Chris Lehnes Factoring Specialist

203-664-1535 | clehnes@chrislehnes.com

Non-Dilutive Growth Financing

Posted on November 20, 2024 by Chris Lehnes

Proposal Issued: $5 Million/mo – Non-Recourse – Staffing Company

Posted on October 22, 2024 by Chris Lehnes

Proposal Issued: $5 Million/mo – Non-Recourse – Staffing Company

Client has violated a loan covenant under their ABL facility with a major bank and need an alternative in place ASAP. Our facility can fund in a week.

Contact Factoring Specialist, Chris Lehnes

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Inflation’s Impact on Small Business

Posted on August 26, 2024 by Chris Lehnes

Inflation’s Impact on Small Business

Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power over time. While inflation affects the entire economy, small businesses often face unique challenges when inflation rates increase. Here’s how inflation can impact small businesses: Inflation’s Impact on Small Business

1. Rising Costs of Goods and Services

One of the most direct effects of inflation on small businesses is the increase in the costs of goods and services. As prices for raw materials, inventory, and utilities rise, businesses face higher production costs. Small businesses, which often have less negotiating power and fewer bulk purchasing options than larger corporations, may struggle to absorb these increased costs without passing them on to customers.

2. Wage Pressure

Inflation often leads to higher living costs, prompting employees to demand higher wages to keep up with the increased cost of living. Small businesses may find it difficult to meet these demands, especially if their revenue does not increase at the same rate as inflation. This can lead to higher labor costs, putting additional strain on a small business’s budget.

3. Pricing Challenges

Passing on increased costs to customers through higher prices is a common response to inflation. However, this approach can be risky for small businesses, as higher prices may drive away price-sensitive customers, reducing sales volume. Small businesses must carefully balance the need to cover rising costs with the potential impact on customer demand.Inflation’s Impact on Small Business

4. Cash Flow Constraints

Inflation can disrupt cash flow, as businesses may need to pay more upfront for inventory and supplies, while customers may delay payments due to their own financial pressures. This can lead to tighter cash flow, making it difficult for small businesses to meet their obligations, such as paying suppliers, employees, or loans.

5. Interest Rate Increases

In response to inflation, central banks often raise interest rates to curb spending and bring inflation under control. Higher interest rates can increase the cost of borrowing for small businesses, making it more expensive to finance operations, expand, or invest in new opportunities. For small businesses already operating on thin margins, higher interest rates can further limit growth.

6. Changing Consumer Behavior

Inflation can change consumer behavior as people adjust their spending habits to cope with rising prices. Consumers may prioritize essential purchases and cut back on discretionary spending, which can negatively impact small businesses, especially those in industries reliant on non-essential goods and services. This shift in demand can lead to lower sales and profitability.

7. Increased Competition

As inflation pressures build, small businesses may face increased competition from larger companies that can better absorb rising costs or offer lower prices due to economies of scale. This can make it harder for small businesses to maintain their market share and attract new customers.

8. Long-Term Planning Difficulties

Inflation introduces uncertainty into the business environment, making long-term planning more difficult. Small businesses may find it challenging to set prices, forecast costs, and budget for future expenses when inflation is unpredictable. This uncertainty can lead to more conservative decision-making, potentially limiting growth and innovation.

9. Supplier Relationships

Inflation can strain relationships with suppliers, who may raise their prices or alter terms to manage their own increased costs. Small businesses may find themselves renegotiating contracts more frequently or seeking new suppliers, which can disrupt operations and add to administrative burdens.

Strategies to Mitigate Inflationary Pressures

While inflation presents significant challenges, small businesses can take steps to mitigate its impact:

Cost Management: Focus on improving efficiency and reducing waste to keep costs under control.
Flexible Pricing: Implement dynamic pricing strategies that allow for quick adjustments to changing costs.
Diversification: Explore new products, services, or markets to reduce reliance on a single revenue stream.
Supplier Negotiation: Strengthen relationships with suppliers and negotiate favorable terms to manage rising costs.
Financial Planning: Maintain a strong cash reserve and explore fixed-rate financing options to manage cash flow and debt more effectively.

