Trump Tariffs: Expect Cost Increases On These Items

Trump Tariffs: Expect Cost Increases On These Items

As trade tensions escalate, Trump’s tariffs have taken center stage in discussions about their impact on consumer prices. Tariffs, essentially taxes on imported goods, increase costs for businesses that rely on foreign products and materials. These costs are often passed down to consumers, making everyday items more expensive. Here’s how tariffs will affect the prices of cherry tomatoes, Tonka trucks, avocados, maple syrup, tequila, and smartphones.

Trump Tariffs: Expect Cost Increases On These Items

Cherry Tomatoes: A Pricier Staple for Salads

The United States imports a significant portion of its cherry tomatoes from Mexico, particularly during the winter months. A tariff on Mexican produce means grocery stores will pay more for imports, leading to higher prices for consumers. In an industry where margins are tight, retailers will have little choice but to pass along the increased costs.

Tonka Trucks: Tariffs on Toy Manufacturing

Classic American toys like Tonka trucks are often manufactured using imported materials, particularly metals from China. Tariffs on these raw materials drive up production costs, leading to higher retail prices. Parents shopping for holiday gifts could see a noticeable increase in toy prices due to these trade policies.

Avocados: A Costly Breakfast Addition with tariffs

Avocados have become a dietary staple for many Americans, but they are largely imported from Mexico. Tariffs on Mexican goods will directly affect the cost of avocados, making guacamole and avocado toast a more expensive indulgence. Given the already volatile pricing of avocados due to supply fluctuations, additional tariffs will only exacerbate cost concerns for consumers.

Maple Syrup: A Blow to Breakfast Budgets Due to tariffs

Although the U.S. produces a fair amount of maple syrup, a significant quantity is imported from Canada. Tariffs on Canadian agricultural products will make syrup more expensive, increasing costs for consumers who enjoy this breakfast staple. The impact could also hurt businesses that rely on maple syrup as a key ingredient.

Tequila: Higher Costs for a Popular Beverage

Tequila, a product exclusively made in Mexico, is another item set to become more expensive under tariffs. As demand for tequila-based cocktails like margaritas continues to rise, tariffs will increase the cost of importing tequila, leading to higher prices at liquor stores and bars. Consumers and hospitality businesses alike will feel the financial strain.

Smartphones: The Tech Industry Faces Higher Costs

Smartphones, including popular models like Apple’s iPhone and Samsung’s Galaxy series, rely on components sourced globally. Tariffs on Chinese electronics and components will increase production costs, which companies will likely pass on to consumers. Given the essential nature of smartphones in everyday life, these price hikes could have widespread financial implications.

Consumers Will Bear the Burden

While tariffs are intended to promote domestic production and protect American industries, they often lead to higher consumer prices. As businesses face increased import costs, those costs will inevitably trickle down to shoppers. From food and beverages to toys and technology, many everyday items will see price increases, affecting household budgets across the country.

Understanding the real-world impact is crucial, as consumers and businesses alike prepare for the economic consequences of these trade policies.

Contact Factoring Specialist, Chris Lehnes to learn if factoring can provide your client the working capital needed to survive this trade war.

US GDP Grew 2.5% in 2024: Resilience Amid Uncertainty

US GDP Grew 2.5% in 2024: Resilience Amid Uncertainty

The U.S. economy demonstrated robust growth in 2024, with gross domestic product (GDP) expanding by 2.5%, according to the latest government data. Despite global economic uncertainty, fluctuating interest rates, and shifting labor market dynamics, the economy managed to sustain moderate yet steady growth throughout the year.

US GDP Grew 2.5% in 2024: Resilience Amid Uncertainty

Key Drivers of Growth

Several factors contributed to the 2.5% expansion in GDP. Consumer spending remained a key driver, buoyed by a resilient job market and rising wages. Although inflationary pressures persisted, cooling price increases allowed households to maintain purchasing power. The services sector, particularly travel, hospitality, and healthcare, experienced strong demand, further supporting economic activity.

Business investment also played a role in GDP expansion. Companies continued to allocate capital towards technology, automation, and supply chain enhancements, strengthening productivity and long-term growth prospects. Meanwhile, federal spending, particularly in infrastructure and clean energy projects, added further momentum to economic expansion.

Challenges and Headwinds

While the economy posted solid growth, it was not without challenges. Higher borrowing costs, resulting from the Federal Reserve’s restrictive monetary policies, weighed on sectors sensitive to interest rates, such as housing and commercial real estate. Additionally, global supply chain disruptions and geopolitical tensions created volatility in trade and commodity markets.

Labor shortages in certain industries also posed constraints, leading businesses to invest more in workforce training and automation to mitigate hiring difficulties. The labor force participation rate remained stable, but demographic shifts and evolving workforce trends continued to shape labor market dynamics.

Outlook for 2025

Looking ahead, economists remain cautiously optimistic about 2025. While growth is expected to moderate slightly, ongoing investments in infrastructure, innovation, and clean energy could provide long-term benefits. The Federal Reserve’s policy stance will be closely watched, as any shifts in interest rates could impact consumer spending and business investment.

