Invoice Factoring in Louisiana
Louisiana Invoice Factoring
Small businesses are critical to Louisiana’s economy. In fact, there are approximately 436,867 small businesses in the Big Easy that employ almost 1 million workers (or 53% of all Louisiana employees).1 But anyone that has ever run a small business knows how difficult it can be at times. They are typically regulatory, compliance and financial in nature.
Financially, it’s often a cash flow issues that get businesses into trouble. According to a U.S. Bank study, 82% of small business failures are attributed to poor cash flow management and information.2
Certain industries present particular financing challenges. While businesses would love to be paid in cash, up front, the reality is that smaller companies need to offer credit sales to entice larger, lucrative accounts to conduct business with them. Many business owners begrudgingly wait 30, 60 or even 90 days for payment. This is especially true in more fragmented areas including the manufacturing, distribution, construction and transportation industries.
There are a number of programs provided by the state of Louisiana to foster higher growth companies by providing access to capital. These include the SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) programs.3 But these are often hit or miss for small business funding and the application process is extremely lengthy. Further, they often partner with local banks for the actual financing.
If your startup or small business needs capital ASAP, these programs are not the answer. An increasingly popular solution to cash flow problems is invoice factoring– the sale of outstanding invoices to a third party buyer. According to Eyal Shinar, CEO of invoice financing firm Fundbox, the U.S. has around $72 trillion of capital locked up in invoices.4 He speculates the ‘vast majority’ of these are overdue.5
Factoring invoices can provide the cash flow many small businesses need to run the day-to-day operations. For Louisiana businesses still reeling from the aftermath of BP oil spill, access to funds to pay bills or expand operations is critical. In fact, tens of thousands of Louisiana small businesses that are still waiting for BP to review their claims from the 2010 accident! Consequently, invoice factoring in Louisiana is starting to really catch on.
One success story is Louisiana’s Blum & Bergeron Dried Shrimp Company, the country’s oldest dry shrimper. Despite coming within one day of closing their doors, the shrimp packaging and distribution company able to return their sales to pre-spill levels and rehired the employees they were forced to let go.6
Invoice Factoring Companies in Louisiana
Luckily, there are several invoice factoring companies in Louisiana. These third parties buyers unlock the cash that’s tied up in outstanding invoices, providing your business with the liquidity it needs to run its operations.
A factor advances funds based on a percentage of the unpaid invoice’s face value. The amount advanced is determined by a number of variables, mostly the credit worthiness of your business customers. When the invoice is paid, the factor refunds the remaining balance to you, minus a small factoring fee. Keep in mind, a factoring company generally finances business to business (B2B) receivables only.
We are partial to factoring companies that are headquartered in the same state as your small business. We also prefer factors that specialize in your industry since there are many nuances between industries that require a level of experience and expertise by the factor. You probably wouldn’t want a factoring company that specializes in manufacturing in the Midwest to be factoring receivables for a temporary staffing agency in New York City.
One reason for this is that the factor often has better credit information on your customers than you do. This value-add can help you decide which customers to extend credit sales to. If the factor specializes in the same industry as your business, they could be familiar with your account debtors (business customers) and may have even dealt with them in the past.
Here are some accounts receivable factoring companies headquartered in Louisiana:
- Gulf South Receivables Fund, LLC
- Evergreen Working Capital (Baton Rouge)
- Capital One (Baton Rouge)
This is not a full list of invoice factoring companies in Louisiana. Riviera Finance, Fleet One Factoring, Bluevine and Apex Capital also service customers throughout the state. There are a variety of small business funding companies that can help your business mitigate cash flow squeezes or negative net working capital. A good invoice financing company can support your business and remain a partner as your business matures. Over time, accounts receivable factoring makes way to cheaper financing options such as asset based lending or a small business line of credit.
If your business is interested in a free, no obligation factoring quote, please provide us with some basic information on your business- official company name, the average size of monthly accounts receivable (and their ages) and a list of some major customers. We would be glad to help your small business become a big business.