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Understanding The Merits Of Invoice Factoring For Your Business in 2017

Understanding The Merits Of Invoice Factoring For Your Business in 2017

The majority of businesses get stuck financially not because they lack money but due to the fact that they cannot access their hard cash. Sometimes, clients may delay payments for up to 90 days. During this period, a company can make use of invoice factoring to keep the business afloat. We will look into all that you need to know about invoice factoring and the merits it has for your business.

What is Invoice Factoring?

Many terms can define invoice factoring. For example, you may hear some calling it “invoice financing” and others calling it “accounts receivable factoring”. All these names mean the same thing, which is invoice factoring.

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Invoice factoring is the process of ‘selling’ owed invoices to a lender. Broadly speaking, it allows you to use your money before you receive it. There are more than enough benefits to make invoice factoring worthwhile for your business. We will highlight some of the merits of invoice factoring for your business.

Quick Access to Cash

One of the many reasons invoice factoring is important to your business is because it allows you to get quick approval of loans from banks when you need the money. The majority of small and medium-sized businesses have a major problem in accessing bank loans or any other form of financial assistance. However, invoice factoring makes it easy. You can process a loan within a day or two if you are using invoice factoring services. However, it is important to note that the amount of money you get as a loan is purely dependent on the sum of your outstanding invoices. Most likely, a bank will give you a loan for 90% of your outstanding invoices.

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Relief from Invoice Collecting

One of the hardest tasks businesses face is collecting invoices. For a small business, this may mean employing new staff to follow up on such matters. It is clear that such a move is likely to raise the cost of operation of a business. If you can find a good company offering invoice factoring services, you will not have to follow up on your clients to get your money. You can use your money without hustling to get it. It is a relief, especially if you are dealing with clients who are notorious for not paying debts on time or at all.

Meet the Daily Customer Demand

It is easy for a small or medium-sized business to be forced to close down simply because they cannot meet the daily demands of customers. A company with outstanding invoices can fail to provide for its daily costs of operation if it does not use invoice factoring. Invoice factoring helps the company to get the money needed to keep the daily activities of the business running to meet the customer demand.

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Filling Large Customer Orders

With invoice factoring, you do not have to let go of large orders. When you have a customer with a large order, you can seek money and attend to that order instead of letting that offer go simply because you do not have enough money to attend to the order. This is a benefit to both small and medium-sized businesses that are still seeking opportunities to get hold of large orders. Therefore, when such orders come, such businesses should use all the possible resources they have access to, including invoice factoring, to get hold of the order.

Easy Approval Criteria

Not only does invoice factoring give you a way of getting bank loans, but it also provides ways to get such loans the easy way. With invoice factoring, you do not need to add your personal assets as security for the loan for which you are applying. This means that you can apply for and get a loan very quickly without having to go back to your list of assets.

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As discussed above, it is clear that invoice factoring is very beneficial to your business. You should consider using this option so that you can enjoy the above benefits plus many others.

Featured photo credit: FactoringCompanies198 via flickr.com

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Deborah Belford

Freelance journalist

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Last Updated on February 18, 2019

How to Motivate Employees and Boost Team Productivity

How to Motivate Employees and Boost Team Productivity

These days, in a world with cognitive, AI, and extraordinary advances, we have failed at the most basic stimulus: motivation. Why do I say so? Just take a look at these statistics:

58 percent of managers said they didn’t receive any management training as per a CareerBuilder.com survey. Only 12% of employees leave their jobs because of more money. Research indicates that around 80% of employees leave their jobs due to “lack of appreciation”. Due to fear of failing, more than half of American workers don’t take their paid vacations. 53% of Americans are unhappy at work (not engaged). And 1 in 3 are working in a field they don’t like.[1]

Archaic people management and HR structures are the root cause.

“If you want to build a ship, don’t drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.” – Antoine de Saint-Exupery

So how to motivate employees and boost team productivity?

Here are 3 key things that you can do to motivate your employees and boost team productivity:

1. Run Your Team/Group/Company like a Lean Startup

The Lean Startup phenomena by Eric Ries has been socialized across millions all over the globe. In a nutshell, it is a methodology for developing businesses and products, which aims to shorten product development cycles and rapidly discover if a proposed business model is viable; this is achieved by adopting a combination of business-hypothesis-driven experimentation, iterative product releases, and validated learning.[2]

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Encourage Your Employees

When you empower your employees (or family members) to do what they deem to be best for a particular roadblock, idea, or improvement, you create magic. You create genuine trust. You enable innovation. The result is happy, inspired employees who feel they have a say in the grand cosmic stage at work.

Note that increasing the competency level of employees and coaching and mentoring them along the way is key. You yourself, need to do the same. Nourish your brain – and get a mentor that will keep you at the edge of your game.

Offer Rewards

Motivation is also intrinsic. The startups I have worked at offered instant rewards — not just fat checks or equity increments, but Oscar-style nominations.