Overall, the 2.5% GDP growth in 2024 underscores the resilience of the U.S. economy. Despite global and domestic challenges, strong consumer demand, business investment, and strategic federal policies have supported expansion, setting the stage for continued economic stability in the years ahead.

Contact Factoring Specialist, Chris Lehnes

Fed Doesn’t Make a Move

Fed Doesn’t Make a Move – Rates remain Unchanged

On January 29, 2025, the Federal Reserve announced its decision to maintain the federal funds rate within the 4.25% to 4.50% range, citing ongoing solid economic activity, stable low unemployment, and persistently elevated inflation.

Fed Doesn't Make a Move

federalreserve.gov

Economic Implications:

  1. Banking Sector: Moody’s analysts suggest that holding interest rates steady allows banks to better align deposit pricing with declining loan yields, thereby supporting net interest income. marketwatch.com
  2. Inflation Control: The Fed’s decision reflects its cautious approach to managing inflation, which remains above the 2% target. Maintaining current rates aims to prevent exacerbating inflationary pressures. ft.com
  3. Market Reactions: Investors are closely monitoring the Fed’s stance, with major indices experiencing gains ahead of the announcement. The decision to keep rates unchanged provides markets with a degree of stability amid economic uncertainties. investors.com

Political Context: Fed Doesn’t Make a Move

President Donald Trump has advocated for significant rate cuts to stimulate economic growth. However, the Fed’s decision to hold rates steady underscores its commitment to data-driven policy and maintaining independence from political pressures.

ft.com

Future Outlook:

The Federal Reserve emphasized that future rate decisions will be informed by incoming economic data and the evolving economic outlook. Factors such as inflation trends, labor market conditions, and the impact of new fiscal policies will play crucial roles in shaping monetary policy moving forward.

federalreserve.gov

For a more in-depth understanding, you can watch Federal Reserve Chair Jerome Powell’s press conference discussing the decision:

On January 29, 2025, the Federal Reserve announced its decision to maintain the federal funds rate within the 4.25% to 4.50% range, citing ongoing solid economic activity, stable low unemployment, and persistently elevated inflation.

federalreserve.gov

Economic Implications: Fed Doesn’t Make a Move

  1. Banking Sector: Moody’s analysts suggest that holding interest rates steady allows banks to better align deposit pricing with declining loan yields, thereby supporting net interest income. marketwatch.com
  2. Inflation Control: The Fed’s decision reflects its cautious approach to managing inflation, which remains above the 2% target. Maintaining current rates aims to prevent exacerbating inflationary pressures. ft.com
  3. Market Reactions: Investors are closely monitoring the Fed’s stance, with major indices experiencing gains ahead of the announcement. The decision to keep rates unchanged provides markets with a degree of stability amid economic uncertainties. investors.com

Political Context:

President Donald Trump has advocated for significant rate cuts to stimulate economic growth. However, the Fed’s decision to hold rates steady underscores its commitment to data-driven policy and maintaining independence from political pressures.

ft.com

Future Outlook:

The Federal Reserve emphasized that future rate decisions will be informed by incoming economic data and the evolving economic outlook. Factors such as inflation trends, labor market conditions, and the impact of new fiscal policies will play crucial roles in shaping monetary policy moving forward.

federalreserve.gov

For a more in-depth understanding, you can watch Federal Reserve Chair Jerome Powell’s press conference discussing the decision:

Contact Factoring Specialist, Chris Lehnes

Factoring Program Overview – A Primer

Factoring Program Overview – A Primer

Factoring Program Overview
Factoring Program Overview

Executive Summary – Factoring Program Overview – A Primer

We specialize in providing working capital solutions through accounts receivable factoring, particularly for businesses that may not qualify for traditional bank financing. We focus on the quality of a client’s receivables (invoices owed to them by their customers) rather than the client’s overall financial health, enabling them to serve a wide range of businesses, including startups, rapidly growing companies, and those with financial challenges. We offer full notification, non-recourse factoring with a focus on speed and a personal touch, working with a network of intermediaries like brokers, bankers and lawyers, rather than marketing directly to businesses.

