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Myths vs. Financial. Financial information

FINANCIAL MYTHS vs. FINANCIAL DATA

The evaluation of financing options for your business B2B

The world of commercial finance is complicated. It is suggested that all businesses consult with their trusted advisors (CPA, lawyer or couple) before making any financing transaction with long-term effects on their activity. The following statements are opinions based on dictionary definitions below.

The definitions in the Merriam Webster online dictionary short:

MYTH:

Pronunciation: "Mith

Function: noun

Etymology: Greek mythology

1 a: a usually traditional story of the alleged historical facts used to deploy part of the worldview of a people or explain a practice, belief or natural phenomenon.

2 a: popular belief or tradition that has grown up around something or someone, especially: one with the ideals and institutions of a society or a segment Company

2 b: an unfounded or false notion

FACT:

fakt pronunciation '

Function name

Etymology: the memory of America, from Factus neutral, past participle of facere

1: a thing made

2: the quality of being real

March 1 thing: that there is indeed

3b: a true story

4: a piece of information presented as reality objective, in fact: in truth

"A fool and his money are easily separated"

FINANCIAL MYTH: There is no

Financial firms to provide funding within 24-48 hours are the best option.

FINANCIAL FACT:

Unless you are desperate for funding, which should take time to compare options, read the nominations, and consult your advisors.

Please read the draft contract prior to accepting the terms and carefully consider the risks related to following issues:

1. Percentage to do: This can range from 60% to 90% of the nominal value of invoice. The percentage progress enough to help you profitably grow?

2. Your obligation to cooperate with the financial institution: Are you forced to sell 100% of your receivables each month, or is permitted to sell at their discretion? Is there a minimum monthly fees and if so, you could use the services of the commercial finance company every month?

3. Would it be more profitable if you use the services of companies funding? In other words, can afford to pay the cost of trade finance to grow your business?

4. is the best source for you: a small commercial finance company finance company commercial department in large loans, or assets of a bank? With smaller companies are more likely to work with those responsible and generally greater flexibility and discretion. With larger companies, you can do larger transactions, which can be of great importance, especially if their business. Banks can be an excellent option if your account is perfect and that's good to meet strict requirements. Banks are institutions of safety and soundness requirements that banks often do private lenders more cautious. GFS works with three types lenders.

5. Choice of Law: If you are in California and any dispute must be declared New York may be at risk can have to travel to protect their interests? Where are the disagreements or disputes be resolved? Is it compulsory arbitration?

6. Penalties for cancellation Early: Some contracts provide that each year, if you want to leave the business of the finance company, you are responsible for the "greater of two percent (2.00%) the maximum line of credit, or the number of months remaining in the contract, multiplied by the minimum monthly fee. The risk of termination rates affordable?

7. interest penalty if a customer does not pay on time: Some lenders provide that if a client can not replace another tax bill and not of a penalty. Other lenders may require that if a customer does not pay an invoice within 90 days, pay 20% of bill rate nominal 7.5% per month over until actual payment. What is the financing agreement if your business requires customer does not pay on time?

"The whole truth"

If someone is with the truth, to omit information in order to create a false image of a situation without lying.

MYTH OF FUNDING: N º 2

Financing companies offer lower rates are the best option. For example, Co. "A" has a 3% per month; Co. "B" offers 3.25% for month. Co. "A" is the best option.

FINANCIAL FACT:

The conditions of the contract to determine the actual costs based on when customers to pay. This requires an analysis.

Please read carefully review the terms of the contract on how the interests of his race and experience how your customers typically pay the actual costs of financing the project. Here are some examples:

1. You sell a bill from a nominal value of $ 100.00. Assuming that the fees paid for the contract is 3% for 30 days with an advance of 80% for you and your customer pays the commercial finance company total amount due within 30 days. Take an advance of $ 80.00 on 1 and your customer pays the commercial finance company $ 30 100.00 Day:

v Assume that the lender "A" fee of 1% for each period of 10 days. Suppose that "the date of payment" is defined in the contract trade finance as the date on which the finance company receives payment from his client pays more than ten (10) business days. Ten days are two-week bank calendar. You will pay for 44 days. The one per cent during the first 10 days, more than 4 percent for the next 34 days is equal to a charge of 5%. Your cost = $ 5.00.