Inflation can pose significant challenges for small businesses, from rising costs to cash flow difficulties. However, by understanding these impacts and adopting proactive strategies, small businesses can navigate inflationary periods more effectively and position themselves for long-term success. Inflation’s Impact on Small Business

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Inflation’s Impact on Food Prices

Saks’ Slow-Pay of AP Negatively Impacts Vendors

Posted on August 9, 2024 by Chris Lehnes

When a large retailer like Saks is slow to pay its accounts payable, it can have significant negative impacts on its small business vendors. Saks’ Slow-Pay of AP Negatively Impacts Vendors.

Saks' Slow-Pay of AP Negatively Impacts Vendors

These impacts can include:

1. Cash Flow Problems

Immediate Financial Strain: Small businesses often operate with limited cash reserves. Delayed payments from a major client like Saks can create cash flow issues, making it difficult for these businesses to cover their own expenses such as payroll, rent, and supplier costs.
Dependency on Payment Timeliness: Small vendors may rely heavily on timely payments to maintain their operations. A delay from a large retailer could mean they struggle to fulfill other orders or pay their own debts, potentially leading to a vicious cycle of financial instability.
Saks’ Slow-Pay of AP Negatively Impacts Vendors

2. Increased Borrowing Costs

Need for Short-Term Financing: To manage their cash flow, small businesses might need to take out loans or use lines of credit, which could come with high-interest rates. The cost of borrowing could eat into their profit margins, making their operations less sustainable.
Damaged Creditworthiness: Frequent delays in receiving payments could harm a small business’s credit rating, as they may miss payments to their own suppliers or lenders.

3. Operational Disruptions

Inability to Invest in Growth: Slow payments might force small vendors to cut back on essential investments in their business, such as upgrading equipment, expanding their product lines, or hiring new staff. This can stifle growth and innovation.
Inventory and Production Issues: Delays in payment might mean that vendors can’t purchase necessary raw materials or components, leading to disruptions in their production processes and delays in fulfilling other orders. Saks’ Slow-Pay of AP Negatively Impacts Vendors

4. Strained Business Relationships

Erosion of Trust: Persistent delays can erode the trust between small vendors and Saks, leading to strained business relationships. Vendors might start prioritizing other customers over Saks, or even refuse to do business with them altogether.
Reputation Damage: If the issue becomes widespread, Saks might develop a reputation for being a slow payer, making it difficult for them to secure favorable terms with other suppliers or vendors. Saks’ Slow-Pay of AP Negatively Impacts Vendors

5. Legal and Compliance Risks

Contractual Disputes: Vendors might seek legal recourse if they believe Saks is violating the terms of their contracts. This could lead to costly litigation and further strain the financial situation of small businesses.
Potential for Bankruptcy: In extreme cases, chronic payment delays could push small vendors into bankruptcy, especially if they rely heavily on Saks as a key customer.

6. Impact on Industry Ecosystem

Supplier Vulnerability: The financial distress of small vendors could ripple through the supply chain, affecting other businesses and potentially leading to supply disruptions for Saks and its competitors.
Market Consolidation: Smaller businesses that can’t withstand the financial strain may be forced out of the market, leading to consolidation where only larger, better-capitalized companies survive. This could reduce competition and innovation in the industry.

Conclusion

The practice of slow payments by a major retailer like Saks can have severe and far-reaching consequences for its small business vendors. It can lead to cash flow problems, increased borrowing costs, operational disruptions, strained relationships, and even legal disputes. For small vendors, maintaining financial stability in the face of delayed payments is crucial, and many may need to seek alternative financing options or diversify their customer base to mitigate these risks.

Funding Wholesalers – Quick cash through factoring

Posted on June 26, 2024 by Chris Lehnes

Funding Wholesalers: Our accounts receivable factoring program can be an essential source of financing for wholesalers which may not qualify for traditional financing, but have a strong customer base.

By factoring, companies get quick access to the funds needed to continue to expand operations.