Key Themes and Concepts – Factoring Program Overview – A Primer

  1. Factoring Defined: Factoring is the sale of a company’s accounts receivable invoices to a third-party factor in exchange for immediate working capital. This is not a loan; it’s a purchase of an asset. It is distinct from a loan because there is no loan amount or interest rate, but rather a discount rate or fee against the invoice.
  • “Factoring is the sale of a company’s accounts receivable invoices to a factor in order to obtain working capital.”
  1. Non-Recourse, Full Notification Factoring: We offer “full notification, non-recourse factoring,” which means:
  • Non-Recourse: Factor assumes the credit risk of non-payment by the client’s customers. The client is not responsible for repaying the advance if a customer doesn’t pay due to credit issues (bankruptcy, etc.) . However, clients remain responsible if customers don’t pay due to issues with the goods or services provided to the customer, often referred to as a “performance guarantee” or “validity guarantee”.
  • “With non-recourse, the factor takes on the customer’s credit risk (their inability to pay), but the client remains responsible for most other discounts or deductions their customer may take on an invoice.”
  • Full Notification: The client’s customers are notified to pay Factor directly and invoices will usually include instructions for the customer to pay directly to the factor. This allows for greater control over the flow of cash and is often used for businesses with weaker financial conditions.
  • “A notification factor is one that will contact each of a client’s customers and instruct them to make payments to the factoring company. Each invoice issued will usually include instructions that payments must be made payable to the factor.”
  1. Client Profile: Versant targets a broad range of businesses, particularly:
  • Small to medium-sized companies with annual revenues between $1 million to $50 million.
  • Companies that need quick access to working capital and can’t wait for slow-paying customers.
  • Businesses with limited access to traditional credit (startups, fast-growing companies, seasonal businesses, those with poor credit or losses).
  • Businesses with credit-worthy customers, typically large corporations, municipalities or government agencies.
  • “The success of nearly every business is dependent on its supply chain. Whether it is a neighborhood restaurant securing fresh produce from local farmers market or a time-sensitive, month or a high-tech manufacturer procuring microchips from Asia often depends on reliable sources of supply. “
  1. Use of Factoring Funds: Factoring can be used for various purposes, including:
  • Project Financing
  • Business Growth Financing
  • Business Acquisition Financing
  • Bridge Financing
  • Financing Working Capital Needs
  • Realization of Supplier Discounts
  • Preparation for High Season
  • Crisis Management
  • Debtor-In-Possession (DIP) Financing
  1. Program Details:
  • Factoring Volume: We handle annual factoring volumes from $1 million to $120 million, with monthly transaction sizes ranging from $100,000 to $10 million.
  • Advance Rate: Factor typically advances up to 75% of the face value of approved receivables. The remaining balance (less fees) is paid when the receivable is collected.
  • “Client is typically advanced 75% of face value of approved receivables in the batch. The balance is paid when the receivable is collected and the batch is fully closed.”
  • Fees/Rates: Factoring fee is generally 1.5%-2.5% of the face value of the purchased invoices for each month that the account receivable is outstanding. There are no other fees charged on dollars outstanding or for the facility. Fees can vary depending on client risk profile.
  • “Factoring fee is typically 2.5% of the face value of the purchased invoices for each month that the account receivable is outstanding.”
  • Factoring Term: Factoring agreements typically range from 1 to 24 months, with some clients renewing.
  • Personal Guarantee: None is required, as Factor assumes credit risk on the invoice with the previously mentioned “performance guarantee.”
  • Audit Requirements: None is required of the client’s financial performance, as Factor focuses on the credit quality of their customer base.
  • Closing Time: Funding can occur as quickly as one week from the initial contact to funding, and often within 3-5 business days of the initial referral.
  1. Competitive Advantage:
  • Focus on Difficult Deals: Versant specializes in deals other factors might avoid, including those with poor financial performance, limited credit history, or new companies.
  • Speed: Can fund quickly, often within a week of initial contact, and funding typically occurs on the same day that accounts receivable invoices are received.
  • Personal Service: Each client is assigned a dedicated Account Executive.
  • Technological Advantage: We provide clients with access to web-based reports to monitor the performance of their accounts receivable.
  • “Online platform (FactorSQL Software) enables clients to review reports and determine if/when it’s economical to close out aged receivables “batches.”” Factoring Program Overview – A Primer
  1. Marketing and Business Development:
  • We focus on educating financial professionals (bankers, brokers, CPAs, attorneys, business coaches) about factoring to increase referrals.
  • “All my efforts are getting in front of, and speaking with, bankers, attorneys, consultants and coaches, and all those people that help small businesses get through their challenges, so that when one of their challenges could be met by factoring they can recommend what I do,” Lehnes says.”
  • They aim to build a large network of referral sources.
  • They see value in being a “bridge” to help businesses grow, become profitable, and eventually obtain traditional bank financing.
  • “Sometimes they’ll renew with us and stick around a little longer, but we fully acknowledge that we’re a bridge. We’re a way to get a business to the next step of their evolution, where they’re stable enough to get bank financing, or they’re large enough to go out and raise equity, or just that they’re profitable and can move on to a cheaper form of financing.””
  1. Process Steps
  2. The process is a multi-step process that includes:
  • Initiation: The process begins with identifying a prospect who has accounts receivable that may benefit from factoring. The referral source then hands off the completed request with the necessary documentation (Accounts Receivable Aging, Intake Checklist) to Versant.
  • Application Review and Legal Documentation: The client submits a signed proposal letter, a signed application, and a non-refundable fee. Versant then prepares a factoring agreement and associated documents, which the client then signs.
  • Underwriting: Versant conducts a review process by reviewing the Accounts Receivable Aging, conducting public record searches for liens and UCC filings, reviewing customer credit, verifying the receivables by calling the customers, creating a purchase and sale agreement, taking a 100% security interest on client assets, and filing a UCC notice. Invoices will be mailed to debtors with assignment stickers and customers will be notified.
  • Closing and Funding: Versant purchases the receivables, typically advancing 75% of the face value and assuming responsibility for collection.
  • Closing of Batches: When all payments for a particular batch are received, Versant pays the balance owed (the difference between what was collected and the 75% advanced) to the client, less their factoring fees.
  • Ongoing Flow of Receivables: After the client is set up, Versant continually purchases new invoices based on the terms of the agreement.
  1. Factoring’s Role in Economic Uncertainty:
  • In times of economic uncertainty when traditional lending standards tighten and businesses have reduced cash flow, factoring can be a better option than a traditional bank loan.
  • “This economic uncertainty will likely continue for some time and cause many traditional lenders to restrict credit to small businesses in an effort to shield their institutions from the impact of a softening economy.”

