The business lockdown that resulted from the recent pandemic has shifted the focus of many brick and mortar retailers to the online marketplace. Branching out into eCommerce offers numerous benefits that can help you expand your business. However, the already crowded online marketplace is more over-populated than ever. In order to succeed, you have to find a way to stand out from the crowd and remain competitive. You may feel like the products you’re offering are unique but remember, you’ll be going up against online retailers like Amazon, where you can buy almost anything or websites like Etsy that specializes in unique products. That doesn’t mean success in the online marketplace is impossible. There are things you can do to help set you apart from the competition.
You may be selling products similar to what other online retailers are offering. This is where you need to get creative. You may be selling shoes but so are companies like Zappos. They carry just about every brand and type of shoe made, making them tough to beat. One way to succeed in online retail is to have a specialty. Instead of simply marketing your business as an online shoe store, target a specific audience. Maybe you specialize in women’s high heels or men’s work shoes. Once you identify your specialty, you can use it to increase your search engine ranking as well. Potential customers will often type in the specific kind of shoe they are looking for when they search.
Because the online marketplace is so crowded, it’s important to keep your eye on the competition. It’s especially important to know what they’re charging for items you both carry. If possible, make your prices lower than theirs. Online shopping has made it so much easier for customers to compare pricing that having the best price could give you a competitive edge. While this will reduce your profit margin, it can increase your customer base and your sales volume. If you don’t feel you can offer a lower price, at least offer a comparable one. Then look for other ways to lure customers away from your competitors.
No matter how good your products are, consumers won’t know that until they’ve tried them. If everyday lower prices aren’t an option, consider an introductory discount for first-time shoppers. You can also offer discounts for referring a friend or offer free shipping. Free shipping can be a big draw when trying to attract new customers. An article by Rejoiner cited an AlixPartners survey which showed that shipping cost was the number 2 reason for consumers to abandon their online shopping cart. Out of the group that participated in the survey, 95% said that shipping costs impact their online ordering decisions. Hassle-free returns are also a great way to attract new customers. Some companies are offering free returns while others are allowing you to return them to their local brick and mortar store.
Online or in-person, excellent customer service can go a long way. If a customer has an issue with a purchase, go above and beyond to make it right. Add free samples, surprise bonuses, and discount coupons to your shipments. Do everything you can to make sure every customer is completely satisfied with their purchase. This will help to build strong brand loyalty, resulting in repeat business. Satisfied customers can often become your best advocates, telling friends how pleasant their own experience was with your company.
While these actions will all contribute to building your online presence, you will have to up your marketing game as well. Unless you have some website or digital marketing experience, it’s best to hire a professional agency to handle it for you. If you get it wrong, your online efforts could do more harm than good.
Succeeding in the online marketplace can be challenging but not impossible. Like any other business venture, It is an investment of time, effort, and of course, money. At CapFlow Funding Group, we understand that this kind of investment can be difficult when experiencing a downturn in business, no matter what the reason.
We offer invoice factoring and merchant cash advances and are dedicated to providing the short-term working capital you need to establish your presence in the online marketplace and remain competitive. We will work with you to find the best funding solution for your business.
CapFlow Funding Group specializes in factoring and merchant cash advances., We also work with trusted partners to provide other alternative financing options that may be better suited to our clients’ business needs. We service many different industries with a variety of funding needs. Contact us today and find out how invoice factoring can help grow your small business.
The financial crisis in 2008 made it much more difficult for merchants and small business owners to obtain traditional business loans. Because of this, the merchant cash advance (MCA) began its rise as an alternative business funding option. Immediately following the crisis, the MCA was a way for businesses turned away by traditional financial institutions to get the necessary funding to keep their doors open. As alternative business funding moves forward in 2020 it has become not only a popular option but for many small businesses, it has become their go-to solution for a variety of business funding issues.
Let’s start with what a merchant cash advance is not. A merchant cash advance isn’t a loan. It is an alternative business funding option that provides business owners with the capital they need without taking on any additional debt. Once approved for an MCA, the business owner receives a lump sum advance. In exchange for that advance, the business owner will remit an agreed-upon percentage of future credit and debit card sales to the MCA provider. Whether you’re experiencing difficulty obtaining a traditional business loan or in need of immediate short term funding to maintain your growth trajectory, an MCA can be a great option.
While it is true that a merchant cash advance can be accompanied by a slightly higher interest rate than a traditional business loan, it offers benefits traditional financial institutions can not.
