Business Instrument

Archive for September, 2009

Freight Factoring – Financing For Carriers And Brokers

Running a transportation company a carrier or broker has always been a financially rewarding career. When run properly and professionally they can grow beyond your expectations. At the same time they present financial challenges as well. Transportation is a cash intensive business with many expenses that cant wait. There are drivers fuel and repairs that must be paid for. However clients can take a long as 60 days to pay their freight bills.

Waiting up to 60 days to get paid can be very taxing especially for new or rapidly growing companies. Few have the required cash reserves to cope with the increasing expenses of growing a venture. One traditional alternative is to look for a business loan. However business loans are not always suited to handle operational expenses. They are better suited for buying assets such as trucks. There is a form of business financing that is ideal for funding operational expenses. Its called factoring and its offered by factoring companies.

Factoring freight bills provides carriers and logistics companies with immediate liquidity and enables them to meet business expenses on time. It eliminates the juggling act of managing client payments and business expenses greatly streamlining business operations. Basically when used properly freight bill factoring provides an effective platform for growth.

Accounts receivable factoring as it is commonly known integrates very well into transportation companies. It works by providing an advance of up to 90 on your invoices. The advance is provided immediately upon invoicing. You get the balance the remaining 10 less the financing fee once your clients pays for the invoice in full.

By using freight factoring you are doing the equivalent of putting your business on a Cash on Delivery COD basis. This simplifies operations as you limit or even eliminate worries about collections and payment tracking.

There are two important requirements needed to qualify for factoring. First your company must do business with good clients. This means that they must be reputable companies that pay their invoices in 30 to 60 days. Second your company must be free of liens and legal issues. What makes factoring freight bills different than conventional loans is that startups can successfully obtain financing provided they have a roster of solid customers.

About the writer:nbsp;nbsp;About Commercial Capital LLC
We are a leading factoring company and can provide freight factoring and freight bill factoring financing services. For information call 877 300 3258.

Franchising – Some Negative Aspects

Although many people enjoy the benefits of franchising there are still several disadvantages that a prospective franchisee needs to be aware of.

Buying into big and popular franchises is expensive. Their track record does not need much investigation since their outlets are most probably in every major town and city in the country perhaps even abroad. Their popularity with consumers speaks well of the profitability of the brand. However a prospect eyeing such franchises must be ready with a large amount of money or be able to make the necessary financial arrangements since the franchising fee alone can command a hefty price.

On top of the original franchise fee royalties and a percentage of business revenue of the franchise must be paid to the franchisor every month. In addition the franchisor may also charge fees for the cost of advertising and promotional materials. These will be stipulated in the franchise agreement.

On the other hand buying a littleknown and perhaps inexpensive franchise can be attractive especially to those who would like to start their own business but do not have the kind of money needed to buy a popular one. Prospects need to be aware however that just because a business is offering franchises is no assurance that its franchises will be successful. In some cases franchising itself is the business of the company. In this case the franchisor is only interested in selling as many franchises as possible regardless of whether the individual franchises will be successful or not. However this is not to say that littleknown inexpensive franchises are not worth looking into. Some of these may even prove to be a sound business concept that has just started. Therefore all franchises whether popular or little known must be investigated carefully before making a final decision.

In franchising although the franchisee owns the business he is not an independent entrepreneur. He must follow all of the instructions of the franchisor sometimes down to the smallest details to ensure uniformity with all other franchises. Franchising does not allow the franchisee much control over his business because he has to adhere to an agreed method of operation. A tightly written franchise agreement gives the franchisee little latitude to deviate from the system of the franchisor. Some people may not be able to live with this arrangement for extended periods because the restraints being imposed by the franchisor may be too limiting for their own personal style. This is the reason why it is important for a prospect to match his intended business with his personality preferences and style.

There is always the possibility that conflicts between the own outlets of the franchisor and those owned by franchisees may occur particularly if they are servicing the same general area. One may cut into the customer base of the other and franchisor and franchisee will ultimately be competing against each other to some extent. It is also possible that there are too many franchises of the same brand in one area that franchises are pitted against each other. This scenario happens when the franchisor did not give much consideration to market studies but only to the financial gain with many franchises.
Factors such as interest rates willingness of banks to extend loans to franchises the condition of the national economy and competition come into play once a business starts to operate. The franchisee must be financially ready to absorb the negative impact of these factors.

An inevitable aspect of franchising is the conflict that may arise between the franchisee and franchisor once the former starts losing money. More often than not the conflict results in litigation something that will be costly to both parties in terms of both time and money. Tremendous efforts and resources on the part of the franchisor are needed to ensure the success of all its franchises. The bad news is that not all franchisors have access to such big resources hence limiting their efforts largely.

Not all franchisors offer the same degree of assistance in starting a business and later on running it successfully. Some provide training just for startup operations and the franchisee is left on his own after that. Others make assurances of continuous personnel training and support that they do not follow through on.

Deciding to get a franchise is good. However its potential negative aspects must still be considered and addressed because to be forewarned is to be forearmed. No franchisor is perfect so it is up to the aspiring franchisee to objectively assess the profile of the target franchisor and prepare for all the possible scenarios that might happen in the future.

UK Franchise Directory Franchise blog

About the writer:  Matthew Anderson is the founder of The Franchise Shop. A directory of the UK’s leading franchise opportunities and a resource of franchising information

Franchise Opportunities Many Dont Know About

One of the most common question I am always asked is “What’s Hottest business out there?” The reason people ask that is because everybody wants to be on board when the next “Best Thing” comes out. Today I am going to tell you how to be the first to bring the “Next Best Thing” to your area your city or your country. There are two opportunities available with Franchises that most people do not know about: Master Franchisee and Area Developers.

Area Developers:
An Area Developer purchases an exclusive territory and makes a commitment to the Franchise that he/she will open X amount of units in X amount of time. Here are several advantages:

• Exclusive Territory means no one else will ever own that concept in your area. Imagine being the only person in your area who owns the “Next Best Thing” As the “Name” gains popularity so does the value of your business.
• Most Franchises offer discounts on Franchise Fees to Area Developers
• Multiple locations maybe cheaper to operate because you can divide the expenses between several locations.
• Your primary function is a CEO and CFO of your company.

Master Franchisee:
A Master Franchisee purchases an exclusive territory and makes a commitment to the Franchise that he/she will find assist support new Franchisees in that specific area. Basically a Master Franchisee becomes a Franchisors mini corporate office. Here are several advantages:

• For every new location a Master opens the Franchise will typically pay him/her 1/2 of the Franchise Fee and then typically 1/2 of all the royalties collected.
• Master can develop and area using other people’s money and time.
• Residual income…As long as you maintain your Master Status you will continue to get the percent of royalties from every location you open for as long as they are in business.

The biggest concern and fear that people have about bringing a new concept to an area is the fact that no one has heard about it but isn’t that the idea? to be the first?
Both concepts require a much larger investment than a single business however most millionaires did not become rich from one location so THINK BIG.

About the writer:nbsp;nbsp;Franchise Advisory Group is a leading business brokerage firm located in Philadelphia that specializes in the sales of Franchises and business merger and acquisitions. Our experience and expertise make us an invaluable partner to have on your side when buying or selling a business.

Franchise Advisory Group is a professional organization whose top priority is client service; we are firmly committed to confidentiality integrity and excellence.