Medical supply companies in general are very profitable enterprises. However, most medical supply companies operate on a very tight cash flow. Unfortunately, the challenging billing procedures and slow payment cycles of insurance companies, HMOs and Medicare/Medicaid create a situation where many companies wait 30 to 60 days before getting paid.

Cash flow can get even tighter if the company’s sales grow, or if the owners decide to open new locations. When this happens, most company owners try to obtain bank financing through a loan or line of credit. However, qualifying for bank financing is incredibly challenging as they will only lend money to a business that shows profits for three straight years and can provide audited financials.

There is a financing alternative in the healthcare industry that has been used with success with medical supply companies. This solution provides you with quick financing based exclusively on your sales. Furthermore, since financing is tied to sales, the line of financing grows as your sales grow. The solution is to factor your medical insurance claims using medical receivables factoring.

Medical factoring provides you with immediate financing based on your slow paying insurance and Medicare/Medicaid claims. Rather than waiting 30 to 60 days to get paid, with medical factoring you can get paid in a few days. This frees up significant cash, allowing you to finance operations, and more importantly, to buy supplies and fuel new sales.

As opposed to bank financing, where the bank lends you money, the factoring company buys your invoices and pays you immediately for them. The process is fairly straightforward. But more importantly, this also means that you are free from the traditional bank lending requirements. Medical receivables factoring is easier to qualify for, and often, the owners’ personal credit is not a consideration.

Factoring your medical receivables can be an ideal solution for your medical supply company if your main challenge is that you cannot afford to wait up to 60 days to get paid by insurance companies. If that is the case, medical factoring should provide you with the working capital you need to operate and grow your business.

Business financing strategies for short-term working capital management are often overlooked because of an apparent preference for long-term business financing. Although long-term business loan options are frequently appropriate, there are several short-term working capital management possibilities that will be much more effective for business owners in achieving successful business financing results. Two of the most overlooked short-term working capital financing strategies are business cash advance programs and short-term commercial mortgage loan programs.

BUSINESS FINANCING EXAMPLE ONE – SHORT TERM WORKING CAPITAL MANAGEMENT – Business Cash Advance Programs

For any business that accepts credit cards as a method of payment, a business cash advance is a critical business financing tool that is often overlooked. Even thriving businesses frequently need more working capital than they can borrow from a bank. One of the least-known business financing strategies for successful businesses is potentially the single best working capital management strategy for obtaining needed cash for growing their business: the use of a business cash advance or merchant cash advance program. The most likely candidates to benefit from this working capital loan strategy are retail stores, service businesses, restaurants and bars. The highly-recommended and highly-effective working capital financing strategy uses an under-utilized business asset (credit card receivables) to obtain business cash advances based upon a merchant’s sales volume.

This working capital management strategy is also known as “credit card factoring”. Many businesses have relied upon a working capital financing strategy called “receivables factoring” or “receivables financing” which allows them to sell their future receivables at a discount. Most small businesses cannot adequately document their receivables in order to qualify for this kind of business financing. Many other small businesses (such as restaurants, bars, retail stores and service businesses noted above) simply do not have such receivables to rely upon as a commercial financing tool.

What these businesses do have in many cases is documented sales volume and documented credit card sales activity. It is this documented level of sales volume and credit card sales activity that becomes a financial asset to the business and its business financing strategies. Business cash advances from $5,000 to $300,000 can usually be obtained based on a merchant’s sales volume and future credit card sales. The business financing time period covered by a business cash advance is typically 12 months or less. For businesses that desire to continue the merchant cash advance program beyond this period, it is usually an easy matter to get an additional business cash advance once the initial one has been completed.

As with any successful business financing strategy, there will typically be only a small number of commercial lenders who are effective at implementing the working capital management strategy properly. There are also a number of problems to be avoided with business cash advance programs, so choosing the appropriate provider of this business financing service is extremely important to any business owner considering a business cash advance program.

BUSINESS FINANCING EXAMPLE TWO – SHORT TERM WORKING CAPITAL MANAGEMENT – Short-Term Commercial Mortgage Loan Programs

It is important to note that long-term business financing has a very important place for any business that owns commercial property. Business properties should normally not be financed with short-term funds. When longer-term business financing is appropriate, it is essential to obtain a long-term commercial mortgage of at least 15-20 years (and longer is even better).

However there will be many commercial mortgage loan situations in which longer-term business financing is not appropriate for the business owner. In such circumstances it is important for a business owner to realize that there are viable short-term working capital management options.

For business owners who expect to sell or refinance their commercial property within one to five years, it is especially advisable to explore short-term commercial mortgage loan programs. The most appropriate short-term business financing will have little or no prepayment penalties and “lockout” fees normally associated with longer-term commercial mortgage loans.

While we will not attempt to describe the technical aspects of commercial loan prepayment fees and lockout fees in this article, we will note that the absence of such fees in most short-term commercial mortgage loan programs is a very positive aspect of these short-term business financing options. The lack of such penalty fees could easily translate to a savings of 10% to 30% or more if a business owner needs to sell their commercial property during the time period which would have been covered by prepayment fees and lockout fees in a traditional longer-term commercial mortgage loan.

Although prepayment and lockout fees will typically be avoided with a short-term commercial mortgage loan, there are some trade-offs to be made if a business owner selects shorter-term business financing. When short-term commercial mortgage loans are available, the interest rate will frequently be in the range of 11% to 13%, the loan-to-value will typically be under 70% and such business financing will not be readily available for special purpose commercial properties. The most likely candidates for a short-term commercial mortgage loan are office, retail, multi-family, warehouse and mixed-use commercial properties. The business financing time period typically covered by a short-term commercial mortgage loan is six months to three years.