Quick Funding – Often when a small business is in need of cash, they need it now. Submitting endless paperwork and waiting weeks for a traditional business loan isn’t an option – especially since the chance for approval is usually low. When applying for a merchant cash advance, a business can typically receive a determination in 24 hours and, if approved, receive the funding they seek in only a couple of days. For business owners dealing with an unforeseen emergency or looking to take advantage of an unexpected opportunity to move their business forward, quick funding can be a game-changer.
Less Than Perfect Credit – No Worries – While it is not uncommon for some small businesses to have a short or less-than-perfect credit history, it can be a problem when applying for a traditional business loan. That’s not the case with a merchant cash advance. Because it is an advance on future debit and credit card sales, your credit history is not the determining factor. An MCA provider will be more interested in the revenue your business regularly generates and it’s the ability to continue to do so. Also, an MCA doesn’t require collateral so business or personal assets are not at risk.
Flexible and Convenient Repayment – Because MCA payments are based on a percentage of actual debit and credit card sales, their amount will fluctuate with your revenue. This can help business owners avoid being faced with payments that are more than they can afford. MCA terms and repayment collection methods can vary by provider. Interest percentage rates are typically determined on a case-by-case basis. Payments are typically collected by one of two methods – split withholding or lockbox withholding. With split withholding, payments are made automatically through the merchant’s credit card processor. With lockbox withholding, debit and credit card revenue is sent to a special bank account. It is then divided based on an agreed-upon percentage and the MCA provider and the business owner each has the appropriate amount deposited into their respective accounts.
A merchant cash advance allows a business owner to get the cash they need without entering into a long term loan agreement or taking on additional debt. If your business needs an immediate influx of cash, this alternative business funding option can be a great solution.
Although CapFlow Funding Group specializes in invoice factoring, in conjunction with our trusted partners we also offer merchant cash advances and other working capital solutions to provide the funding you need to grow your business. We strive to find the best funding solutions for businesses across various industries. Our team will work tirelessly to see you through to success. Contact us today!
While there are many factors to building a successful business, having sufficient working capital is key. Defined simply as the difference between a business’s current assets and its current liabilities, working capital is what keeps a business running. It covers payroll and daily operating expenses so it’s important for a business to maintain a positive flow of working capital. For small businesses experiencing growing pains, this can be a challenge. It is not uncommon for them to sometimes need an influx of short term working capital.
There are a variety of reasons a small business might find themselves in need of additional capital. For some seasonal businesses, cash flow will fluctuate throughout the year. In the offseason, they can find themselves on the verge of depleting their working capital. Business owners experiencing unexpected growth or taking on expansion can find themselves in a similar situation. Significantly reducing or depleting working capital can leave a business vulnerable, resulting in the inability to properly provide products or services to their customers. In some cases, a lack of sufficient working capital can cause a business to shut down permanently.
In addition to facilitating business growth and allowing business owners to cover their daily operating expenses, access to short term working capital funding can provide many other advantages.
Business Solvency – Consistently having sufficient working capital allows a business to operate uninterrupted. It will allow them to replenish the inventory and raw materials needed to maintain a proper inventory. This enables them to provide quality products and services on schedule, creating a positive customer experience.
Maintain Daily Operations – Nothing will bring a business to a grinding halt faster than being unable to meet payroll. This will deflate morale and cause some of your best employees to seek employment elsewhere. In addition to the added expense of hiring and training new employees, existing employees could end up working for one of your competitors.
Reputation of reliability – Access to short term working capital funding allows a business to make prompt payments and keep their accounts current. This will create goodwill with suppliers and vendors while building mutually beneficial relationships.
Secure Discounts – Cash is still king! Many suppliers and vendors will offer discounts for cash payment. Even if it is a small percentage, over time with multiple vendors, the savings can add up.
Take Advantage of Favorable Market Conditions – Market prices on raw materials can fluctuate. It‘s to a business’s advantage to purchase supplies in bulk when the prices are low. Having access to short term working capital funding allows businesses to take advantage of these lower prices without depleting their existing working capital.
Survive the Unexpected – Even if a business has a sufficient level of working capital to maintain daily operations, it probably won’t be enough to handle a crisis. Broken equipment, a sudden downturn in business and various other unexpected emergencies can cripple a business. Having access to short term working capital funding can allow a business to ride out a crisis and keep it moving forward.
Cultivate New Business – Taking on bigger accounts and filling larger orders can initially be a drain on a business’s existing working capital. However, being able to handle this increase in business without missing a beat is essential to business growth. Short term working capital funding can make that happen.
