In the current climate a lot of companies are experiencing critical cash shortages. Business owners need to understand how to finance their enterprise. The Board has the responsibility in this process to make sure that the correct financing strategies are in place, and are well focused and resourced.

The Board should make sure that the financing strategies cover the following 10 questions:

1. Is it the right time to seek financing?

2. Will the required financing be enough to meet the needs of the company?

3. Are the documents to support the financing request completed to high quality professional standards?

4. Does the company have an experienced and competent management team that can deliver against the strategies and plans?

5. Are the right financial instruments being investigated (utilised) and in conformity with all securities laws and regulations?

6. Are the right sources being approached?

7. Have all opportunities to release cash from the balance sheet been explored?

8. Is the optimum capital structure in place to sustain growth and allow for future capital raises, if they are required?

9. Is there an adequate cash management system in place to protect the money lent or invested into the company?

10. Will the company be able to afford the financing being sought?

Many company owners complain about their difficulty in obtaining the financing they want. Their frustration is linked to their doubts that investors are ready to put money in to companies experiencing temporary cash shortage. I do agree that the current economic and financial climate has made it more difficult to get cash, yet I would stress that there is no shortage of available money. In fact, in my experience, there is a shortage of companies who can step up to the mark and demonstrate what investors are looking for. Such companies would have put in place viable strategies; have plans on how to tap into new market opportunities; have the right talented management teams that can seize those opportunities and who can execute the plans well. Even when all of those ingredients are in place, I often observe that company owners are unrealistic about the valuation of their company and refuse to give up sufficient equity to attract the level of investment they require. Put simply – it is better to own a small percentage of a very successful company rather than 100% of a failed one.

Importing and exporting are only some of the duties business owners make to gain better reputation and finances. However, some business owners wish to improve their safety by opting for financial solutions such as import finance strategies. This option offers numerous features, but there are still ways to improve such service. Below are some of the following.

Know import rules and regulations

In order to improve import finance strategies, business owners need to mindful about import rules and regulations of countries. Of course, there are cases when businesses have overseas clients. Therefore, you need to have sufficient knowledge about import rules and regulations. This is important to avoid delays. In addition, having sufficient knowledge about shipping regulations will help make ventures better and more efficient for both buyer and seller.

Opt for the right payment method

The next way business owners need to do in order to improve their import finance strategies is by opting for the right payment method. As of now, business owners can opt for numerous payment options for their import finance solutions such as bills of exchange arrangement, letter of credit and open account. These options can provide the best features that can help make transactions safer and more effective. However, you need to be aware about charges and hidden fees from such options.

Be cautious in choosing the financial institution to work with

Another option that business owners can do to improve their import finance strategies is to be cautious in choosing financial institutions to work with. Of course, there are numerous financial institutions that offer such services. However, not all institutions can provide you the right service that can match your needs. So, it is best for business owners to spend time determining their service to help them assess if they can gain wonderful benefits.

Find alternatives

Finally, it is also best for business owners to find alternatives. Surely, import finance solutions from reliable financial institutions are very effective. Not to mention, this service can secure both buyers and sellers. But, there are still cases when issues can affect such strategy. Therefore, finding alternatives can be a good plan. For instance, you can choose to pay for your orders in advance, but make sure to pay for low value shipments only. Or perhaps, when paying a foreign supplier, you can send payments electronically. And, you can also open an account with suppliers if you are working with them for a long time.

Knowing all these tips can help owners improve their ventures which can help them become better and more profitable.

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All businesses rely on their cash funds to operate. Although most businesses typically depend on a steady cash flow to sustain their venture, unfortunately, importing companies usually do not enjoy such liberties. This is mainly because import companies have long cash flow cycles.

Businesses in the import industry will therefore need to have and use the right financing strategies in place so that their venture won’t go under. In addition, owners of import businesses shouldn’t be complacent with the financing strategies they have; they should find ways to improve them.

Below are some tips for businesses on improving their finance strategies:

Be mindful and keep track of all relevant rules and regulations of import. To effectively import finance strategies, owners of importing businesses need to be aware of the regulations and rules set by the different countries for import. Being knowledgeable of all applicable rules and regulations of import finance strategies is important to keep things fast. In addition, knowing the key shipping details and rules is crucial because this helps increase understanding of the whole business.

