Gary Honig is president of Washington, D.C.-based Creative Capital Associateswhich has provided accounts receivable financing nationwide for over a decade. Currently playing an important part in the revitalization of small businesses, his role in the invoice factoring industry is helping to increase working capital to companies faced with cash flow challenges.
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When Alternative Financing Won't Work
By Gary Honig Thursday Apr 8, 2010A not-too-uncommon situation business owners have getting an upcoming contract underway is the capital to get organized. A problem arises when assuming that a purchase order or contract award for a product or service will allow the business to get cash from a commercial finance company in order to perform on the contract. While there are purchase order finance companies and contract finance opportunities, the business owner needs to understand the limitations of each.
The Most Common Tax Mistake Small Businesses Make
By Gary Honig Thursday Apr 1, 2010The Internal Revenue Service is not a lender of last resort. By not paying taxes, you are ultimately borrowing from the government, at extremely costly rates. The addition of compounding interest and penalties will make a bad situation much worse. Any unpaid taxes due will garner a daily interest rate, plus a monthly 5% penalty each month up to five months for a maximum of 25%.
How to Avoid Selling to Poor Credit Customers
By Gary Honig Sunday Mar 28, 2010Giving away money to customers isn't exactly considered smart business. But that's exactly what businesses do everyday when they offer credit terms to their customers. Sure it’s considered normal to allow a customer 30 days to get their bookkeeping in order to pay the bills. But many large companies take advantage of credit terms and take 60 to 90 days to pay an invoice. That becomes three months of interest-free money. Your money. You are essentially helping to grow their company using your resources, time, material and energy.
Collateral Is Key to Protecting Your Access to Credit
By Gary Honig Friday Mar 19, 2010Business owners who are operating revenue-driven companies often turn to outside sources of capital when looking to grow faster. Either a company can sell shares (and shared ownership) to raise capital or they can borrow against collateral. Collateral usually means some sort of tangible asset such as equipment or account receivables.
What's Best for Your Business: Debt or Equity?
By Gary Honig Sunday Feb 28, 2010Deciding whether to go after debt capital or an equity investment usually has less to do with the current economic climate than it does with the company's business model. What is happening in the economy only means a stronger position is needed when going after these types of capital.
Some Myths About 'Factoring' as a Financing Tool
By Gary Honig Thursday Feb 25, 2010Often I hear about the perception by business owners who have never used invoice factoring that accounts receivable financing will somehow have a negative reflection on their business (to find out more about how factoring can help businesses, read "When Credit Is Tight, 'Factoring' Can Help." Unfortunately, this is a misconception based on having never utilized receivables financing.
Beware the Independent Contractor Trap
By Gary Honig Tuesday Feb 23, 2010You may not have noticed in the news, but the use of independent contractors by companies looking to lower labor costs is becoming a hot item. This is where a company foregoes payroll tax payments and just hopes the non-employee will pay his own way.
When Credit is Tight, 'Factoring' Can Help
By Gary Honig Monday Feb 8, 2010There are many types of commercial financing available to business owners. The most notable would be a term loan or line of credit from an institutional bank. But due to current economic conditions, banks may be unable to provide financing to certain businesses. Luckily, business owners are turning to an alternative for working capital called “factoring.”
Stimulus Checklist: Does Your Business Qualify for Loan Aid?
By Gary Honig Tuesday Jan 12, 2010The stimulus plan created for small businesses is known as the America’s Recovery Capital — or ARC — loan program. With $255 million of funds, it is geared to help businesses who have an existing loan with their loan payments. Here's what you need to know about ARCs:
Customer Payment Plans: The Difference Between Milestone and Progress Payments
By Gary Honig Monday Dec 21, 2009Whenever a business offers payment terms to their customers — they become a “lender" of sorts. The customer owes for the work, and the business is waiting for payment, essentially a business loan. There are things a business should note when offering terms that may bring beneficial results in the future. If a company has a strategic capital plan and the intent to raise outside capital, then knowing what makes the transaction attractive may make all the difference in securing capital. Certainly with invoice factoring, this holds true.
Expert Answers
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