesses. Many entrepreneurs can’t get bank financing to fill these purchase orders, don’t have or don’t want to use their own capital to use to fill these purchase orders and don’t have access to other sources of business capital willing to finance this type of steep, sudden business growth.

We are able to help get letters of credit opened, goods shipped, goods delivered, suppliers paid and invoices collected once these new purchase orders are filled. Our hands on, service oriented involvement in the purchase order to invoice collection process adds a great deal of value that can inspire reorders or other order opportunities for our clients.

If your business has recently received a purchase order at the Consumer Electronics Show you need help financing call us today for a personalized explanation of how we can help your business.

“Ship and Hope” Syndrome

January 5th, 2011

How important is it to have a strong credit department in today’s economy? I just received a large order from a local company – should I take it?

This is what I call the “ship and hope” syndrome. In other words, fulfill an order; ship the product and “HOPE” to get paid.  I would estimate that over 90% of our clients failed to have the proper credit review procedures in place before funding with us. In today’s economy, not knowing the credit (payment history) of your clients is a recipe for disaster.

As a factor, we are constantly monitoring the credit strength of what we call the debtor (the entity making payments on the invoices). Due to the large volume of invoice payments received, we use a number of credit reporting agencies as well as credit insurance companies to help us in making funding decisions.

By virtue of being a Millennium client, our clients have access to highly sophisticated credit reports, information that would most likely, be unattainable on their own.  Whenever a client is in receipt of an order from a “new” customer, they simply fax over a copy of the purchase order (or like) to their account executive and within a short period of time, a complete credit history will be provided along with an approved funding limit (or declination) from Millennium. “It is better to have never shipped at all than to have shipped and never been paid”

Factoring is not only a solution for working capital and cash flow needs, but also a way to make solid credit decisions in the future.

Use the Proceeds of Medical Factoring to Settle a Lawsuit

December 27th, 2010

Medical malpractice lawsuits are one of the biggest problems in our current medical system today. One way a medical provider can save money is to mediate with a plaintiff before a medical malpractice lawsuit is filed.

A new study discusses the viability of mediation prior to filing a medical malpractice lawsuit and outlines the benefits for all the parties involved. For medical providers one of the problems in settling a case is the financial damage it can due to their practice.

One solution is to use the cash advance from medical claims factoring to settle a case brought against the medical provider. This is true of other medical provider lawsuits as well not just medical malpractice suits. A provider can use the equity tied up in the claims they are waiting to be paid on to settle lawsuits or to pay off existing judgments, liens or debts at a reduced amount.

The ability of medical claims factoring to generate a large lump sum of cash makes this medical financing very attractive to many providers.

Payroll Deposit Era Ends Soon

December 23rd, 2010

Starting January 1st, 2011 banks will no longer accept payroll and income tax deposits on 8109 coupons. Going forward the IRS will require all federal tax depositors with a federal payroll tax liability of more than $2,500 per quarter to submit federal payroll tax deposits via the EFTPS payment system.  This IRS requirement will cover nearly all businesses. One easy way for a small business to make sure your payroll taxes are remitted properly is to have Millennium Funding do your payroll in addition to factoring your accounts receivable.

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