Get Your Clients the Apps and Advice They Need to Survive a Cash Crunch
One of the most challenging times for any business is the short-term cash crunch. A business can become cash challenged for many reasons – a volatile sales cycle, longer Account Receivable cycles and feeding the needs of a fast-growing business. Your clients’ businesses can still be profitable but have temporary low cash flow. The key is using a loan to survive the crunch. One way to do this is to have your clients take out a short-term loan through invoice factoring, a line of credit or other types of financing.
Invoice factoring is a fancy name for getting an advance on your outstanding invoices for a small fee. If your clients’ business has large outstanding invoices or receivables where customers pay slowly, factoring can speed up the collection cycle. With invoice factoring, your clients may be borrowing against them or selling them outright.
A business line of credit is similar to a personal line of credit, such as credit cards or home equity lines of credit. Your clients have access to a specific amount of financing but don’t make payments or incur interest until they tap into the funds.
There are three financing apps that connect to QuickBooks® Online that can make this process easier: Bluevine, Fundbox and Fundera. Once your clients download one of these apps and sync with QuickBooks Online, the app will use their QuickBooks data to tell them if they may qualify for financing and their credit limit. For apps that offer multiple funding options, they will tell them which of their funding products may be available to them – whether it is an advance on unpaid invoices, a new line of credit or a more traditional small loan. These apps can help demystify invoice financing, start up loans and business lines of credit.
Before they get started, their business needs to be in good financial standing and their QuickBooks Online data should be up to date. Make sure they understand the terms of any loan product before they commit (1).
BlueVine – This app offers your cleints two options: factoring and credit lines. BlueVine’s factoring offering means that they for an invoice that their client has not yet paid, minus their fee. Then, they set up a bank account and P.O. box, both in their business name where they will receive payment directly from their client. Your clients’ customers don’t realize that they are paying a third party, since their payments are made to your clients’ business name. Factoring from BlueVine can yield as much as $500,000, and there is no minimum or reserves. Your clients can be paid as soon as 24 hours. BlueVine currently funds 85% of the invoice amount upfront, and then the rest, minus fees, when your clients’ customers pay. Their standard current rate is 1% per week with a minimum of 3 weeks.
BlueVine also offers credit lines up to $50,000, with fixed payments with interest over six month to pay it back. Even if your clients are not currently experiencing a cash crunch, you may want to have them establish a line of credit. This will be available for quick emergencies and, in most cases, they won’t be charged until they borrow. You may want to research just-in-case options before it becomes necessary.
Fundbox – Fundbox enables your clients to quickly get paid for their outstanding invoices and connects automatically to their QuickBooks Online once they download the app. The app will access their QuickBooks data and determine which of your invoices qualify for funding. Fundbox buys their invoice, but their customers still pay them as they normally would. Your clients maintain theircustomer relationship and collect on behalf of Fundbox. A small clearing fee is displayed in full before they commit. Once they see the details and confirm, 100% of the invoice value will be sent to their bank account, as early as the next business day. Your clients can pay back Fundbox over 12 weekly installments, or choose to pay the full invoice amount early, at any time, without penalty, and all remaining fees will be waived.
Fundera – Fundera is a loan facilitator, which means they match your clients with loan providers for a small fee. The Fundera app integrates with QuickBooks Online to help your clients quickly fill out one online loan application, which can be sent to multiple lenders who offer a variety of funding options. Your clients learn which loan products they qualify for and from which lender. Your clients can then determine which loan is the best match for their business. Fundera is paid by the funder that provides your client with the loan – typically 1.5-3% of the total loan cost, and this fee doesn’t impact the interest rate of the loan. They look for companies that have been in business for at least two years, with minimum of $10,000 in monthly revenue.
Getting your clients through a short-term cash crunch doesn’t have to be painful. With the right loan or line of credit, your clients’ business can bridge the gap and emerge stronger than before.
Note: Bluevine, Fundbox and Fundera are not Intuit® offerings, and said products and services are provided by third parties. Intuit is not affiliated with these third party products or services and does not endorse or recommend them, even if such products or services are marketed or distributed via our products, website or are otherwise associated with Intuit.