Just as there are very few highly-effective providers of business cash advance programs, there will typically be a very small number of commercial lenders who are effective at implementing the short-term commercial mortgage loan strategy properly. There are also a number of working capital management problems to be avoided with short-term business financing for a commercial mortgage loan, so choosing an appropriate provider is extremely important to any business owner considering a short-term commercial mortgage loan program.

Copyright 2005-2007 AEX Commercial Financing Group, LLC. All Rights Reserved.

Business has such a versatile scope, any thing considered in the point of view of earning money can bring a new idea for a business. Specially for a small business one does not need to go very formal strategic planning but the crucial part is financing. Before starting business one should be aware of financing options and their comparative merits and demerits. There are mainly eight types of financing options for small firms. They are listed below with their advantages and disadvantages:

(1) FAMILY LOANS:

Advantages:

1) No security is required.

2) Profit is distributed among the family members so it stays at home.

Disadvantages:

1) Since there is no security required so it can strain the family relationship if repayment is not made as expected.

2) If business fails, entire family suffers.

3) Family members? unwanted interference is unavoidable.

(2) BANK OVERDRAFT:

Advantages:

1) Its flexibility is specialty of such financing. Once agreed, it can be availed on demand.

2) Interest is payable when the borrower uses it so it saves cost.

Disadvantages:

1) It is repayable on demand. Terms are not fixed.

2) It needs security against business assets.

3) It requires sufficient security, due to lack of which, it can?t be granted.

4) Rate of interest is usually higher than loans.

(3) BANK LOANS:

Advantages:

1) Terms of loan is fixed i.e. it is not repayable on demand.

2) Interest and capital repayment are fixed and known in advance so it helps borrower to plan the amount and terms for borrowing.

3) Rate of interest is usually lower than Bank Over- Drafts.

Disadvantages:

1) It needs security against business or personal assets.

2) Sufficient security is needed otherwise can be refused.

3) Require good cash flow for repayment.

(4) FACTORING & INVOICE DISCOUNTING:

Advantages:

1) Security is on debts generated by sales so increase in sales increases finance availability.

2) Interest and charges are deducted from the profit of the firm so no chances of missing repayment.

Disadvantages:

1) Rate of interest is usually higher than that of bank loans.

2) Certain conditions are imposed including checks on new customers.

(5) LEASE & HIRE-PURCHASE:

Advantage:

1) Security is on assets purchased so no extra security is needed.

Disadvantages:

1) Rate of interest is higher than Bank Loans.

2) Adequate Cash-flow is required to meet regular repayment.

Importing electronic devices from China and other Asian countries is a very profitable business and lately the number of MP4 player wholesalers has skyrocketed. Why? Well, first of all because the largest consumer of electronic goods, the US market, is getting ready for the next step in portable entertainment – MP4 players. The second reason for this new interest in MP4 player wholesalers and MP4 imports is that early product sampling and negotiations with the wholesaler could give US vendors and edge when the customers come rushing in to purchase MP4 players. You can checkout some of the newest MP4 models direct from China here: http://www.chinavasion.com/index.php/cName/mp4-players/

MP4 player samples

Although MP4 technology is fairly new, there are already dozens of MP4 video player manufacturers. One of the best ways to determine how valuable their product is and how reliable your business partner proves to be is by requesting samples of their products. Of course, there is no written rule for this process, and in most cases this will have to be negotiated on an individual basis. Small US-based vendors may have a hard time receiving free samples from different Chinese manufacturers and other MP4 player wholesalers. In such cases, it is up to the US vendor to decide whether they want to make a small investment and purchase several units or if they wish to sit back and watch how the market is evolving.

What to look for in a MP4 player product?

One of the key elements to reaching a wide and highly targeted consumer market is to anticipate their preference for the new products. In other words, you should not import tens of thousands of cheap and low-quality MP4 players if the public is looking for higher prices but better features and image quality.

Here are some features of a top quality MP4 player that should appeal to a large audience:


• Memory: Built-in 1.8 inches 20GB Hard Disc, for example, would give you large capacity for storing whole movies in high resolution.

• Connection: USB 2.0 for faster transfer speed.

• Video playing: MPEG-4 format including DivX.

• Resolution: QCIF/CIF/1/2D/2/3D and D1

• Music Playing: MP3 / WMA formats

• TV Recording: AV input / Video record

• Picture format: JPEG and GIF

• Internal power: rechargeable lithium ion battery

• Acceptable battery time: Video – 3 hours, Audio – 5 hours

• Accessories: USB cable, stereo earphones, installation CD, charger


Finding a reliable wholesaler

As with any type of business, you want to make sure that your business partner is reliable and trustworthy. For retailers looking for an overseas partner and an import business, the best solution is to go with a reputable supplier of MP4 players. While determining “reputation” is difficult, you should look for customer feedback, check out their website and definitely give them a call. A very well known source you can find is this chinese wholesaler: http://www.chinavasion.com/

You should be looking at China in particular for the lowest wholesale prices for MP4 and MP3 players. That’s where they are all made these days. Professional MP4 player wholesalers located in China will always have an English translator ready to assist you and provide you with more details. Make sure to ask for samples and clarify all import transactions properly before you sign any contract. It is also advisable to consult other retailers and electronic product vendors to see who they partnered with in their business.