How Factoring Effects the Balance Sheet

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Factoring actually improves the balance sheet by converting accounts receivable into immediate cash. Until recently, the average invoice on net-30 day terms was taking about fifty-four days to be paid. When there was a downturn in the economy, the average went from fifty-four to about fifty-nine days. When a business submits a new invoice to a factor, it takes about twenty-four to twenty-six hours.

A balance sheet improves with factoring because the question of when the company will benefit from the payment of an invoice is eliminated with an immediate advance on the invoice. It is much more predictable to plan on factoring than other variables such as the effects of the economy. The amount of time it takes for another company to pay an invoice can be effected by the economy as well as other variables.

Even though banks and other conventional loan institutions use a UCC-1 filing to tie up company assets, accounts receivable are not considered the most secure for backing up a loan. Generally there are other assets considered more secure as collateral.

But a factor only ties up only accounts receivable and not other equipment as collateral. In fact, factoring is not a loan but the sale of an asset. So it enters the balance sheet as cash rather than as a loan.

In difficult times, companies have used credit cards to finance material and operational costs rather than conventional loans. However, the burden of paying off the credit cards is difficult due to their clients paying late on invoices. One of the nice features of factoring is not having to make periodic payments. Furthermore, the amount of money available grows automatically as the business grows. There is no need to apply for an increase in the line of credit.

Factoring is similar to receiving payments from credit card companies. When Company A buys from Company B, a credit card company pays Company B in full minus the discount almost immediately. A factor pays a percentage almost immediately and the reserve minus the discount once the invoice has been paid in full. So a credit card company pays in one installment whereas a factor pays in two installments.

Factoring is more expensive than taking out a conventional loan so it should be considered a time sensitive and a transitional way of financing a business. Some Fortune-500 companies have used factoring as a way of growing their companies and becoming successful. It is a viable alternative when a company is growing but not yet able to qualify for adequate conventional funding.

Company executives should always keep in mind that the number one reason for failure in business is from a lack of available funding. They should always understand the time value of money. Cash flow is extremely important when a company is growing.

An example of how factoring works is as follows: Company A delivers products and/or services for Company B for $1,000. The invoice is submitted to the factor. The factor immediately sends Company A $800. After company B pays the invoice in full, the factor sends Company A $200 minus a discount. (Perhaps $20-$30 for a thirty day period)

Another flexibility of factoring is delayed submission of invoices to the factor. If it is more advantageous for a company to finance customers for the first thirty days and factor only the invoices not paid within the thirty days, the company can factor only those invoices. Furthermore, the business does not have to factor all of the invoices.

Only the companies invoicing business to business or business to government are eligible for factoring. It is also possible to factor purchase orders particularly if the company is selling products rather than services. In some cases, it is possible to finance the purchase orders and invoices.

Factors have a tendency to specialize in an area of their expertise. Some factors only do medical factoring. Others do construction. Yet others specialize in manufacturing and distribution. So it is important to have a broker who can match the right factor with a business needing factoring in a particular industry. Usually the percentage of the advance on construction invoices is only about seventy-percent due to nuances in the construction industry such as liens, subcontractors, tier subcontractors, retention etc.

The whole purpose of factoring is to increase cash flow in order to help a business grow. It is possible to grow only when there is adequate cash flow.

How does the Canada Revenue Agency find out about undeclared income

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The Canada Revenue Agency is extremely resourceful when it comes to finding out about undeclared income. The age of technology has made it very easy for them to find out information and when they do they will come after the taxes that they believe that you owe. So how does the Canada Revenue Agency find out about undeclared income?

Here are some of the common ways that the Canada Revenue Agency can find out that you have earned income that you haven't declared:

Audits. When one company is audited it often triggers a chain reaction. If you are self-employed and have performed services or worked for a company who is audited, the Canada Revenue Agency will often look at invoices and cheques that have been paid to other companies and then check to see if the other company is up to date in their tax filings or if the amounts of the invoices exceed the companies declared income.

Tax Slips. Many contractors assume that because they are paid by cheque that the CRA won't know about their income until they file a tax return. Companies must file a T4A for each contractor who they paid during a given tax year that includes the amount of income paid to the contractor for that tax year.

CRA Snitch Line. The CRA has an anonymous phone number where people can report friends, family members, colleagues, suppliers etc who have undeclared income. Commonly ex-spouses and business partners will exploit these services to wreak havoc on another which they once had a relationship with and now hold ill will towards them.

Once the CRA thinks that you may have undeclared income the real trouble can start. If you are up to date in your tax filings they can audit or re-assess your tax returns. If you have not filed a tax return they can file a notional assessment which is filing your return on your behalf and then assessing income and taxes that you will owe. They will add penalties to any tax that you owe in association to undeclared income and charge interest on the tax debt and penalties retroactively. This can double and even triple the size of a tax debt.

