Posted by admin on Feb 26, 2011 in
Finance There is a reason why accounts receivable financing is a four thousand year old financing technique: it works. Accounts receivable financing, factoring, and asset based financing all mean the same thing as related to asset based lending- invoices are sold or pledged to a third party, usually a commercial finance company (sometimes a bank) to accelerate cash flow.
In simple terms, the process follows these steps. A business sells and delivers a product or service to another business. The customer receives an invoice. The business requests funding from the financing entity and a percentage of the invoice (usually 80% to 90%) is transferred to the business by the financing entity. The customer pays the invoice directly to the financing entity. The agreed upon fees are deducted and the remainder is rebated to the business by the financing entity.
How does the customer know to pay the financing entity instead of the business they are receiving goods or services from? The legal term is called “notificationâ€Â. The financing entity informs the customer in writing of the financing agreement and the customer must agree in writing to this arrangement. In general, if the customer refuses to agree in writing to pay the lender instead of the business providing the goods or services, the financing entity will decline to advance funds.
Why? The main security for the financing entity to be repaid is the creditworthiness of the customer paying the invoice. Before funds are advanced to the business there is a second step called “verificationâ€Â. The finance entity verifies with the customer that the goods have been received or the services were performed satisfactorily. There being no dispute, it is reasonable for the financing entity to assume that the invoice will be paid; therefore funds are advanced. This is a general view of how the accounts receivable financing process works. Read more...
Tags: Accounts, Don’t, Financing, Happy, Receivable, Worry
Posted by admin on Jan 17, 2011 in
Finance Oh here we go again. I heard from another realtor just this week; oh my seller cant sell a property and let someone take over the payments because the bank may use the Due on Sale Clause to ask for all their money. In the same conversation the realtor outlines the sellers best plan of action is to keep dropping the price (who cares that its the sellers ,000 to ,000 of equity just being thrown out the window) or rent it out.
Many realtors today without hesitation will suggest to their clients, if you cant sell, just lease it out yet the realtors dont sit down and list all of the ridiculous reasons landlords have been sued and LOST millions over. Renting has been around forever and the risks of being a landlord are just an acceptable risk verses the reward of not making vacant house payments or not letting the home go to foreclosure.
Yet at the same time, those same realtors because they are unfamiliar with owner financing as a selling option will say dont do owner financing its too risky. Oh really? Can the buyer living in the owner financed home sue the seller? Nope, not if you construct the transactions the way I do it. If the buyers dog bites the neighbor kid or the UPS guy, can the injured person sue the seller who provided the owner financing? Nope. If the buyer does something stupid, can he sue the seller who owner financed him the home? Nope. Yet if you substitute tenant and landlord instead of buyer and seller in the above questions. The answer becomes yes to everyone. In every one of those scenarios the landlord can be sued, has been sued and has lost. Read more...
Tags: Austin, Finance, Happy, Owner, Renters, Sale
Posted by admin on Feb 14, 2010 in
Finance
There is a reason why accounts receivable financing is a four thousand year old financing technique: it works. Accounts receivable financing, factoring, and asset based financing all mean the same thing as related to asset based lending- invoices are sold or pledged to a third party, usually a commercial finance company (sometimes a bank) to accelerate cash flow.
In simple terms, the process follows these steps. A business sells and delivers a product or service to another business. The customer receives an invoice. The business requests funding from the financing entity and a percentage of the invoice (usually 80% to 90%) is transferred to the business by the financing entity. The customer pays the invoice directly to the financing entity. The agreed upon fees are deducted and the remainder is rebated to the business by the financing entity.
How does the customer know to pay the financing entity instead of the business they are receiving goods or services from? The legal term is called “notificationâ€Â. The financing entity informs the customer in writing of the financing agreement and the customer must agree in writing to this arrangement. In general, if the customer refuses to agree in writing to pay the lender instead of the business providing the goods or services, the financing entity will decline to advance funds.
Why? The main security for the financing entity to be repaid is the creditworthiness of the customer paying the invoice. Before funds are advanced to the business there is a second step called “verificationâ€Â. The finance entity verifies with the customer that the goods have been received or the services were performed satisfactorily. There being no dispute, it is reasonable for the financing entity to assume that the invoice will be paid; therefore funds are advanced. This is a general view of how the accounts receivable financing process works. Read more...
Tags: Accounts, Don’t, Financing, Happy, Receivable, Worry