Important Considerations: Factoring Program Overview – A Primer

  • Terminology: It’s crucial to understand the differences between lending and factoring terminology (e.g., “loan” vs. “factoring facility,” “borrower” vs. “client/seller”).
  • Fee Structure: Factoring fees are not interest rates; they are a discount or fee on the invoice amount, generally based on the time the receivable remains outstanding.
  • Cost vs. Benefit: While factoring can be more expensive than traditional bank loans, it provides critical access to capital, particularly when bank credit is unavailable and can improve a business’s profitability.
  • Not a “Last Resort”: Factoring is a widely used financial tool, not just an option for troubled companies.

Conclusion: Factoring Program Overview – A Primer

Factoring offers a valuable service for businesses needing flexible and fast access to working capital. Their focus on non-recourse, full-notification factoring, combined with a client-centric approach, positions them as a strong alternative to traditional lenders, particularly in times of economic uncertainty. Their model provides a way for businesses to operate when they do not qualify for traditional loans or need an alternative to banks. Their emphasis on education and partnerships with intermediaries has been crucial to growing their business. Factoring Program Overview – A Primer

**Compiled with AI Assistance

Contact me to learn if your client is a fit:

203-664-1535

clehnes@chrislehnes.com

Request a proposal

Factoring Study Guide – A Primer

Factoring Study Guide – A Primer

Factoring Study Guide - A Primer

Quiz

Instructions: Answer the following questions in 2-3 sentences each.

  1. What is the core function of factoring, and how does it provide working capital for businesses?
  2. Describe the difference between recourse and non-recourse factoring, and what impact does it have on risk for the client and the factor?
  3. How do notification and non-notification factoring differ, and which method is more commonly associated with businesses in weaker financial condition?
  4. What are some common reasons a business might choose to use a factoring facility?
  5. What is Versant’s typical advance rate, and what happens with the remaining percentage of the invoice when it’s paid?
  6. What is Versant’s typical factoring fee structure?
  7. What are the key differences in Versant’s approach compared to other factoring companies?
  8. What types of businesses are a good fit for factoring with Versant Funding?
  9. What are the steps Versant takes when underwriting a potential new client?
  10. What are two industries Versant does not typically factor?

Factoring Study Guide – A Primer

Answer Key

  1. Factoring is the sale of a company’s accounts receivable to a third party (the factor) in order to obtain immediate working capital. This provides businesses with cash flow by turning their invoices into cash, rather than waiting for customer payments.
  2. In recourse factoring, the client is responsible for repaying the advance if their customer does not pay. In non-recourse factoring, the factor assumes the credit risk of non-payment. Non-recourse factoring generally allows businesses in weaker financial situations to be accommodated.
  3. Notification factoring means the client’s customers are notified to pay the factor directly, often with instructions on the invoice. Non-notification factoring allows payments to be made to the client through a lockbox controlled by the factor. Notification factoring is generally better suited for businesses in weaker financial condition.
  4. Businesses might use factoring for project financing, business growth, acquisition financing, bridge financing, meeting working capital needs, taking advantage of supplier discounts, navigating a crisis, or as debtor-in-possession financing.
  5. Versant typically advances up to 75% of the face value of approved receivables. The remaining 25% of the invoice, minus fees, is paid to the client when the receivable is collected.
  6. Versant’s fee is typically 2.5% of the invoice amount for each month (or portion thereof) the receivable is outstanding.
  7. Versant focuses on larger and more complex deals, provides fast service (funding within a week), and assigns an Account Executive to each client. They focus more on the credit quality of the client’s customers, and less on the overall financial strength of the business itself.
  8. Versant is suitable for small to medium-sized businesses with $1-$50 million in annual revenue that need liquidity and may not qualify for traditional bank financing, particularly those with strong customers, even with a weak financial history.
  9. Versant reviews client’s accounts receivable aging, performs a public records search for UCC filings and liens, conducts a credit review of client’s customers, and verifies receivables by calling customers directly.
  10. Versant does not typically factor for the medical and construction industries.