So what can you do if you have undeclared income? First, don't wait until the CRA catches up to you. If you know you have undeclared income, if you come forward and declare it under the voluntary disclosure program before they contact you about the undeclared income; you can avoid interest and penalties altogether. Organizations that specialize in helping people with tax problems can make an application from you under the voluntary disclosure program on your behalf.

If the CRA is already pursuing you about undeclared income, hire representation immediately. A representative who is skilled at working with taxpayers who have tax problems can act on your behalf to help you become tax compliant.

The worst thing you can do is ignore the problem because it won't go away by itself. Failing to declare income is tax evasion under the income tax act and the CRA has many tools at their disposal to come after you including criminal prosecution. Time is your enemy and the faster you deal with your undeclared income the better!

How Does Life Insurance Work

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We all need life insurance. Even if we do not have much in the way of personal expenses, life insurance is a must. Parents will even obtain life insurance on their newborn babies because we never know what is going to happen from day to day. Newborn babies do not have debt, but there are funeral expenses that the parents have to worry about if the worst happens. If you are an adult without life insurance, that is as good a reason as any to have coverage.

But if you are not sure how life insurance works, that is okay. Many individuals refrain from even getting involved with looking for life insurance for the fact that thy lack the awareness needed to find it.

Fortunately, that all ends right now

The different policies

The first place that people tend to get confused is that they are not sure which policy type is best for them. Well, here is a breakdown of what you may want to consider and when you may want to consider it.

If you are a young individual, such as someone who is in college or just establishing your life, you may want to look into a Term policy. This is because Term life insurance policies are the most affordable and they offer a significant amount of coverage. You can get over 100,000 dollars in coverage for 20 dollars or less if you need to.

If you are a young individual or middle aged individual who can afford a higher premium than what you would have to pay with Term, it is a good idea to look into Whole life. You want to get this policy young because your health is in the best condition. The premium you get now is the premium you will pay for the rest of your life. But even if you are not young, you still want this type of policy because it gains cash value in the form of an annual dividend. Eventually, you can borrow from the policy if you need to.

Universal life is a combination of Term and Whole. This is because you can make changes during the life of the policy that you can make on Term but not Whole, while keeping the policy for the duration of your life. If you cannot afford a higher premium when you are young, you can increase your coverage when you are older and pay the higher premium. That is one example of what you can do. This policy still gains cash value.

So now you know the different types. Now what does life insurance do after you have it?

How it works

How life insurance works is quite simple. You have to inform your family of the policy so that they can contact the insurance company and prove your death so that they will pay your beneficiaries. Your beneficiaries then take the money to settle any outstanding debt, pay funeral costs, and pay burial costs. You may even want to provide enough to where your spouse can be financially secure for a while so that he or she can get on their feet on their own.

It is as simple as that. This keeps your family from having to liquidate assets or take a smaller inheritance after you die. In other words, they do not have to deal with financial shell shock when you have an adequate life insurance policy.

Jane Reynolds works for life-insurance-settlement.com; a company dedicated to making it easier for you to find quality life insurance in your state. Life-insurance-settlement.com is a directory of life insurance websites and makes looking for life insurance a one stop affair.

How Does Drug Addiction Affect Family Relationships

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Qualities you need to get through medical school and residency: Discipline. Patience. Perseverance. A willingness to forgo sleep. A penchant for sadomasochism. Ability to weather crises of faith and self-confidence. Accept exhaustion as fact of life. Addiction to caffeine a definite plus. Unfailing optimism that the end is in sight. "Khaled Hosseini"

Drug addiction is the most dangerous thing as it ruins the life of both, the druggist as well as his family members. The long use of drugs depreciates the health of the person along with mental weakness. It not only affects the person inhaling drugs but destroys his family too. So, it causes a big damage to the family and cant be easily repaired.

Today, we are living in a nuclear family so the whole family is run by one individual mainly. So, if somehow that person gets addicted to drugs, it will break the family both financially and mentally. This will bring the crisis of the money and will force them to gain money by hook or by crook.

Mental weakness hampers relationships:
The drugs make the person mentally weak. So, the person performs many unwanted things which start breaking his/her personal relationships and cant be easily mended. On getting addicted to drugs, you wont be able to live without drugs and you will need them more and more. It will consume most of your time and your concentration too. So, you wont get much time to spend with your family members or friends and this starts generating a gap between your relationships. Along with it, the number of arguments also increases because you are giving more preference to drugs than your family.