Select the most suitable payment method. Choosing the right payment method is another important step business owners need to improve their import finance strategies. The most common payment methods import business owners can choose from include Letters of Credit or LOC, bills of exchange arrangement, and open account. According to finance experts, these options are considered the best in the import and export industry since they make transactions easier. If you are still in the process of selecting your payment method, make sure that you know the transaction fees and hidden charges before making your final decision.

Choose a good and reliable financial institution to work with. Selecting a trustworthy financing partner is also crucial in improving your finance strategies. Although there are numerous of these institutions today, not all these establishments can fit your business needs. Take the time to do sufficient research on these institutions and check their services so that you can make a choice that can promise the best returns.

Have contingencies in place. Finally, make sure you have substitutes. Various financing institutions offer solutions that can help secure the interests of both the sellers and buyers. However, a few issues may arise that can have a long-lasting impact on your company’s import finance strategies. Because of this, it is important to search for substitutes. For instance, if you choose to pay for your order beforehand, do this only for low value shipments. With long-term business partners, consider opening an account with them. This strategy can help you to be secure and have a more profitable business.

When you need to fill positions within the finance department, it is important that you create a hiring strategy. Finance recruiters will be able to help you fulfill the strategy entirely so that you can focus on other areas of the business. If you are responsible for all aspects of hiring, you will find that the process is going to take considerably longer – and this may not be something that you can afford.

Your hiring strategy needs to consist of such things as:

a sufficient job description
a large pool of candidates to choose from
a list of desirable skills
knowledge of the industry
various ways of listing the job opening
a timeline

Executing the hiring strategy is going to take knowledge of the hiring process, as well as multiple people to help you. You cannot be responsible for creating the job description, creating job opening listings around the area, compiling all of the resumes, and conducting interviews. It simply cannot be done because you have other responsibilities within your organization.

Finance recruiters will be able to streamline the process because it is their business. They are responsible for recruiting finance individuals all the time and therefore they already have a lot of the work done for you. They have a timeline that can be customized for you, they have job descriptions that can be tweaked for your organization, and they most likely have a large pool of candidates that they can already begin pulling from.

By working with professional finance recruiters, you can make short work of hiring a qualified individual for your organization. Regardless of the actual job position that you need to hire for, a recruiter will be able to find you someone quickly so that you can get them started right away.

The longer you leave a job position open, the more strenuous it is going to be for the others within the department. For example, if you need someone in the Accounts Receivable department, everyone else is going to work longer hours and have more on their desks because you are short one person. If you begin to stress all of your employees out for too long, you may be looking for more than just one person because others will get tired of picking up the slack and leave the organization as well.

Finance recruiters will simplify the process, expedite the hiring process, and find you qualified candidates. They are familiar with the skills needed within the finance industry and can tell the difference between someone who has skills and someone who has a polished resume. This will work to your advantage. So that you can feel confident in the person that you ultimately offer the job position two.

You can be as involved in the process as you want to be – and finance recruiters will pick up the slack when needed so that you can meet all of your deadlines and have someone on staff quickly.

Whitaker is one of the nation’s most respected names in professional recruiting. Our national staffing companies provide the highest quality contract and direct-hire staffing solutions for a wide variety of enterprises and organizations in three areas of disciplinary focus – information technology, accounting & finance, and engineering / technical professions. Within these areas of specialization, we provide staffing solutions for key positions that require premium credentials and where demand is high.

What do you mean finance the deal – isn’t this about acquiring property without using your own money? Of course it is – we will get into some techniques you can use without taking your wallet out of your pocket next, but I would find this discussion somewhat incomplete if I didn’t touch a little bit upon financial methods that may require some skin (yours), and naturally, a pretty good credit score.

Conventional: When I got started, I didn’t have a couple hundred G’s sitting in my bank account ready to plop down on my first rehab opportunity – perhaps you’re in the same boat. But I did have good credit. If this is the case for you, consider doing what I did and visiting with your favorite mortgage broker (should also be on your professional team, right?). Get yourself a standing pre-approval – this will need to be updated from time to time but this is a nice tool to have in your arsenal.

