Chris Lehnes Factoring Specialist

203-664-1535 | clehnes@chrislehnes.com

Financing IT Consulting

Posted on November 6, 2024 by Chris Lehnes

Financing IT Consulting

Our factoring offering can quickly meet the working capital needs of IT Consulting Companies which do not qualify for traditional lending sources but have good quality accounts receivable outstanding.

Program Overview

$100k to $10 Million
75% Advance against AR
Non-Recourse
No Audits or Covenants
No Long-Term Commitments
Great for bank declines

Think of me for Consultants, Staffing Companies or SaaS clients which need cash to meet their immediate goals.

Contact me to learn more:

Chris Lehnes

203-664-1535

clehnes@chrislehnes.com

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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Oil-Service Providers Say Producers Are Becoming More Cautious About Spending

Posted on October 21, 2024 by Chris Lehnes

Oil-Service Providers Say Producers Are Becoming More Cautious About Spending

As oil prices experience increased volatility and global economic uncertainties weigh on the energy market, oil-service companies report that producers are growing more conservative in their capital spending. This shift marks a notable change from the recent period of higher oil prices, when many oil producers were more aggressive in ramping up drilling activity and investing in new projects. The tightening of budgets reflects broader concerns about market stability, geopolitical risks, and the potential for a downturn in global demand for crude oil.

Spending Slowdown Amid Price Volatility

Oil-service providers, which offer critical equipment, technology, and expertise to exploration and production (E&P) companies, are seeing a cooling in demand for their services as oil producers scale back capital expenditures. After a relatively strong period driven by robust crude prices and rising demand, there is now a noticeable shift toward caution.

In recent months, oil prices have fluctuated significantly due to a range of factors, including concerns about slowing economic growth in major markets such as China, shifts in global energy policy, and uncertainty around OPEC’s production decisions. As a result, oil producers are adopting a more risk-averse approach, reducing drilling activity and delaying or cancelling some exploration projects.

Impact on Oil-Service Companies

For oil-service companies, this more cautious spending environment means reduced demand for their services. Many companies in the sector had anticipated continued growth in 2024, fueled by the expectation of stable or rising oil prices. However, the recent market environment has led some of them to revise their forecasts. The shift in producer spending could slow the recovery for service providers, who had already endured a challenging period during the pandemic when low oil prices caused a sharp pullback in drilling activity.

While some service providers have reported ongoing demand for maintenance and production-optimization services, new drilling projects have been more limited. Companies are focusing on improving efficiency and extending the life of existing wells rather than committing to large-scale exploration and production investments.

Factors Driving Producer Caution

Market Uncertainty: The volatility in oil prices is one of the main reasons for the more cautious approach from oil producers. The global oil market has faced a series of disruptions in recent years, ranging from the pandemic’s impact to the Russia-Ukraine conflict, which has created uncertainty in global energy markets.
Cost Inflation: Rising costs for labor, equipment, and materials have also contributed to the hesitation among producers. Higher input costs make new projects less attractive, particularly if oil prices are not expected to rise significantly in the near future.
Environmental, Social, and Governance (ESG) Pressure: Another factor influencing spending decisions is the growing pressure on oil companies to improve their environmental footprint. More companies are dedicating resources to low-carbon initiatives or considering how new regulations may affect future oil demand.
Concerns About Demand: Long-term demand for oil is increasingly in question as the global energy transition toward renewable sources gathers pace. This has led some companies to reevaluate their long-term strategies, focusing less on expanding oil production and more on maximizing returns from existing assets.

Outlook for 2024 and Beyond

The cautious stance among producers could have significant implications for the oil-service sector. If oil prices remain unstable or decline further, there could be prolonged reductions in capital spending, putting additional pressure on oil-service providers. However, if demand stabilizes and prices strengthen, there could be a resurgence in activity later in the year.

Additionally, service companies that can adapt to the changing needs of producers by offering innovative, cost-effective solutions may be better positioned to navigate the current environment. This includes technologies aimed at improving well productivity, lowering emissions, or enhancing operational efficiency.

In summary, while the oil industry remains essential to the global energy landscape, the current climate of uncertainty is prompting producers to exercise greater caution in their spending, impacting oil-service providers and the overall supply chain. The path forward will likely depend on the interplay of market forces, geopolitical developments, and the pace of the global energy transition.

Connect with Factoring Specialist, Chris Lehnes

Funding the Energy Sector

Merger of Chevron and Hess: What does it mean?

Big Oil Companies Warm-Up to Biden Administration

Federal Trade Commission Regulates Subscription Charges

Posted on October 17, 2024 by Chris Lehnes

The Federal Trade Commission (FTC) plays a pivotal role in protecting consumers from deceptive and unfair practices in the marketplace, including those related to subscription services. As subscriptions become an increasingly common business model across various industries, the FTC has ramped up its efforts to ensure that companies adhere to legal standards regarding transparency, billing practices, and cancellation processes.