CapFlow Funding Group offers working capital solutions to quickly provide the funding you need to grow your business. We work with business owners across various industries to find the best working capital solutions to their businesses on track. CapFlow specializes in invoice factoring and offers merchant cash advances. We also partner with other funding providers to secure the funding option that best fits your business needs. Our team will work tirelessly to see you through to success. Contact us today!
With the lack of access to smaller, short term business loans from traditional financial institutions, more business owners are exploring alternative funding options from merchant cash advance lenders. These options are not one size fits all. There are different funding options, each tailored to meet the needs of specific industries. For those in mercantile businesses that sell the majority of their products or services via debit or credit cards, the merchant cash advance (MCA) is becoming a more popular choice for small business funding.
According to an article from Creditcards.com, 54% of consumers make payments for goods and services using their debit cards, 26% chose to make these payments using their credit card and only 14% specified a preference for using cash. This, along with the reluctance of traditional banking institutions to provide short term business funding, has caused the use of MCA’s in the US to steadily increase in recent years. There are many mercantile businesses that could improve their cash flow and promote growth from this alternative funding option. Keeping in mind the frequency goods and services are paid for with a debit or credit card, there are some industries, in particular, that could greatly benefit from the services of merchant cash advance lenders.
Retail sales can be a constant roller coaster ride of highs and lows. Despite proper planning, a small business owner can sometimes experience a shortage of cash flow during an offseason. To prevent any interruption to daily operations, cover expenses and retain their core staff, business owners need a way to bridge these short-term financial gaps.
The hospitality industry also experiences seasonal highs and lows. Most hotel reservations are made in advance either online or over the phone and are typically paid for via debit or credit card. While the offseason can be the perfect time to make upgrades to their accommodations, the working capital they have on hand may not be sufficient to cover such projects.
The personal care industry is another business sector that receives much of its revenue via debit or credit cards. Salons and spas can see an uptick in appointments throughout the year, especially during prom, wedding and other holiday seasons. Coming off a slower season, it can be challenging to cover the expense of the supplies and payroll needed to meet the higher demand for services. As the salon or spa grows, it may be necessary to expand or move to a larger location. This can also require more working capital than the business owner can use without leaving the business vulnerable.
Whether customers are dining in the restaurant or ordering take out, they are often paying for their meals with a debit or credit card. The restaurant industry can be very unpredictable, impacted not only by the season but also by various trends in cuisine and fluctuations in the economy. In order to sustain the business through industry downturns or expand it to keep up with increasing business, a restaurant owner may need a quick influx of cash.
Vehicle repair is often a large and unexpected expense resulting in the use of a credit card to pay for it. This is due in part to the constantly evolving automotive technology. To keep up with that technology and stay one step ahead of the competition, repair shop owners are faced with the challenge of keeping their business outfitted with the most up-to-date equipment. The upfront cost of new equipment often requires more cash than they have available resulting in the need for additional working capital.
A merchant cash advance isn’t a loan. It is an advanced, lump-sum payment of future sales. In exchange for this advance, the business will pay the funding provider an agreed-upon percentage of future credit and/or debit card sales. Because payments are based on a percentage of actual sales, they flex with fluctuations in revenue. This allows business owners to avoid being faced with payments they can’t afford. Terms may vary depending on the provider and the specifics of each MCA application.
While these may be some of the most common businesses to benefit from the services of merchant cash advance lenders, they aren’t the only ones. If your business receives the bulk of its revenue from debit and/or credit card payments, an MCA could be the perfect funding solution to ride out a slow season or expand your business.
Although CapFlow Funding Group specializes in invoice factoring, in conjunction with our trusted partners we also offer merchant cash advances and other working capital solutions to provide the funding you need to grow your business. We strive to find the best funding solutions for businesses across various industries. Our team will work tirelessly to see you through to success. Contact us today!
Almost every small business owner will experience a working capital shortfall at some point and need access to immediate cash. In today’s financial marketplace, no matter how good a business’s financial health is, it can be difficult to obtain a traditional bank or SBA loan. If your credit history is less than perfect, it can be almost impossible. For business owners in need of immediate, short term funding, these loans may not be the best option. There are a variety of alternative financing options that can offer fast, effective funding, including the merchant cash advance.
