“does factoring make cents in today’s economy?” a presentation to: the professional credit and...
TRANSCRIPT
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“Does Factoring Make Cents In Today’s Economy?”
A Presentation to:
the Professional Credit and Financial Association of Calgary
Quality Hotel Airport and Conference Centre
May 19th, 2009
Judy PerdomoSolutions ProviderLiquid Capital Rockyview Inc(403) 503-1233Toll Free: 1-877-313-1233jperdomo@liquidcapitalcorp.comwww.lcrockyview.liquidcapitalcorp.com
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Cash is King?
• “Money isn’t the most important thing in life, but it’s reasonably close to oxygen on the ‘gotta have it’ scale” …. Zig Ziglar
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Does factoring make ‘cents’ in today’s economy?
• Advances up to $5MM range
• Solvent company with strong margins
• Principals of integrity
• Credit worthy commercial customers
• Current financing arrangements
• Confirm delivery and acceptance of goods and services
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A brief history
• 5,000 years ago in Babylon?
• The Roman experience
• Hudson’s Bay 1670?
• USA 1808
• Canada 1925
• A/R financing is used more than all types of business financing combined
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Some statistics
• Total world factoring volume is over $1 Trillion per year
• Volume almost evenly split between recourse and non-recourse
• 4 leading markets in the world are: UK (100 cos) – US $280B, Italy (40 cos) - $131B, USA (200+ cos) - $106B, France (25 cos) - $105B
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What is factoring anyhow?
• “A financing method in which a business owner sells accounts receivable at a discount to a third-party funding source to raise capital” (www.entrepreneur.com)
• Can be recourse: company producing invoice is liable for payment if not collected
• Or non-recourse: factor bears the risk
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Factoring Process FlowchartYou
deliver Goods or Services and create an invoice
YouSell the invoice to
Liquid Capital
Liquid Capitalverifies invoice with
your customer
Liquid CapitalAdvances you up to 80%
Of the invoice immediately
Liquid CapitalCollects payment from
Your customer
Liquid CapitalHolds the 20% balance
in reserve
Liquid CapitalPays you the 20% reserve minus fee
You elect to continue the cycle
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Apples & Oranges? How factoring compares to a bank loan
• Continuous supply of funds, no ceiling
• Turnaround time of application
• Creditworthiness of customers
• Repayment considerations
• Not debt financing
• Additional service offerings
• Funding linked to sales
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Dispelling the myths
• Loan shark/Lender of last resort
• Collection Agency
• Alienation of customers
• Losing control over receivables
• Prohibitively expensive
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Real company success stories
• Overnight Courier
• Oilfield Construction
• Pallet Company
• Trucking
• Temporary Staffing
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Overnight Courier
• Started the search for financing in August 2007 with one year in business
• Payroll twice a month• Invoice size $25 - $5,000• Customer base grown from 500 – 1,000• We assisted them in taking on two large
contracts which doubled their sales overnight
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Oilfield Construction
• Found me in late October 2006
• Main customer went from paying at 60 days,,, to 90
• 30 days more to wait for cash
• Quadrupled sales Jan 2007 – Jan 2008 ($65K - $280K)
• Can plan based on weekly cash flow
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Pallet Company
• Liquid Capital has factored for past 3 years
• Company grew sales from $0 to $3million
• Company recently acquired operating line from their bank
• By funding sales we enabled the company to exceed their growth targets
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Trucking
• Started with 1 truck - monthly rev of $12k
• Expenses $9k per month
• Factoring provided working capital for expenses
• Today Company has 11 trucks – monthly rev $140k
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Temporary Staffing
• Company provides temp accounting/admin staff
• Cash flow demand for payroll
• Factoring provides 85% advances on invoices
• Company started a year ago with 4 staff and today they have 16 staff – annual rev $675k
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What to look for in a factoring company…
• Quality credit department
• Professional collection staff
• Customer service and support: local?
• Contract details
• Industry specialization
• Track record, code of conduct
• Going the extra mile…
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Liquid Capital – a solid choice
• Liquid Capital Rockyview Inc is supported by Liquid Capital Corp
• $100MM + yearly volume
• Credit, collections and back office operations provided by Montcap Financial
• Montcap wholly owned subsidiary of Accord Financial
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19
Our affiliations
• Affiliated organizations:
– International Franchise Association
– International Factoring Association
– Commercial Finance Association
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Why Liquid Capital Rockyview?
• I am local!
• Strong client relationships
• Fast and flexible
• Professional background
• Proven track record
• Clients come for the cash and stay for the service
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Questions? Thank you!
Judy Perdomo
Solutions Provider
Liquid Capital Rockyview Inc
(403) 503-1233
Toll Free: 1-877-313-1233
www.lcrockyview.liquidcapitalcorp.com