v Assume that the lender "B" costs of 1.5% every 15 days. Suppose that the date payment "is defined in the contract of trade finance as the date the financing company receives payment from his client, in addition to three working days Check Clearing. You will pay for 33 days. You will be charged 4.5%. Your cost = $ 4.50.

v Assume that the lender "C" define the date of payment "that the day you receive the check or electronic funds transfer. The commercial finance company interest stops the timer the day they receive payment from his client. You will be charged 3%. Your cost = $ 3.00.

v Assume that the lender "D" sets the date payment "as the day they receive the money and interest expense funds actually advanced diary, also known as per diem interest. Since it is charging a 3% cost $ 80.00 = $ 2.40.

2. All contracts for the definition of the date of payment and the method of calculating interest is essential to anticipate their actual funding costs. All methods of calculation above, unless the lender "A" may be reasonable in light of the risks inherent in the operation. Gregg Financial Services working to obtain the most competitive rates and terms of the initial financing of our clients, and GFS is to reduce the cost of trade finance as it grows.

3. If your customers typically pay in 60-90 days, a contract which requires a minimum interest charge of 60 days is not unreasonable. This condition may be a need for funding of medical receivables.

4. Ask yourself if the contract financing business of the Company requires you to sell all invoices invoice (100% of all invoices) on the day of delivery, or can be individual to sell up to 59 days after maturity, according to your needs? There are advantages and disadvantages: lower prices compared to the flexibility. Spoken much evaluation of their financial needs of your business and gross margins to pay financing costs.

"Easier said than done "

If something is easier said than done, is much more difficult than it sounds. Often used when someone advises you to do something difficult and trying to make it look easy.

FINANCIAL MYTH No. 3

You can determine the best company to work with the finance the simple comparison of several different sites.

FINANCIAL FACT:

Websites are advertising. The knowledge of the lender, his reputation and business practices are essential to choose wisely.

The key points to consider:

In assessing the company finance the most appropriate commercial, make sure:

• The provider is a trustworthy company

• the contract is consistent with the verbal or written quotes

• you are aware of all financial penalties if they want to terminate the agreement quickly

• Credit limits funding are sufficient for initial needs

• you have read the contract carefully before signing, verifying the amount of funding and time notice

• understand all the terms and conditions, and costs paid

Commercial Finance Brokers work with many companies engaged in trade finance and banks in several companies of all sizes. There are many specialty areas, such as funding for the purchase, financing accounts receivable, inventory financing and funding of the SBA. Most commercial finance companies limit their services to one or two of these categories. A commercial finance broker will evaluate the different companies and make game that best suits their business needs. Some companies also monitor commercial finance may charge non-competition and correspond with them. Besides comparing rates, there are many points to consider when choosing services.

To anticipate customer problems that inevitably arise, what level of customer service they offer to help solve problems. Do you offer telephone support and in-person meetings, email support and live chat, or a combination of services? Select the commercial finance company that provides multiple ways to address questions or concerns for reliable answers. Note the difference in where you are and the time zone you are in the business of the company Finance. How that affects the reduction of funding? How does this affect their ability to achieve its key financial representatives?

Can request a list of references before doing business with them. Be sure to ask questions such as:

• Were they able to expedite its request for funding?

• Is this the simple process of approval? How long does it take?

• Is the company easy to reach by phone and e-mail?

• How long did it take before receiving the funds?

• If you had a problem with your account, what did they done to solve?

• How do you react to customers working with commercial finance company? Is it appropriate to treat them?

• Would you recommend this business?

Face Value "

If you take some of its par value, acceptance of appearance rather than seeking more about the subject.

MYTH OF FUNDING: N º 4

A contract shall not use means you do not have to pay finance you pay less if your company is a defect.

FINANCIAL FACT:

Most contracts require a payment, unless your client present bankruptcy or closure.