A merchant cash advance, or MCA, is not a loan. It’s the sale of future receivables. The alternative finance company will purchase these receivables at a discounted rate, providing the immediate capital the business needs. While they will take your credit score and the overall health of your business into consideration, the alternative finance company reviews the last three to six months of your credit card sales revenue. This will give them a basis for estimating your future credit card sales and determine how much your business qualifies to receive.
While the terms of an MCA can vary from one provider to another, the typical repayment period is less than a year. Payments are an agreed-upon percentage of the business’s daily credit card sales and those payments are collected by one of two methods – split withholding or lockbox withholding. With split withholding, payments are made automatically through the merchant’s credit card processor. With lockbox withholding, credit card revenue is sent to a special bank account. Then the bank divides it based on an agreed-upon percentage and sends both the finance company and the business owner the appropriate amounts. This type of funding option allows the business owner to get the cash they need without going into a long term loan agreement and taking on additional debt.
The type of merchant cash advance that is most commonly known does require that a business accepts credit cards. If you think your business could benefit from an MCA but doesn’t accept credit card payments, there is another option – the ACH cash advance. This type of funding is very similar to a regular MCA. The main difference is that the bank account deposits and bank statement cash flow is used to determine the amount of funding a business can receive as well as the repayment terms.
Once funding has been provided, the finance company will receive repayment via an ACH deduction directly from the business’s bank account on a daily or weekly basis. ACH stands for Automated Clearing House, which is a network that coordinates electronic payments and automated money transfers. With an ACH advance, a fixed daily payment is required rather than a percentage of the actual daily sales revenue.
If your business needs an immediate influx of cash, a merchant cash advance can be a great solution. Getting the cash you need when you need it can keep your business on track and moving forward. There are no restrictions on how you use an MCA, unlike a bank loan which is usually accompanied by a covenant. You retain complete control with an MCA.
It’s important to work with a knowledgeable and reputable alternative finance company. At CapFlow Funding Group, our team of professionals will evaluate your business’s unique situation and help you determine which funding option would best suit the company’s needs. We service many different industries with a variety of different funding needs. In addition to merchant cash advances, we specialize in factoring and other methods of small business funding. Contact us today!
The MCA merchant cash advance has been the subject of much controversy and confusion in recent years which may have discouraged some business owners from considering it. This is unfortunate, as merchant cash advance can be a viable option for businesses in need of working capital and it offers advantages over a traditional bank loan.
An MCA merchant cash advance is not a loan. It is the sale of future receivables. With an MCA, the merchant consents to sell an agreed-upon amount of future credit card revenues at a discounted rate. This discount is primarily determined by the risk and expected time for the funds to be recovered. For example, if a merchant agrees to sell $65,000 dollars of future credit card revenue with a factor rate of 1.3 percent, they would receive a lump sum of $50,000 dollars. The merchant gets the upfront capital they need and the MCA provider will receive a percentage of the merchant’s credit card sales until the amount of credit card revenue sold has been reached.
The percentage of credit card sales received by the MCA provider is called a “holdback” or “retrieval rate” and is typically between five and twenty percent. This rate is based on the size of the advance, the volume of credit card revenue and the repayment terms. The MCA provider will review three to six months of credit card receipts to determine the amount the merchant is eligible to receive. The terms vary but normally span no longer than two years.
Access to Quick Capital
The need for additional capital can arise suddenly. It could be an equipment breakdown or an unexpected business opportunity. Whatever the reason, an MCA can provide funding much faster than a traditional bank loan. In most cases, the merchant can be approved in hours and receive funding in just a few days; in certain cases, same day funding is available.
Less-Than-Perfect Credit
MCA providers will review the merchant’s credit history. However, the ability to qualify is based mainly on the length of time the business has been open and the consistency of credit card sales, as that will be the source of repayment.
Flexible Repayment Amounts
Unlike a traditional loan, there is not a set monthly payment. Payments are deducted from the daily credit card sales and calculated according to the agreed-upon retrieval rate. For example, at a rate of 15 percent with $3000 dollars in sales, the payment would be $450 dollars. If the sales totaled $5000 dollars, the payment would be $750 dollars. Depending on the MCA provider, these payments are collected one of three ways:
With an MCA merchant cash advance, there are no limits on how the funding is utilized. It can be used for new equipment, expansion, marketing or any other business need. With traditional bank and SBA loans, there are often restrictions or covenants that dictate how the funding can be spent.
At CapFlow Funding Group, our team of professionals will help evaluate each business’s unique situation and help you determine which funding option would best the company’s needs. In addition to merchant cash advances, we specialize in factoring and other methods of small business funding. Contact us today!