Body and mind control is lost:
When a person takes regular drugs and gets addicted, his brain and body arent in his control. This causes illness and diseases to that person. So, that person mostly needs a caretaker who can handle him. This is a great burden because sometimes you need to take care of his physical health also. This will start depreciating the goals of the caretaker as he doesnt have much time to do things according to his own wish.

Financials become weak and hence disputes occur:
The drug addiction also brings financial crisis with it. Drug addiction will not allow you to work and force you to take more and more drugs. This will decrease your income and increase your expenditure. In short, the financial health of the family goes down and will generate stress for all family members.

Understanding with the partner vanishes:
Taking drugs will contrast your understanding with your partner and will increase the risk of Sexually Transmitted Diseases (STDs). This is the worst thing which occurs after taking drugs. The person is not in control after taking excess drugs and start moving towards violence or inappropriate behaviors. It may be verbal, physical, sexual or emotional.

Sometimes, drug addiction may also cause many misunderstandings and this may lead to divorce. Due to which, children suffer a lot and remain in the unstable environment. This destroys all their goals and makes them mentally weak.

Conclusion:
The drug addiction causes a big damage to your health and reflects the impact on your family. So, in order to save your family and live a happy life, you must remove drugs from your life. On deleting the drug from your life, you can spend plenty of time with your family members or friends. This will help in generating close relationships and leads to a happy life.

Life is a series of baby steps along the way and if you add up these tiny little steps you take toward your goal, whatever it is, whether it's giving up something, a terrible addiction or trying to work your way through an illness. When you total up those baby steps you'd be amazed over the course of 10 years, the strides you've taken. "Hoda Kotb"

How Does Bad Credit Effect My Chances of Getting a Loan

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Having bad credit certainly has an effect on your chances of getting a loan. Of course, there are degrees of bad credit. Depending on your situation it may be possible to do other things to help make up for the issues in your financial history so that you can be approved for financing.

A lender decides who to lend to based on how likely it is that they will repay the amount they've borrowed. One of the major factors in evaluating how likely this is, is their financial history. Your credit score is calculated based on the information in your financial history, which is why the score itself becomes so important. Not only do lenders use this information to decide whether or not to approve your application, but also to decide what interest rate they will offer you. The worse the chances are that you will make your payments on time, the higher the interest rate they will offer you.

Every lenders criteria is going to be different, so if you get turned down at one, or offered a horrible rate, you can always look at other lenders. Keep in mind that when you apply, however, this will show up on your report and it does not look good for you to have many applications at once on your report.

If you're applying for a loan the application will ask you about your employment history. If you have a well paying job, that you have been at for a long period of time, this will help on your application. This shows stability and that you will be able to make your payments.

If you have a large percent down payment prepared for whatever it is you are using the financing for, this will also show that you were able to save up that money and handle your finances, another good thing to have.

If you have made recent efforts to improve your credit history you should briefly point this out to a lender so that they can take into consideration that your circumstances have changed. If there is a clear reason for why you had the past financial problems that can be summarized in an approximately two sentence explanation do tell them, lenders will care about this. Examples include medical issues, divorce, or other unusual life circumstances.

While bad credit definitely effects your chances of getting a loan, if you need financing there are options available to you. Be aware, however, that your interest rates will be high. If you make all of your payments on time though this may be a great opportunity for you to build up a new history of on time payments for your credit history.

How Does A Bank Look At Your Financial Statements

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As a business owner, there may be times when you need a loan or a line of credit to help purchase new materials or improve a temporary cash flow situation. Banks will require copies of your financial statements to determine whether or not you are credit worthy. Here's what the bank will look for in your statements:

Is Your Business Established?

One of the factors a bank will consider before lending money to a business is how established that business is. Did you just start your business last month, or have you been operating for the last four years? A business that has successfully been operating for several years will have a better chance of securing funding than a newly born business, most businesses fail within their first year of operation, and are considered high risk by lenders.

A key issue for businesses trying to obtain financing is related to your timing. If you wait until you are in a cash flow crunch, you lose your negotiating power with the potential lender, and your overall financial position is weaker than if you look for capital before the cash flow situation arises.

How leveraged are you?

Banks will look over your income statement and balance sheet to come up with financial ratios. They'll run numbers and generate predictions to see whether or not you have the ability to make loan payments, and how likely you are to continue having the ability to make loan payments in the future.

One of the common tools to asses a business is their debt-to-equity ratio which is simply the total amount of your business debts divided by the equity in the business. The equity is determined by subtracting all of your debts from your assets. A quick example:

Assets

Cash $10,000
Inventory 50,000

Liabilities

Accounts Payable $40,000

Equity would be $20,000 ($60,000 in assets less the $40,000 in debts) and the debt-to-equity ratio would be 2:1 ($40,000 in debts divided by $20,000 in equity).