The non-monetary rewards were actually more coveted, and grandiose: lunch with the CEO, tickets to an Obama fund-raiser, horse-back riding with a world-class equestrian.

Compare this to a dodgy, corporate, white-cubicle dinosaur that had a “yearly performance review” where both parties dread the conversation. In a world of instant WhatsApp messages, having a conversation about performance, likes and dislikes cannot just happen annually in 60 minutes. Employees need to be rooted in the belief that their manager genuinely cares about them.

Give Autonomy

Another key attribute is autonomy. Most employees start brushing their resumes and cruising LinkedIn when their hands are tied in their current positions: approval forms, long meetings, escalations, and more meetings. In the world of agile and scrum masters, deliberating for the sake of deliberating is poison. You will choke the very employees that giddily accepted the job initially to “change the world”.

Within a reasonable realm of assessment and deep-dives, trust your employees to do the heavy lifting. Give them access to the knowledge, people and resources that help them directly make the choices that will shape the future of your team, and your company.

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Eliminate yourself as the bottleneck – and interject yourself as a benevolent, servant leader that is the symbol of high-performing organizations.

2. Apply the 90/90/1 Rule

I recently saw a video by Deepak Sharma (a leadership adviser) about productivity and this principle stuck with me. Here’s what it’s about:

Devote the First 90 Minutes of Your Day to Important Project

For the next 90 days, devote the first 90 minutes of your day to your most important project—nothing else. Do this for yourself and your employees.

We usually get sucked into the most wasteful, operational activities in the morning which robs our focus, and steers us into an unwanted rabbit hole. So mute your notifications, avoid the temptation to check your exploding inbox, and scroll your Instagram feed later. Instead, focus on that ONE thing that will provide real value to you, your team, or your business/company/home.

Apply this rule to yourself – and your team. Your team will thank you. Note: If you’re feeling really stretched for time, you can always hack the rule by testing out a “45/45/1” version.

A To Do Scheduling System

Another version of this is to use the Kanban concept, developed by Taiichi Ohno, an industrial engineer at Toyota. Kanban is a scheduling system employing boards and cards.

The most basic version is a canvas with “To-do”, “Doing”, and “Done” boards (or columns). Each activity or task is a “card” that moves from one column to the other. I use Trello (a Kanban-inspired app) that is a key system for my personal and professional life. It allows me to understand my workload, their priority, and due dates.

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I use importance and effort metrics (scores) for each task to understand what is truly necessary in my life to work on. It negates the FIFO (first-in, first out) paradox that has plagued millions of people. Instead, it allows me to take stock of what is on my plate, and then bite on what truly will move the needle for me, my team, my life, and my company.

With a limited appetite (at least for some), would you eat the veggies, fries, mashed potatoes and leave the sizzling steak? No, you wouldn’t (unless you are a vegan and ended up in the wrong restaurant).

Approach your work with a weighted vengeance – and encourage your team to do the same.

3. Align Passion and Skills to Purpose

The heart of human excellence often begins to beat when you discover a pursuit that absorbs you, frees you, challenges you, and gives you a sense of meaning, joy and passion.

“The most fortunate people on earth are those who have found a calling that’s bigger than they are—that moves them and fills their lives with constant passion, aliveness, and growth.” — Richard Leider

An ace team-member once told me that while she enjoys working for the company we both used to work at, she really hated anything to do with technology. She was more of a “people” person, and did not want to sit behind a desk sifting through lines of code.

What struck me was that she was in that role for more than a decade and had just spoken up. The good thing is she spoke up. She expressed her desire and interests. And it allowed her to get into a role of her liking within 30 days.

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Ask If They like What They’re Doing

If you, or a team member is frustrated, demotivated, or not performing at their best – one of the questions you should ask is whether they like what they are doing. Then genuinely try to help them get to the role they should be in (whether in the same team/company or not).

There’s a reason why 53% of Americans (and perhaps more or same across the globe) are unhappy at work. A butcher cannot be an ace salad maker. Pursue your passion – and help pave the way for your team. Unlock your potential and theirs. You will command and lead a supercharged team.

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” – Steve Jobs

The Bottom Line

Sometimes, passion has to be ignited. It is dormant, clouded by busy-ness, buried by wrong career choices, and plagued by non-supportive eco-systems. Some will climb out of it, but we as society — and in the case of business teams — incumbent upon the manager/CEO/leader to foster, grow, and nurture the employee.

Teach her the ropes. Show her the path. Advise him as you would yourself. Let them lead, and make mistakes. Do not fear them, rather make them the leader you would want to become.

For your not-so-great team members, understand that it is not personal, it is just not a good fit. Help them move on to the pastures they would be fit to graze on. Hence, hire slow (and fire fast).

Your team is a reflection of you. Boosting their confidence and helping them achieve the impossible is motivation. Focus on that, and you will have a productive team that you and your company will be proud of.

More Resources About Team Management

Featured photo credit: rawpixel via unsplash.com

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