Interview with Jon Anselma

Jon Anselma spearheads the Paragon Financial Group, which was founded in 1994 with the initiative to afford growing businesses an alternative to conventional Bank Financing. With satellites in Tampa and Orlando, Paragon Financial Group is headquartered in Fort Lauderdale, Florida.

Ralf Bieler, President & CEO of Cash Flow Exclusive, LLC, caught up with Mr. Anselma to talk with him about his company and its business, as well as about his view on the economy and future plans.

CFE: Jon, why don’t you kick us off by telling us your “story”. Who is Jon Anselma? When did you start working in the cash flow business, how and why did you get into it, and how did you get to Paragon?

Jon Anselma: I first learned of factoring while growing up in New York. My best friend’s father was a garment manufacturer in the heart of the garment district in New York City. In those days, numerous factoring companies lined those streets of Manhattan. He explained to me what factoring was and that without it, he wouldn’t be in business. I was enamored with the concept and at 15 years old decided that’s what I wanted to do for a living.

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Invoice Discounting: A Tool To Finance Your Business

Invoice discounting can be an excellent way for some companies to infuse much needed capital into their businesses. It is quite possible to run a very successful company and still not have the money nesseray to cover basic expenses such as rent, materials and salaries.

For someone who has little to no experience running a business, this may be quite surprising. However, persons who have been in the trenches, are quite aware that a company can be profitable and still be cash poor. Most companies that find themselves with not enough capital to meet their obligations, will turn to a bank in hopes of obtaining a loan. This can be a decent option in some cases but may not be available for every business. There are also some huge disadvantages to using a bank loan. We will discuss some of those below. First, we will mention what might be an excellent choice for businesses in certain industries, invoice discounting.

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Financing Your Business By Factoring Invoices

Business owners must be resourceful in order to be successful. This has never been more true then today. With companies being forced into bankruptcy or into closing their doors, finding the money to stay afloat is becoming more difficult. One method that is perhaps underutilized by a large number of businesses is invoice factoring. Many companies are unaware that it exists or may lack enough understanding to give it a try.

Factoring invoices is a great way for businesses in many different industries to raise the money that they need to function and/or grow. It provides a way to raise capital that does not require taking on any debt. This is very attractive to many business for a number of reasons, two the most common are not being able to get a loan and not wanting to add any more debt to an already heavy load.

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Accounts Receivable Factoring: Is Your Business Eligible?

Your company may or may not have heard of receivables factoring. If not, what you learn in this article will be quite exciting. Receivables factoring is an excellent way for companies to receive capital in a very short amount of time. Businesses generally rely on debt when they are in need of cash. The problem with taking out a loan is that first of all, a business has to be eligible. It can be very difficult for some businesses to meet their basic lending criteria.

Banks generally won’t loan money to businesses that don’t have a lot of assets and who haven’t been around for very long. Companies with poor credit will have an even more difficult time finding financing. Therefore, there may be few options for such companies. Thankfully, receivables factoring offers a good alternative.

Accounts receivable factoring involves a company selling their invoices to factor. A factor will purchase them at a discount rate generally around 80 to 95%. That money will be paid in cash and can be used by the company immediately and whatever they want or need. The factor will then collect payments from the company’s customers. After this money is collected, they will return it to the company that sold them the receivables. The factor gets paid by charging that company a fee. How much factoring costs will be dependent on the factor and their fee structure.

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The Broker’s Role in the Factoring Transaction

What is your role in the factoring transaction? How involved should you be? Everyone has different feelings about the answers to these questions. This article will attempt to provide some general guidelines and helpful ideas.

The primary initial role a factoring broker must serve is as an “Educator”. First, you must educate the prospect about factoring, invoice funding, po financing, accounts receivable factoring. Understand the business problems your prospect is facing and explain how factoring may solve those problems. Assume the prospect knows nothing about factoring; don’t forget, factoring is a foreign, and often scary, concept to many entrepreneurs. Slowly walk the prospect through the benefits of factoring, with particular emphasis on the impact the benefits will have on his business. Also explain the logistics of factoring and what the factor is likely to expect of him.

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Payroll Financing

We all know that the banks do not provide a friendly credit environment to small, growing businesses. If they offer any money, it usually isn’t enough. This often leads to an inability to grow your company due to a lack of funds. Well, there’s a type of financing out there that is greatly increasing in popularity in our industry. It’s called factoring, also known as invoice factoring, accounts receivable financing, or purchase order financing. This type of financing concentrates on your customer’s ability to pay, not yours.

Factoring is the sale of your accounts receivable (invoices) to a funding source at a discount off the face value in return for immediate cash. The funding source is known as a factor.

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Funding Your Fast Growing Company

A fast growing company will be in constant demand for funds in order to further fuel that growth. Money is required to purchase additional materials, bring in more personnel and cover operating costs.

There are numerous ways for a business to get the funds that they might need, though there is no guaranteed way. Loans are the most common way to secure funds though they are difficult to obtain for many. New companies and those with bad credit have the hardest times. One very good option is to use accounts receivable financing, and invoice factoring, also known as invoice financing.
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Factoring Is The Cash Flow Solution To The Staffing Industry

Invoice factoring is one of the oldest forms of business finance. There are certain industries that are a perfect fit for factoring and one of them in particular is the staffing industry. Cash flow, gets held up because money goes out much faster than it comes in. This rings especially true with temporary payroll staffing firms because payroll is their primary cost of business and they must meet it every week regardless of if they get paid for their services or not. This constant weekly need can create a gap in their cash flow and this is where the factoring company can step in and provide an essential service.

The biggest obstacle facing staffing companies is having enough cash flow on hand to meet payroll. When a worker comes to one of these agencies for a temporary position, whether as an office worker, accountant, nurse, or a laborer, they expect to be paid every week. In some instances in which the job only lasts a day or two, these temporary employees want to be paid immediately. That creates a cash flow squeeze when the agency’s customers pay in 30 to 45 days. This is where accounts receivable factoring to staffing agencies can provide the working capital needed to keep up with current payroll costs and also provides room for any potential growth.
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How the Down Economy Has Positively Affected the Factoring Industry

The current consensus in the factoring industry seems to be that the lower debtor quality is greatly influencing receivables financing. As factors see increases in invoice turnover, risk of bankruptcy by customers, concentration, and decreases in debtor credit, it may look like troubling times for invoice factoring. That being said, there are “diamonds in the rough” that can be positively looked upon by factors. As long as the factor holds tight to sound judgment, remains conservative, and uses the core principles of receivable financing, they can take certain advantages that is positively affecting the factoring industry given the current economy.
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Here’s How Factoring Is Better Then A Loan

There will definitely times when factoring will be more advantageous for a company then a loan or line of credit. Factoring does not require a company to take on new debt. It is a faster way to get money then a loan, there are no interest payments and obtaining money from a factor is much easier then from a bank. In this article, we will take a closer look at how factoring is better then a loan or line of credit and when it is best to utilize this financing option.

Money does not have to be paid back: If a company takes out a loan or a line of credit, they will have to pay it back, with interest. While most companies are fully aware that loans are a normal part of staying in business, many would prefer not to borrow money if they don’t have to. A good number of businesses would be more then happy to finance their needs without having to pay back any money.

Invoice factoring gives companies the opportunity to do just that. This form of financing does not require a loan. The more money that a company borrows, the more difficult it is for them to receive a loan in the future. If a business can use a mix of financing and not be so dependent on debt, they give themselves more options down the line.
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