There are two general types of factoring: recourse and non recourse. Factoring is used more often. Action With factoring, the company trade finance funds usually all invoices you send, but require the reimbursement of expenses, in addition to the unpaid bills within a specified period, normally 90 days.

non-recourse factoring can free your company from all liability for accounts payable, if and only if it is really "No resource "without conditions.

The commercial finance company without recourse to a contract have more stringent policy to accept bills. In a contract not to use commercial finance company agrees to purchase the invoice from you and to take part or full responsibility for payment. Depends on terms of the contract. Credit insurance may be required. This is an added expense.

Factoring without recourse is generally defined in the financing contracts for trade say that if the customer does not pay in limited situations, not your problem. For example, if the customer goes bankrupt or go into bankruptcy is not required to reimburse commercial finance company ahead of the bills. But if there is a problem with the warranty in any case a problem with your product or service, you may be required manager in advance that you received. And commercial finance company can claim a violation of the security of many performances in his contract as a defense to accept responsibility for any loss due to lack of payment in an agreement not to use.

There are also companies Commercial Finance, which will provide a mixture of both. These companies promise to take the risk of their accounts, but require you to share in a replacement of equal or greater value to pay the bills slowly, or default. This is not a true "no use" contract in the literal sense of the idea, because they are necessary to replace the bills in arrears with the new laws that may perform.

On the surface, without the need for better sound appeal. But if the costs of non-recourse factoring is much greater than the full use, is the additional cost to transfer the default risk is worth the expense? How many of your customers for bankruptcy or go out of business? During a period of time, can cost more than their potential benefits to transfer part of the risk of payment to the finance company.

The most commercial finance companies offer complete the implementation of non-recourse factoring thorough credit checks on customers before they pay a down payment on a bill. It is an advantage for all concerned. If it is likely that the bill will be paid by a customer credit, the bill will be purchased. Quality control of credit is beneficial because you do not want to sell their products or services to businesses in the knowledge that is not likely to pay. On the other hand, companies may prefer to do with companies that do not meet the solvency standards non-recourse factoring. There may be compelling reasons for choosing appropriate action against non-recourse factoring.

"Watch the money and care for books."

If you take care of currencies, the pound will take care of themselves, which means that if someone is careful not to lose small amounts of money, accumulate capital.

"Hook, line and sinker"

If somebody accepts or believes something hook, line and lead, accept it completely.

MYTH OF FUNDING: N º 5

new business with a hot new product venture capital needed to grow rapidly.

FINANCIAL FACT:

You can increase exponentially with the financing for the purchase, factoring and inventory financing commercial finance company.

In general, products sold, more of their income and benefits. The more you order, the more you sell, as long as they can pay their suppliers in the delivery. financing of the command is financing the inventory of goods in transit to your customer.

Commercial finance companies provide financing for the purchase to pay their suppliers, enabling you to complete the sale and delivery of their orders to their customers. This often involves a letter of credit using the credit Commercial Finance Company to ensure payment to the factory manufacturing the product, especially if the manufacturing plant is located in the U.S..

When goods are accepted by the customer, an account receivable is created. A factor of the invoice or commercial finance company purchases accounts receivable, payroll payment in order to finance the purchase. You are paid the benefit when their customers pay.

The funding structure Trade can follow these steps:

Letter of Credit (to guarantee the payment of goods manufacturer) ► Order of financing (pay Manufacturer / Supplier) Accounts receivable ► Finance (Payroll Purchase Order) Financing Inventory Financing ► ► ► The customer pays paid Factor

► You are paid the benefits of their sales after financial expenses are paid

CRE Finance to help you determine what funding is available, depending on their circumstances, prices competitive rates.

Hardball "Play"

If someone plays hard, are very aggressive in trying to reach your goal.

Capital Social financing

The venture capital industry:

Venture capital is money provided by professionals who invest alongside management with young, growing companies that have the potential to become major economic contributors. Venture capital is an important source of capital for startup companies.