Essay Questions

Factoring Study Guide – A Primer

Instructions: Write a well-organized essay for each question. Your essays should demonstrate your understanding of factoring concepts and your ability to connect these concepts to the source materials.

  1. Discuss the role of factoring as a financing tool for small to medium-sized businesses, comparing and contrasting it with traditional bank financing. Consider factors such as eligibility criteria, speed of funding, and cost.
  2. Explain the benefits of a non-recourse, full-notification factoring facility for a business that is experiencing financial difficulties and how this model operates from initial referral to final payment of the factored invoices.
  3. Analyze the competitive landscape of the factoring industry, discussing the differences between smaller and larger factors and Versant’s unique positioning within that landscape.
  4. Chris Lehnes emphasizes the importance of educating financial intermediaries rather than business owners about factoring. Discuss the reasoning behind this marketing strategy and how it contributes to Versant’s success.
  5. Assess how Versant’s factoring product and approach has proven beneficial for businesses facing various challenging scenarios (including the impacts of COVID-19) and the impact it has on improving their overall profitability.

Factoring Study Guide – A Primer

New Podcast Episode – Factoring – A Vital Source of Capital for Small Businesses

New Podcast Episode – Factoring – A Vital Source of Capital for Small Businesses

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Small Businesses face numerous challenges, among them is the ability to have access to sufficient working capital to meet the ongoing cash obligations of the business. While this need can be met by a traditional line of credit for businesses which meet all traditional bank lending criteria, many businesses do not meet those standards and require an alternative. One such option is accounts receivable factoring. With factoring, a B2B or B2G business can quickly convert their accounts receivable into cash. Many factoring companies focus exclusively on the credit quality of the customer base and ignore the financial condition of the business and the personal financial condition of the owners. This works well for businesses with traits such as: Losses Rapidly Growing Highly Leveraged Customer Concentrations Out-of-favor Industries Weak Personal Credit Character Issues Listen to this podcast to gain a greater understanding of the types of businesses which can benefit from this form of financing. To learn if you are a fit contact me today:

**podcast created with AI Assistance (https://notebooklm.google)

Contact me to learn if your client is a factoring fit:

203-664-1535

clehnes@chrislehnes.com

Factoring Study Guide

Quiz

Instructions: Answer the following questions in 2-3 sentences each.

  1. What is the core function of factoring, and how does it provide working capital for businesses?
  2. Describe the difference between recourse and non-recourse, and what impact does it have on risk for the client and the factor?
  3. How do notification and non-notification differ, and which method is more commonly associated with businesses in weaker financial condition?
  4. What are some common reasons a business might choose to use a factoring facility?
  5. What is Versant’s typical advance rate, and what happens with the remaining percentage of the invoice when it’s paid?
  6. What is Versant’s typical fee structure?
  7. What are the key differences in Versant’s approach compared to other factoring companies?
  8. What types of businesses are a good fit with Versant Funding?
  9. What are the steps Versant takes when underwriting a potential new client?
  10. What are two industries Versant does not typically factor?

Answer Key

  1. Factoring is the sale of a company’s accounts receivable to a third party (the factor) in order to obtain immediate working capital. This provides businesses with cash flow by turning their invoices into cash, rather than waiting for customer payments.
  2. In recourse , the client is responsible for repaying the advance if their customer does not pay. In non-recourse factoring, the factor assumes the credit risk of non-payment. Non-recourse generally allows businesses in weaker financial situations to be accommodated.
  3. Notification means the client’s customers are notified to pay the factor directly, often with instructions on the invoice. Non-notification allows payments to be made to the client through a lockbox controlled by the factor. Notification factoring is generally better suited for businesses in weaker financial condition.
  4. Businesses might use for project financing, business growth, acquisition financing, bridge financing, meeting working capital needs, taking advantage of supplier discounts, navigating a crisis, or as debtor-in-possession financing.
  5. Versant typically advances up to 75% of the face value of approved receivables. The remaining 25% of the invoice, minus fees, is paid to the client when the receivable is collected.
  6. Versant’s fee is typically 2.5% of the invoice amount for each month (or portion thereof) the receivable is outstanding.
  7. Versant focuses on larger and more complex deals, provides fast service (funding within a week), and assigns an Account Executive to each client. They focus more on the credit quality of the client’s customers, and less on the overall financial strength of the business itself.
  8. Versant is suitable for small to medium-sized businesses with $1-$50 million in annual revenue that need liquidity and may not qualify for traditional bank financing, particularly those with strong customers, even with a weak financial history.
  9. Versant reviews client’s accounts receivable aging, performs a public records search for UCC filings and liens, conducts a credit review of client’s customers, and verifies receivables by calling customers directly.
  10. Versant does not typically factor for the medical and construction industries.

Essay Questions

Instructions: Write a well-organized essay for each question. Your essays should demonstrate your understanding of factoring concepts and your ability to connect these concepts to the source materials.