Accounts Receivable Factoring
$100,000 to $10 Million
No Long-Term Commitment
Non-recourse
Funding in about a week
Spot Factoring Available

We are a great match for businesses with traits such as:
Less than 2 years old
Negative Net Worth
Losses
Customer Concentrations
Weak Credit
Character Issues

We focus on the quality of your client’s accounts receivable, ignoring their financial condition. This enables us to move quickly and fund qualified businesses including Manufacturers, Distributors and a wide variety of Service Businesses (including SaaS) in as few as 3-5 days.

Contact me today to learn if your client is a factoring fit.
Connect with me on LinkedIn

Factoring Proposal Issued – $400,000 | Non-Recourse | Garment Manufacturer

Posted on June 21, 2024 by Chris Lehnes

Factoring Proposal Issued – $400,000 | Non-Recourse | Seasonal Garment Manufacturer

Factoring Proposal - Garment Manufacturer — Factoring Proposal – Manufacturer

This long-standing business just needs a little extra cash to get through their off-season.

Factoring can help meet the working capital needs of businesses by converting AR into cash.

Connect with Factoring Specialist, Chris Lehnes on LinkedIn

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The Pernicious Impact of Inflation on Small Businesses

Posted on May 13, 2024 by Chris Lehnes

Inflation, the persistent increase in the general price level of goods and services over time, can have far-reaching consequences on economies and societies. While its effects are often discussed in macroeconomic terms, the impact on small businesses, the backbone of many economies, is profound and often overlooked. This article delves into the pernicious effects of inflation specifically on small businesses, exploring how rising prices can disrupt operations, strain finances, and hamper growth prospects. The Pernicious Impact of Inflation on Small Businesses

Reduced Purchasing Power: One of the most immediate consequences of inflation for small businesses is the erosion of purchasing power. As prices rise across the board, the same amount of money buys fewer goods and services. For small businesses operating on tight budgets, this means they can afford fewer supplies, equipment, and other essentials, ultimately hindering their ability to operate efficiently and compete effectively in the market.
Increased Operating Costs: Inflation doesn’t just affect the prices of goods and services that small businesses purchase; it also impacts their operating costs. Essentials such as rent, utilities, and wages often rise alongside inflation, putting additional strain on already stretched budgets. Small businesses may find themselves forced to increase prices to offset these higher costs, risking losing customers in the process or absorbing the costs themselves, further squeezing profit margins.
Uncertainty and Planning Challenges: Inflation introduces uncertainty into the business environment, making it difficult for small businesses to plan for the future. Fluctuating prices make it challenging to accurately forecast expenses and revenues, leading to increased risk and reduced confidence in investment decisions. Small businesses may hesitate to expand or invest in new ventures, opting instead for cautious strategies that prioritize survival over growth.
Difficulty Accessing Credit: Inflation can also affect small businesses’ ability to access credit. Lenders may be hesitant to extend loans or lines of credit in inflationary environments due to the increased risk of default. Even if credit is available, small businesses may face higher interest rates, making borrowing more expensive and potentially unsustainable for those already struggling with rising costs and reduced profitability.
Competitive Disadvantage: Inflation can widen the gap between small businesses and larger competitors with greater resources and economies of scale. Small businesses may struggle to absorb price increases as efficiently or negotiate favorable terms with suppliers, putting them at a competitive disadvantage. Inflationary pressures can also lead to market consolidation, as larger firms with stronger financial positions capitalize on smaller competitors’ difficulties, further concentrating economic power.

The pernicious impact of inflation on small businesses cannot be overstated. From reduced purchasing power and increased operating costs to uncertainty and competitive disadvantages, inflation poses significant challenges for small businesses trying to thrive in increasingly volatile economic environments. Policymakers must consider the unique needs of small businesses when formulating inflation-fighting strategies, ensuring that measures aimed at stabilizing prices do not inadvertently exacerbate the challenges faced by those at the heart of the economy.

Non-Recourse Funding – No PG of Credit Risk Required for Owners

Posted on May 2, 2024 by Chris Lehnes

We can fund a qualified business in 3-5 days with non-recourse accounts receivable factoring. Non-Recourse Funding.