Companies risk capital managed by professionals are generally private partnerships or Place: Widely supported by funds public pensions and private foundations, foundations, corporations, wealthy individuals, the foreign venture capital investors and themselves.

venture capital in general:

• Finance and new high-growth companies;

• Purchase equity securities;

• Assist in the development new products or services;

• Add value to the company through active participation;

• Take more risk in anticipation of increased prices;

• Have a long-term orientation

When considering an investment, venture capitalists carefully screen the merits technical and business of the proposed venture. venture capital investing only a small percentage of companies that have a long term consideration. In the future, are management active society to contribute their business knowledge and experience gained in helping other companies with similar growth challenges.

The advantage of the investment venture capital is that you get the money you can develop your business and gain market share before someone beats you to it. Social capital is not a loan repayable but the capital (VC) invest their money in exchange for equity (stock ownership) in your company. CV to get their money only when your company is acquired by another company or "public key", that is, when its shares are traded on a stock exchange. The disadvantage is that you are no longer the sole owner of your company can lose control. In addition, a CV can be to move the company towards an initial public offering (IPO) of shares traded would be faster than the best long-term health of the company.

In general, the higher the stage where it receives the funds, the more you have to resign. Some companies VC or Angel investor could invest in what still is not a business that really works, but only an idea. For $ 500,000, which could assuming a 60% share of the company, and make their own management team. If they decide they can become a viable business (proof of concept ") it could finance the company for five million dollars, with more equity. In the second round of financing, the owner of the company's parents may have only 5% to 10% of the capital.

What are the advantages and disadvantages of private equity funds as a partner?

Advantage

– The financial strength of global competition

– Repurchase of shares used

– Easier to be traded

– No conflict of interest

– Network can improve business CV Business

VC provide expertise, advice and mentoring. They are objective, useful, networking with and hiring the right people. They add credibility and prestige of your company to share risk, and may help sell the company.

Disadvantages:

– The loss of a portion of the property

– Unable to manage the company as a family business

The risk of working with a CV can be your concern is more for a profitable exit, compulsory in relation to their concerns about their employees and customers. You lose your independence manage their business and venture capital may have the right to fire you and your management team. It can be a time job to manage the venture capital fund your entire business. venture capital in general to ask:

• Anti-dilution protection. If the company stock down at any time in the future, who gets stock additional charge.

• Dividends. In addition to actions that receive a guaranteed rate of return.

• liquidation preferences. CV obtain capital and dividends back before everyone gets a penny.

• Participating preferred. They learn to first get their investment double dip the dividends, the value of shares.

• The repurchase obligation. This requires the company to repurchase its shares on a specified date, the establishment a period of one out of the event.

• The registration fee for the application. Virtual communities may force the company to submit a statement for registration with the Securities and Exchange Commission to open an initial public offering, another way to force an exit event.

• Rights of approval. The CV must approve any new funding and be eligible to participate.

• Representatives and Warranties. We also accept personal responsibility for the has made representations on key aspects of society. They have the right to sue for everything you own if you forgot to give them bad news.

CONCLUSION: There are no easy choices. If you have command of your product with an adequate margin of gross income, commercial finance companies may be your best option. If you need to develop your product and do not have the capital to fund your company for the development of products for your make and receive venture capital may be the best thing that has happened to his business. If you commit to a commercial finance company, you can terminate the contract. If you agree a venture capitalist, exit strategy is in its field.

"Making a workshop"

If someone makes a mint are a lot of money.

"Feeling Impact "

If someone is short of money or feeling restricted in any other way

feel the effects.

MYTH OF FUNDING: N º 6

All expenses for finance companies Interest 100% of the nominal value of bills sold to them.

FINANCIAL FACT:

Some companies finance their spending based only the actual amount of money you receive.

There is a wide range of prices in the area of trade finance. Although competition tends to keep prices down, different industries may pay more than the historical risk. For example, accounts receivable financing, medical and construction is more expensive than commercial financing for a recruitment agency.

At one extreme, some companies require commercial financing 100% of invoices are sold and interest is charged on 100% of invoices. This may be reasonable because the company is high risk and if your company goes bankrupt, the commercial finance company may not charge a portion of the funds that have been presented.

The best available price is calculated with respect to the funds actually advanced with interest payable on a daily basis for the period of the fund is used. It is called per diem interest. Most banks and commercial finance companies offer this option, which could be described as a "line of credit" or "asset-financing" for large transactions.