  1. Discuss the role of factoring as a financing tool for small to medium-sized businesses, comparing and contrasting it with traditional bank financing. Consider factors such as eligibility criteria, speed of funding, and cost.
  2. Explain the benefits of a non-recourse, full-notification factoring facility for a business that is experiencing financial difficulties and how this model operates from initial referral to final payment of the factored invoices.
  3. Analyze the competitive landscape of the factoring industry, discussing the differences between smaller and larger factors and Versant’s unique positioning within that landscape.
  4. Chris Lehnes emphasizes the importance of educating financial intermediaries rather than business owners about factoring. Discuss the reasoning behind this marketing strategy and how it contributes to Versant’s success.
  5. Assess how Versant’s product and approach has proven beneficial for businesses facing various challenging scenarios (including the impacts of COVID-19) and the impact it has on improving their overall profitability.

Glossary

Account Debtor: The customer of the factoring client who owes money for goods or services rendered; also sometimes referred to as a “customer client.”

Advance Rate: The percentage of the face value of an invoice that a factor provides to the client upfront.

Bridge Financing: Short-term financing used to cover immediate cash needs while a company transitions to another source of funding or a more stable state.

Client: In factoring, the business that is selling its accounts receivable to a factor; also referred to as “seller of receivables.”

Debtor-in-Possession (DIP) Financing: A type of financing provided to a company undergoing Chapter 11 bankruptcy, enabling them to continue operations.

Discount/Fee: The amount a factor charges for providing financing, often expressed as a percentage of the invoice amount, generally applied monthly (or part thereof) that the invoice is outstanding.

Factor: The financial company that purchases accounts receivable from businesses; also referred to as “purchaser of receivables.”

Factoring Agreement: The legal agreement between a factor and a client outlining the terms and conditions of their relationship, including the fees, term of the agreement, and other obligations.

Factoring Facility: The overall agreement and set-up for the sale of invoices between the client and the factor.

Factoring Volume: The total value of accounts receivable factored, usually expressed in monthly, quarterly, or annual terms.

Full Notification Factoring: A type of factoring where the client’s customers are notified to pay the factor directly.

Non-Notification Factoring: A type of factoring where the client’s customers are not notified of the factoring relationship and continue to pay the client, who in turn, settles with the factor.

Non-Recourse Factoring: A type of factoring where the factor assumes the credit risk of non-payment by the client’s customer.

Performance Guarantee: A guarantee provided by the client to the factor, assuring that the invoiced goods/services were provided correctly and as ordered, not a guarantee of payment for the underlying invoices.

Purchase and Sale Agreement: A contract that documents the sale of a batch of invoices from a client to the factor.

Recourse Factoring: A type of where the client is liable to the factor if their customer fails to pay the invoice.

Rebate: The remaining percentage of an invoice amount (after the initial advance) that is paid to the client by the factor after the customer has paid the invoice (less the factor’s fee).

Receivables: Invoices representing money owed to a company for goods or services delivered but not yet paid for; also referred to as “accounts receivable.”

Impact of Tariffs on Imports from Colombia on US Economy

In recent years, tariffs have become a key tool in the United States’ trade policy. When applied to imports, tariffs serve as taxes levied on goods entering the country, typically aimed at protecting domestic industries or responding to trade imbalances. However, the imposition of tariffs on imports from Colombia, a significant trading partner of the U.S., has the potential to ripple through both economies. Here, we explore the potential impacts on the U.S. economy, considering the key sectors involved, consumers, and the broader economic implications.

Impact of Tariffs on Imports from Colombia on US Economy

1. Key Sectors Affected

Colombia is a major exporter of agricultural products, energy resources, and textiles to the United States. Tariffs on these goods could have the following sectoral effects:

  • Agriculture: The U.S. imports a significant amount of coffee, bananas, and flowers from Colombia. Tariffs on these goods could increase prices for American importers, disrupt supply chains, and potentially incentivize a shift toward alternative sources or domestic production.
  • Energy Resources: Colombia is a prominent exporter of oil and coal. Tariffs in this sector could lead to higher energy prices in the U.S., especially in industries heavily reliant on these resources.
  • Textiles and Apparel: Tariffs on Colombian textiles might increase costs for U.S. retailers and manufacturers, potentially driving up prices for consumers.

2. Impact on U.S. Consumers

Tariffs tend to raise the cost of imported goods, which can result in higher prices for consumers. For example:

  • Rising Costs: American households could face higher prices for everyday goods such as coffee and clothing, which are staples in many households.
  • Reduced Choices: As tariffs make Colombian products less competitive, businesses may limit imports, leading to fewer options for consumers.

These factors could dampen consumer spending, which is a critical driver of the U.S. economy.


3. Effects on U.S. Businesses

  • Import-Dependent Industries: Companies relying on Colombian imports could face higher costs, pressuring their profit margins. For instance, flower retailers might see increased costs during peak seasons like Valentine’s Day and Mother’s Day.
  • Retaliatory Tariffs: Colombia may respond with tariffs on U.S. exports, affecting American industries such as agriculture (e.g., corn and wheat) and machinery. Retaliatory measures could harm U.S. exporters’ competitiveness in the Colombian market.