Generally speaking, the higher the debt-to-equity ratio, the more risky a business is, but there are many other factors a bank will consider. One of those is the industry you are in. Some businesses are by nature more leveraged than others. It is a good idea to know where your company stands compared to its peers before you request a loan from the bank.

Are You Securing the Loan With Collateral?

When a business wants to take out a loan or line of credit, often they'll be asked if they have any collateral that the bank can use to borrow against. This reduces your risk in the eyes of the lenders, since if you fail to keep up with your loan payments the bank has the right to take whatever you used as collateral to recover their money. Proof of value for items used as collateral will need to be established, and you may find the bank has a different idea of what the potential collateral is worth than you do!

Collateral for loans determines the terms of the deal. Generally, loans with collateral are viewed as less risky, and therefore have lower interest rates, and have longer repayment terms. Also, the more long term the collateral, the longer the term of the note, for instance, a real estate loan will have a longer repayment than one secured by accounts receivable.
Some commonly used collateral include:

* real property
* equipment
* accounts receivable
* inventory
* intellectual property

Personal Guarantee for Small Businesses

Many small businesses will be asked to sign a personal guarantee on a business loan. Your signature indicates that you will be personal responsible for assuming the debts of the business if the business defaults on the loan and is unable to pay back the money. It reduces the risks to the bank lending the money to a business, because they have another avenue (you) to pursue if the original borrower (the business) does not keep up with payments. Sometimes the business owner will be asked to assign a portion of their personal assets or property over to the bank in order to secure the business loan.

Cash Flow and Profitability

A well established business can sometimes obtain financing if they show a good history of cash flow and profitability. Banks will determine this information through your financial statements, including your income statement and balance sheet and will probably want to view at least three years of records. It is important to consider the impact of the new loan. Often times, the bank will 'pro forma' the financial information you give them to see if the new loan can be serviced by the existing profits of a company. Many times a business owner will want to consider the profits that will be made with the loan (additional inventory or new equipment), but a bank takes a more conservative approach to see if the historical profits will support the new debt.

How do you recruit a lot of people in Your MLM Company

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A big question in the industry should be how do I recruit mlm? Traditional offline approaches have worked for some. However, most don't feel comfortable making cold calls, approaching strangers at malls, and hosting home meetings. The power of the internet has really helped leverage time for home base business owners while doing mlm network marketing.
Most people have the wrong approach when trying to recruit network marketing. Pitching your opportunity right away will even scare people away online. Most people do not want to be sold. People online are looking for assistance at the time with their business. View other mlm network marketers as friends and help them. Show them how to generate more traffic for their business. Offer to have them sign up for your newsletter or a marketing system that can help them. Once you have a marketing sytem it is important to get the right training. In order to get the skill set to sponsor mlm you must learn from top leaders. Set aside time every day to learn something new. Most top marketers will tell you to find five-ten places to advertise your business. You have to crawl before you can walk and walk before you can run. Learn one marketing tactic first. Keep working at that tactic till you hit a nice number of leads per day generated. Then read up on another tactic and soon you will be able to add a second strategy to your marketing efforts. Ok so you developed the skill set to generate leads and get sales in your mlm network marketing business. Now, you need to be willing to teach others how to do the same. Spending one on one time showing every detail to your prospects is usually not worth your time. Yes, you want your team to duplicate results but you need to manage your time wisely. Set up a website, video, or host webinars so your whole team can learn the same marketing strategy that you use. You shouldn't have to be technical support and customer service support. The patient and persistent marketers will be able to figure things out by watching training and there is usually 3rd parties they can contact. One example if a member is having trouble setting up auto responder letters they can call Aweber. During my early days as an mlm network marketer I doubted myself. A few years back one of my mentors Mike Dillard passed on a nugget to me. He said anyone could be a seven-figure income earner in this industry when developing three things. The three things you said is you must develop a good skill set, offer value to your prospects and members, and be a leader. When I thought about it more it sounds easy to do. All you have to do is develop the right online and offline strategies to generate consistent leads every day. Then always offer value for your leads and members to want to work with you. Last, follow up with your leads and provide training to show your leadership. You can get more mlm network marketing strategies by following the link listed in the resource box.

Before I started doing marketing I thought great marketers could even sell ice to Eskimos. Guess what? The big secret is: they never sell ice to Eskimos. They make sure they have an AMAZING offer first. Learn how we're creating financial freedom all across the world and how you can do the same FREE => Want to get 10-20 distributors per month? Have a great day! Dave Steffensmeier