Suppose a commercial finance company charges a rate of 3% per month and you sell a bill of $ 100.00. Suppose further that the customer pays within 5 days. Here is a list of costs you pay, according to the contract different in minimum time and conditions of payment:

Based on 100% of the bill:

cost of at least 59 days later = $ 6.00

30 days minimum cost = $ 3.00

long-term cost of at least 15 days = $ 1.50

within 10 days minimum cost = $ 1.00

Interest cost Diem 5 days = $ 0.41

On the basis of an advance of 80% per day for 5 days = $ 0.33

"Do your best"

If you look everywhere to find something, or trying to achieve something, do not leave stone unturned.

Game Plan "

A game plan is a good strategy

MYTH OF FUNDING: N º 7

A partnership agreement without long-term financing is preferable to a one-year duration.

FINANCIAL FACT:

If you need financing for a year and the prices and conditions are lower, one-year contract may be a better option.

"Keep your options open"

If a man keep his options open, are not going to restrict or eliminate any possibility of action.

MYTH OF FINANCING: 8

loans SBA's business are similar to all banks.

FINANCIAL FACT:

Some banks SBA loan origination business delegation. This allows an additional purchase order, accounts receivable and inventory of third-party lenders to create more capital for growth.

"Putting all your eggs in one basket "

If you put all your eggs in one basket, you risk everything on one occasion that, as breaking eggs, that could go wrong.

MYTH OF FINANCING: No. 9

All contracts for financial companies, the terms and conditions are similar.

FINANCIAL FACT:

Conditions range from fair to expensive. When you take the bills that give all their money in cash from a financial company.

Comfort Zone "

This is the temperature range in which the body does not tremble or sweat, but the idiomatic meaning of a place where people feel comfortable, where they can avoid world concerns. It may be physical or mental.

FINANCIAL MYTH: No 10

All finance companies require their customers are informed that you work with them. This is known as the reporting and verification.

In financial reporting:

Some companies factoring finance without notice. What makes financing transparent to your customer.

"Accept the challenge"

If you take the plunge, you decide do something or agreement despite knowing that there is an element of risk.

Submitted by:

Gregg Elberg, President

GREGG SERVICES FINANCIAL

930 Irwin Street, Suite 209

San Rafael, CA 94901

415-482-9221

Fax 415-482-9228

Cell 415-847-8434

gregg@greggfinancialservices.com

Gregg Financial Services is a brokerage firm full-service commercial finance companies and banks fund manufacturers, distributors, assemblers, wholesalers, importers, staff, services, agribusiness, construction firms and care. Buy the lowest rates low and conditions. We organize different types of financing, including financing for the purchase, factoring, factoring with an inventory component and based lending in assets in accounts receivable, inventory, equipment and machinery. GFS also provides cash flow financing and SBA loans on property and equipment. Work in all industries and can arrange financing transactions across the United States and Canada, Mexico, Australia and parts of Europe, including the United Kingdom, Ireland, France and Poland. GFS arranges funding from $ 25,000 to U.S. $ 50 million at competitive prices, and are working to reduce their financial burden grows your business. For more information about GFS, please visit our website: www.greggfinancialservices.com

Copyright 2006 Gregg Financial Services.

About the Author

Mr. Gregg Elberg was President of a Bay Area Savings and Loan for over twenty years. As part of the executive management team, he grew the financial institution from $13 million in assets to $175 million. He has extensive experience in the evaluation of personal and business credit. He has developed, underwritten and originated over $300 Million in Accounts Receivable Financing, Purchase Order Financing, Inventory Financing, and Commercial Real Estate Loans. During the past four years, he held a position with a major regional private commercial finance company.

Mr. Elberg is active in a variety of industry associations and community organizations. He is a member of the Rotary Club of San Rafael and a director of a non-profit organization, which serves low-income individuals and families in Marin County.

A graduate of UC Berkeley and USF law school, Mr. Elberg is a licensed Attorney and Real Estate Broker (Identification Number: 01368387). He currently resides in San Anselmo, CA with his wife and son. He may be contacted at: www.greggfinancialservices.com

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