$10k to $10 Million
Competitive Advance Rates
No Audits. No Financial Covenants
No Long-Term Commitments
Most businesses with strong customers are candidates

We specialize in difficult deals

Start-Ups
Turnarounds
Historic Losses
Customer Concentration
Poor Personal Credit
Character Issues

We focuses on the quality of your client’s accounts receivable, ignoring their financial condition.

This enables us to move quickly and fund qualified businesses including Manufacturers, Distributors and a wide variety of Service Businesses (includes SaaS) in as few as 3-5 days.

Contact me today to learn if your client is a fit.

Connect with me on LinkedIn

5 Small Business Email Marketing Tips

Posted on April 30, 2024 by Chris Lehnes

Tips for Small Businesses During Small Business Week

During Small Business Week, small businesses are presented with an opportune moment to refine their marketing strategies and strengthen customer engagement. Email marketing, a cost-effective and versatile tool, remains a cornerstone of digital marketing efforts for small businesses. In this article, we explore five effective email marketing tips tailored to small businesses, empowering them to maximize their impact during Small Business Week and beyond.

1. Personalization is Key:

Personalized email content resonates with recipients and fosters a sense of connection and relevance. Small businesses can leverage customer data and segmentation techniques to personalize email communications based on demographics, purchase history, and browsing behavior. Address recipients by name, tailor content to their interests and preferences, and incorporate dynamic content blocks to deliver targeted and engaging messages. Personalization enhances the effectiveness of email campaigns, driving higher open rates, click-through rates, and conversion rates.

2. Craft Compelling Subject Lines:

Subject lines play a pivotal role in capturing recipients’ attention and enticing them to open emails. Small businesses should focus on crafting concise, compelling subject lines that convey value, urgency, or curiosity. Experiment with different tactics, such as incorporating emojis, posing questions, or offering exclusive offers or discounts. A/B testing subject lines allows small businesses to identify high-performing variations and refine their approach over time. Remember to keep subject lines relevant to the email content to maintain trust and credibility with subscribers.

3. Optimize for Mobile Devices:

With a growing number of consumers accessing emails on mobile devices, it’s imperative for small businesses to optimize their email campaigns for mobile responsiveness. Design emails with a mobile-first mindset, ensuring that content renders seamlessly across various screen sizes and devices. Use single-column layouts, clear call-to-action buttons, and concise messaging to enhance readability and usability on mobile devices. Test email templates using responsive design tools to ensure a consistent and user-friendly experience across desktop and mobile platforms.

4. Foster Engagement with Compelling Content:

Engaging content lies at the heart of effective email marketing campaigns. Small businesses should focus on delivering valuable, relevant, and engaging content that resonates with their target audience. Share informative articles, how-to guides, product updates, customer testimonials, and exclusive promotions to keep subscribers informed and entertained. Incorporate visually appealing elements, such as images, videos, and infographics, to enhance engagement and convey messages effectively. Encourage feedback, comments, and social sharing to foster two-way communication and community building.

5. Measure, Analyze, and Iterate:

Continuous improvement is essential for optimizing email marketing performance and driving meaningful results. Small businesses should leverage email marketing analytics tools to track key performance metrics, such as open rates, click-through rates, conversion rates, and unsubscribe rates. Analyze campaign data to gain insights into subscriber behavior, preferences, and engagement patterns. Use these insights to refine targeting, content strategy, and email cadence for future campaigns. Experiment with different approaches, monitor results, and iterate based on performance feedback to maximize the effectiveness of email marketing efforts.

As Small Business Week approaches, small businesses have an opportunity to elevate their email marketing strategies and deepen connections with customers. By prioritizing personalization, crafting compelling subject lines, optimizing for mobile devices, delivering engaging content, and embracing data-driven decision-making, small businesses can enhance the effectiveness of their email marketing campaigns and drive sustainable growth and success in today’s competitive landscape. Through strategic experimentation, continuous improvement, and a customer-centric approach, small businesses can leverage the power of email marketing to cultivate lasting relationships, foster brand loyalty, and achieve their business objectives.

Connect with Factoring Specialist, Chis Lehnes on LinkedIn