Why? Because it is necessary when you go MLS shopping – you know, scouring for great deals on your local multiple listing service with your agent – the same agent you chose to become part of your professional team. Let’s not get confused here: remember, MLS shopping is only one of the ways you are employing to find sellers, certainly not your only way. Don’t forget to continue your targeted mailing, signs, flyers, door knocking/leave behinds, classified ads, internet strategy…

Are there deals on the MLS? Yes and no, I certainly couldn’t speak for where you live, but I do go shopping in my area for REO’s, short sales, and fixer-uppers on the MLS and I do indeed put offers on them. Not all of them are available for the price you need, but then again, some are. You will find out who is ready to play ball (the motivated seller) and who prefers to stay listed (the unmotivated seller) right away based on the seller’s counter offer.

Here’s why you need to have that pre-approval we discussed above – it needs to be submitted now with your offer, without that pre-approval you’re just wasting everyone’s time. By the way, if you do have that $200k in your bank account, skip the pre-approval and whip out your proof of funds.

Not to belabor the point, but if you are lucky enough to have an abundance of cash, give me a call (just kidding, kind of) use it – a cash offer that is free and clear of any mortgage contingencies will always rise to the top of the pile if you find yourself bidding against other investors.

So I have a standing pre-approval for submitting offers, and I will use conventional financing if I find something that makes sense to buy and hold. If you have credit issues that will prevent a lender from sending over a pre-approval letter, don’t sweat it, let’s look at some other alternatives that may be available for you.

Credit Lines: these can be secured or unsecured. I have a home equity line that I can tap into and I also have 2 unsecured lines I have access to (through another business). If you are a homeowner with a good amount of equity, you can speak with your lender (also a professional team member), about acquiring a HELOC. If you have another business that is credit worthy and in good standing you may want to also consider an unsecured line of credit. This type of financing is good for down payments, rehab costs, and (depending on your market prices and the amount of your lines) they can also be used to acquire a property outright with cash.

Hard Money: this type of lender will have some pretty steep terms, but if you have purchased the property correctly, the sale of the repaired property will take care of the points and elevated interest rate necessary to squeeze into this type of loan. The good news here is that the lender will analyze the numbers associated with property you are trying to purchase rather than your FICO score. So if you are having an issue with getting into a conventional loan, this may be a nice alternative.

The less than good news is that these lenders are looking for some of your personal participation (see credit lines above). In my area, I have found that the hard money lenders are scrutinizing the potential deal much more so than in the past. Prepare yourself to be grilled over your comparables, repair estimates, and ARV (After Repair Value). Like a lot of the conventional lenders we have been hearing about over the past 2 years, hard money lenders have eaten their share of deals gone bad and have had to foreclose on a large number of properties. As a result, the hard money lenders have also tightened their lending policies just like the conventional lenders.

Speaking of ARV get to know it, and the necessary metrics involved in determining whether you have a deal or a dud. The standard formula form the not too distant past has been: ARV*70% – Repair Costs = MAO (maximum allowable offer). But in today’s declining real estate market, you will need to be a bit more conservative, especially if you are going to deal with a hard money lender – Look for picking up property for 50-60% of ARV, the lower the better…

Private Money: of course if you are fortunate enough to find a private lender or two – you know, one who will finance your deal for a fair return on their risk – then by all means, pass right to go! Finding a private lender(s) will certainly save you time navigating through today’s rocky credit markets and allow you to spend your time finding deals! This is a point that should not be overlooked – let everyone know about what you do, the value you bring to your community – have you seen the returns on Wall Street lately? This is a great time to let the world know about alternative investment opportunities – network, network, network….

Securing financing will be a good first step for the beginning investor and it will also instill some confidence behind those offers you will be submitting. Yes indeed these different methods will require some personal finance/credit analysis by your choice of lender – if you need no money/no credit alternatives, stay tuned for our next discussion on creative financing: controlling property with options.

Kevin Sullivan is an active real estate investor and owner of Maplegate Realty.