4. Macroeconomic Implications

On a broader scale, taxes can have mixed effects on the U.S. economy:

  • Inflationary Pressures: Higher prices on imported goods can contribute to inflation, eroding purchasing power and complicating monetary policy.
  • Trade Deficits: While tariffs aim to reduce trade deficits, they may lead to reduced trade volumes overall, disrupting economic relationships and supply chains.
  • Job Creation vs. Losses: While taxes may protect certain domestic industries and jobs, they can lead to job losses in industries dependent on trade with Colombia.

5. Geopolitical and Strategic Considerations

Colombia is a strategic ally of the United States in Latin America, and trade policies play a role in strengthening bilateral relations. The imposition of tariffs could strain this relationship, potentially affecting cooperation on issues like security, drug trafficking, and regional stability.


Tax on imports from Colombia could have wide-ranging implications for the U.S. economy, affecting key sectors, consumers, and businesses. While such measures may aim to protect domestic industries, the potential downsides—from higher consumer prices to strained international relations—underscore the need for careful consideration. Policymakers must weigh these impacts to ensure that trade policies align with broader economic and strategic objectives.

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Mortgage Rates 7% – What’s the impact on the greater economy?

Mortgage Rates Surpass 7% – What’s the impact on the greater economy?

The mortgage market reached a pivotal moment recently, with the average 30-year fixed mortgage rate surpassing 7% for the first time in over two decades. This development has profound implications for both the housing market and the broader economy, as it signals a shift in affordability, consumer behavior, and economic momentum.

Mortgage Rates Surpass 7% - What's the impact on the greater economy?

The mortgage market reached a pivotal moment recently, with the average 30-year fixed mortgage rate surpassing 7% for the first time in over two decades. This development has profound implications for both the housing market and the broader economy, as it signals a shift in affordability, consumer behavior, and economic momentum.

A Shock to Affordability

Rising mortgage rates have significantly increased the cost of borrowing for prospective homebuyers. For context, a 1% increase in mortgage rates can add hundreds of dollars to a monthly payment, depending on the loan amount. For example, a $400,000 loan at a 6% interest rate would incur a monthly principal and interest payment of approximately $2,398. With a 7% rate, that figure jumps to $2,661—a difference of $263 per month, or over $3,100 annually.

This dramatic rise has effectively priced many buyers out of the market, particularly first-time homeowners who often lack substantial savings for larger down payments. The result is a cooling of demand, evidenced by declining home sales and growing inventories in many regions.

Effects on the Housing Market

The housing market, a bellwether for economic health, is showing clear signs of stress. Home prices, which surged during the pandemic due to low rates and high demand, are beginning to plateau or even decline in some areas. Sellers are increasingly offering concessions, such as closing cost assistance, to entice hesitant buyers.

However, the impact varies by region. In high-demand urban areas, prices remain relatively stable due to supply constraints. Conversely, in markets where inventory is more abundant, prices have softened as sellers compete for a shrinking pool of buyers.

Additionally, the rental market has become a pressure valve for displaced would-be homeowners. Higher mortgage rates have forced many to remain renters longer, driving up rental demand and prices, particularly in urban centers.

Broader Economic Implications

The implications of rising mortgage rates extend beyond housing. Residential construction, a significant driver of economic activity, has slowed. Builders face reduced demand for new homes, leading to fewer housing starts and layoffs in construction-related industries. Supply chain disruptions and inflationary pressures further compound these challenges.

Consumer spending—a critical engine of the U.S. economy—is also affected. Home purchases often lead to significant ancillary spending, from furniture and appliances to renovations. A slowdown in homebuying can dampen these related industries, creating a ripple effect through the economy.

The Role of the Federal Reserve

The Federal Reserve’s efforts to combat inflation have been a key driver of rising mortgage rates. By increasing the federal funds rate and signaling further tightening, the Fed has indirectly influenced the bond market, pushing yields higher and, in turn, raising mortgage rates. While these measures aim to curb inflation, they also risk dampening economic growth.

What Lies Ahead

Looking forward, the trajectory of mortgage rates will largely depend on inflation trends and the Federal Reserve’s monetary policy. If inflation begins to moderate, there may be room for rates to stabilize or even decline. However, continued economic uncertainty and geopolitical tensions could sustain upward pressure on borrowing costs.

For prospective buyers, the current environment underscores the importance of financial preparedness and adaptability. Locking in rates, considering adjustable-rate mortgages, or exploring down payment assistance programs are strategies that can help navigate this challenging landscape.

Conclusion

The surpassing of the 7% threshold for mortgage rates marks a turning point for the housing market and the economy at large. While challenges abound, they also present opportunities for recalibration and innovation within the real estate sector. Policymakers, businesses, and consumers alike must adapt to this evolving financial landscape, ensuring resilience in the face of changing economic conditions.

