I am so excited
to be one of the first consultants in the cash flow industry to be
working with this new, exciting and innovative program which was
developed by an accounts receivable (factoring) funder who realized there was an
additional way to help the small business owner with his cash flow
difficulties.
Now, with the availability of this new
program, I am happy to say there are several ways to go about this
task of helping small businesses with their cash flow issues!
So, just how
does the Vendor Insta Pay Program
(VIP) work?
-
For the Larger Corporate Organization, click here.
-
For the Smaller Vendor to the Larger Corporate
Organization, click here.
The following is a recap of some of
the differences between factoring and the VIP. We will delve
into the specifics in the next newsletter. But for now, please
check out the above links and call me with any questions.
But, generally, the VIP
immediately pays Vendors at No Cost to the Larger Corporate
Organization utilizing the Program. Yes, similarly to factoring,
the cost of the program is borne by the Smaller Vendor to the Larger
Corporate Organization but, again, similar to factoring, 9 times out of
10 this cost is more than made up for by the immediate cash
flow infusion realized by the Smaller Vendor.
In contrast to accounts
receivable factoring, however, the program appeals to
BOTH. Factoring benefits almost exclusively the Smaller
Vendor. Now, with the VIP Program, we have a win/win situation
for all parties. And, "now" the Larger Corporate
Organization has the opportunity to:
-
Increase profitability while aiding it's
Vendor with it's cash flow issues;
-
Add more diversity suppliers since they will
be more eager to bid on the larger bid opportunities when there are no
delays in payment;
-
Show their Vendors that they "Care" about
their financial stability and well being
-
And the list could go on and on!
Suffice it to say this program is of interest
to all parties!
A Comparison of each Program for reference purposes on a
typical $25,000 invoice by say "ABC company" to "Major Oil Company"
would look something like this:
VIP
|
FACTORING
|
|
Fees
between $500 to $1,250 for 15 to 60-day timeframe
|
Fees
between $500 to $1,250 for 15 to 60-day timeframe
|
|
Invoice
fully funded immediately
|
Invoice
funded at 70 to 80% immediately with remainder funded at payment by
Major Oil Company
|
|
Major Oil
Company executes Agreement with funding company and provides certain
documentation
|
ABC
Company executes agreement with funding company and provides certain
documentation
|
|
No lien
on ABC Company's Receivables
|
Lien on
ABC Company's Receivables
|
|
Major Oil
Company's A/P department required to make very minor changes to their
typical process
|
Major Oil
Company's A/P department required to make very minor changes to their
typical process
|
|
1 to
2-day funding after verification of validity of
invoice
|
1 to
2-day funding after verification of validity of
invoice
|
|
Neither
Major Oil Company nor ABC Company is required to coordinate with any
bank line of credits that may have
|
ABC
Company is required to coordinate with any bank line of credit it may
have (usually not an issue, though)
|
For more detials on this exciting new program,
stay tuned for Newsletter #2 or contact
me!
|
