Issue link: https://read.dmtmag.com/i/117828
46 ��� APRIL 2013 ��� WORLD FENCE NEWS Support America���s Veterans! HIRE A HERO! Veterans Make Great Employees! Fence professionals, before you make your next hiring move, please consider our nation���s military veterans first! Members of the fence community are proud patriots. We must do what we can to help our dedicated military men and women re-enter the workforce. Please give special attention to disabled veterans, as they have sacrificed so much in the name of this great country! Obtain more details on how you can participate from your local Veterans Administration o���ce And please join with the Chain Link Fence Manufacturers Institute (CLFMI) as its members try to raise awareness through the Hire a Hero Program. Be recognized by the fence community for your participation! Applications are available at www.chainlinkinfo.org This message is brought to you by Dynamic Tube and Pipe Co., a proud supporter of all U.S. military veterans. Looking at the financing landscape in the year ahead continued from page 11 invoice is collected. The factoring fee ��� which is based on the total face value of the invoice, not the percentage advanced ��� typically ranges from 1.5-5.5 percent, depending on such credit criteria as the credit quality of the borrower���s customers, the size of the facility and the average number of days the funds are in use. Under a factoring contract, the business can usually pick and choose which invoices to sell to the factor ��� it���s typically not an all-or-nothing scenario. Once the invoices are purchased, the factor manages the receivable until it is paid. The factor will essentially become the business��� defacto credit manager and A/R department, performing credit checks, analyzing credit reports, and mailing and documenting invoices and payments. A/R financing is more like a traditional bank loan, but with some key differences. While bank loans may be secured by different kinds of collateral (including plant and equipment, real estate and/or the personal assets of the business owner), the size of the facility is usually predicated on the cash flow coverage the income statement generates. A/R financing or ABL facilities are structured against the current assets of the balance sheet. This may involve A/R only or it may also include inventory and/or equipment ��� it varies from lender to lender. Under an A/R financing arrangement, a borrowing base of 70 to 90 percent of the qualified receivables is established at each draw against which the business can borrow money. In addition to interest being charged against the funds advanced, there is usually some sort of collateral monitoring fee or management fee that is charged; again, this will vary by lender. In order to count toward the borrowing base, the accounts receivable typically must meet an eligibility formula that the finance company tracks. Other conditions will also apply as it pertains to inventory and equipment. Both factoring and A/R financing are usually considered to be transitional sources of financing that can carry a business through a time when it does not qualify for traditional bank financing. After a period typically ranging from 12-24 months, companies are often able to work through their circumstances and become bankable once again. In some industries, though, companies rely on ABL as a permanent source of financing. Trucking, apparel manufacturing, import/export distribution and many service industries rely heavily on ABL as their primary financing vehicle. ABL is on the rise Statistics underscore the fact that, while many businesses are finding it harder to obtain traditional bank financing, asset-based lending is trending up. According to the FDIC, the overall volume of small business loans has been shrinking since 2008 and was recently down 15 percent from its peak. The factor will essentially become the business��� defacto credit manager and A/R department, performing credit checks, analyzing credit reports, and mailing and documenting invoices and payments. The total number of outstanding small business loans (about 1.5 million) is the smallest since 1999, according to the FDIC. On the flip side, the most recent Asset-Based Lending Index, which is published quarterly by the Commercial Finance Association, reveals that total committed asset-based credit lines were up by 2 percent in the fourth quarter of 2012 compared to the previous quarter, and total credit commitments were 6.7 percent higher than a year earlier. In addition, the majority of assetbased lenders reported an increase in total committed credit lines. Meanwhile, new credit commitments originated by asset-based lenders in the fourth quarter were up 6.6 percent, and 55 percent of assetbased lenders reported an increase in credit commitments in the fourth quarter. ���As we have maintained throughout the recession and credit crisis, asset-based lenders will continue to lead the way as a primary source of working and growth capital for U.S. businesses as the economy hopefully moves in a positive direction,��� notes Brian Cove, the CFA���s chief operating officer. Tracy Eden is the national marketing director for Commercial Finance Group (CFG), which has offices throughout the U.S. and Canada. CFG provides creative financing solutions to businesses that may not qualify for traditional financing. Visit the web site www.cfgroup.net or contact Eden at tdeden@cfgroup.net.