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Joann Files for Bankruptcy

Joann Files for Bankruptcy Again

Joann Inc., the beloved retailer of fabrics and crafting supplies, has filed for Chapter 11 bankruptcy protection for the second time in less than a year. This development comes as the company continues to grapple with mounting financial pressures and a challenging retail environment.

Joann files for bankruptcy again

Joann A Storied History Meets Financial Turmoil

Founded in 1943, Joann has grown to operate over 800 stores across 49 states, serving millions of hobbyists and professional crafters alike. Despite its long-standing reputation as a go-to destination for creative supplies, they have struggled to adapt to the shifting retail landscape.

The first bankruptcy filing occurred in March 2024. At that time, the company successfully reduced its debt burden by over $500 million, providing a temporary lifeline. However, persistent challenges have forced the company back into bankruptcy proceedings.

Challenges Leading to Bankruptcy

Joann financial woes stem from several factors:

  1. Supply Chain Disruptions: The global supply chain crisis significantly impacted Joann’s ability to maintain consistent inventory levels. Frequent product shortages frustrated customers who depend on the retailer for their crafting projects.
  2. Economic Pressures: High inflation and rising operational costs, including rent and wages, have further strained the company’s finances. Additionally, increased competition from both e-commerce giants and specialty retailers has eroded Joann’s market share.
  3. Debt and Liabilities: As of the latest filing, Joann holds $615.7 million in debt. The company also owes over $133 million to suppliers and faces $26 million in monthly rent expenses.

Plan for Restructuring

In its bankruptcy filing, Joann expressed its intent to seek a buyer for the business. If a suitable buyer cannot be found, liquidation may become the only viable option. The company has engaged Gordon Brothers Retail Partners LLC to oversee potential liquidation efforts.

Management has emphasized that all retail locations and online operations will remain open during the bankruptcy process. Employees will continue to be paid, ensuring minimal disruption for the company’s workforce of approximately 19,000 people.

Industry Implications

Struggles underscore the broader challenges faced by traditional retailers in an evolving market. The crafting industry, which saw a surge in popularity during the COVID-19 pandemic, has since experienced a slowdown as consumers scale back discretionary spending amid economic uncertainty.

As Joann navigates this critical juncture, its future remains uncertain. Whether through acquisition or restructuring, the outcome of these proceedings will significantly impact the crafting community and the retail landscape as a whole.

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Core Inflation Slowed to 3.2% in December

Core Inflation Slowed to 3.2% in December: Impacts and Repercussions

The U.S. economy witnessed a notable deceleration in core inflation in December, with the year-over-year rate dropping to 3.2%. This development marks a continued easing from the peak levels seen in 2022 and offers insight into the economic landscape as policymakers and consumers adapt to evolving conditions.

Core Inflation Slowed

Understanding Core Inflation

Core inflation, which excludes volatile food and energy prices, is a critical measure for policymakers. Unlike headline inflation, it provides a clearer view of underlying price trends by eliminating short-term fluctuations. December’s figure reflects sustained progress in curbing price pressures, aided by various factors including tighter monetary policy and improving supply chain conditions.

Key Drivers of the Slowdown

  1. Monetary Policy Measures: The Federal Reserve’s series of interest rate hikes have played a significant role in cooling demand. Higher borrowing costs have curbed consumer spending and investment, aligning with the Fed’s objective of stabilizing inflation.
  2. Easing Supply Chain Bottlenecks: Improved global supply chain dynamics have helped lower production costs and increased the availability of goods. This has contributed to reduced upward pressure on prices.
  3. Labor Market Adjustments: While the labor market remains strong, wage growth has moderated slightly. Slower wage increases can help mitigate inflationary pressures in the services sector.

Impacts on the Economy

  • Consumer Purchasing Power: Slower inflation benefits consumers by preserving purchasing power, especially for households that struggled during periods of high inflation.
  • Business Outlook: Reduced inflationary pressures lower input costs for businesses, potentially leading to improved profit margins or opportunities to pass savings on to consumers.
  • Policy Implications: The Federal Reserve may reassess its approach to further rate hikes. A sustained decline in inflation could pave the way for a pause or even a shift in monetary policy in the coming months.

Repercussions for Financial Markets

Financial markets have responded positively to the news, with equity indices rising and bond yields stabilizing. Investors anticipate that a slowing inflation trend may reduce the likelihood of aggressive monetary tightening, fostering a more favorable investment environment.

Risks and Uncertainties

Despite the encouraging trend, challenges remain. Core inflation is still above the Federal Reserve’s long-term target of 2%, and external factors, such as geopolitical tensions and energy price volatility, could reintroduce inflationary pressures. Additionally, the risk of a recession looms as tighter monetary policies continue to weigh on economic activity.

Looking Ahead

The deceleration in core inflation is a promising sign for economic stability. However, sustained efforts will be necessary to ensure that inflation continues its downward trajectory without triggering significant economic disruptions. Policymakers, businesses, and consumers alike must remain vigilant as the economy navigates this transitional phase.

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