Federal Trade Commission Regulates Subscription Charges

The Rise of Subscription Services

Subscription services have proliferated in the digital age, encompassing everything from streaming media platforms and meal delivery kits to software applications and fitness memberships. These services offer consumers the convenience of automated payments, regular access to goods or services, and sometimes discounts for long-term subscriptions. However, the very features that make subscription services attractive—automatic renewals and ease of access—can also lead to consumer complaints if businesses are not transparent about the terms and conditions.

Common Issues with Subscription Services

The FTC has identified several recurring issues with subscription services:

Hidden Charges: Consumers are often unaware of recurring charges associated with a service. Companies may offer a free trial that automatically converts into a paid subscription without adequately informing customers.
Lack of Consent: Businesses sometimes fail to obtain explicit consent from consumers before charging their accounts, leading to unauthorized billing complaints.
Complicated Cancellation Processes: Many consumers report that canceling a subscription is unnecessarily difficult, requiring them to navigate complex steps or face long hold times when attempting to cancel via customer service.
Automatic Renewals without Notice: Some companies do not provide adequate notice before automatically renewing subscriptions, leaving consumers surprised by charges they didn’t expect.

The FTC’s Role

Under its mandate to protect consumers, the FTC enforces several laws and regulations that apply to subscription services. Two primary regulatory frameworks are the Restore Online Shoppers’ Confidence Act (ROSCA) and the Telemarketing Sales Rule (TSR).

Restore Online Shoppers’ Confidence Act (ROSCA): ROSCA prohibits online businesses from charging consumers for services unless they clearly and conspicuously disclose the material terms of the transaction and obtain the consumer’s express informed consent. This includes providing information about recurring charges upfront, as well as clear instructions on how to cancel the service.
Telemarketing Sales Rule (TSR): The TSR requires that businesses using telemarketing to sell subscriptions must disclose all material terms, including the fact that the customer will be charged on a recurring basis, the frequency of those charges, and how to cancel. Additionally, telemarketers must obtain express consent before processing payments.

Recent FTC Actions

The FTC has pursued legal actions against several companies that have violated these regulations. One prominent case involved ABCmouse, an online early education platform. The FTC alleged that ABCmouse made it difficult for consumers to cancel their subscriptions and failed to adequately disclose that their subscriptions would automatically renew. In 2020, ABCmouse agreed to pay $10 million to settle the charges and made significant changes to its subscription processes.

In another case, MoviePass, a subscription service for movie tickets, faced FTC scrutiny for deceptive practices. The company was accused of making it difficult for subscribers to use the service as advertised and for implementing hidden limitations on its offerings without informing customers. The FTC required MoviePass to implement a clearer, more consumer-friendly subscription model.

The “Click to Cancel” Rule

The FTC has proposed updates to its rules to further crack down on subscription-related issues, including a “Click to Cancel” provision. This rule would require businesses to offer a simple, straightforward way for consumers to cancel their subscriptions online, matching the ease with which they can sign up for them. Companies would be prohibited from making consumers endure long retention efforts or navigate complex cancellation processes.

Best Practices for Businesses

In light of the FTC’s increased focus on subscription services, companies should adopt best practices to avoid running afoul of regulatory standards. Key practices include:

Clear Disclosure: Businesses should provide upfront, easy-to-understand information about recurring charges, renewal dates, and cancellation procedures.
Simplified Cancellation: Companies should offer simple, easily accessible cancellation methods, such as online cancellation through the same platform used to subscribe.
Renewal Reminders: Sending reminder notices before automatic renewals is a good way to ensure that consumers are aware of upcoming charges.
Consent and Documentation: Obtaining clear, explicit consent from consumers before charging them and keeping records of these consents are essential for compliance.

As subscription models continue to grow in popularity, the FTC’s oversight has become increasingly crucial in safeguarding consumer rights. By enforcing transparency in billing, ensuring that consumers have the ability to cancel easily, and preventing deceptive practices, the FTC plays a critical role in maintaining trust in the marketplace. Both businesses and consumers must stay informed about their rights and obligations in the evolving landscape of subscription services

Versant Funds Administrator of Adolescent Group Homes

Posted on October 14, 2024 by Chris Lehnes

PRESS RELEASE

Versant Funds $1.8 Million Non-Recourse Factoring Transaction to Administrator of Adolescent Group Homes – Versant Funds Administrator

(October 14, 2024) Versant Funding LLC is pleased to announce it has funded a $1.8 Million non-recourse factoring transaction to a company which administers group homes for adolescents who are victims of neglect and abuse. Versant Funds Administrator.

This newly formed business has relationships with State and County organizations to house children in need. These entities tend to pay their invoices slowly, putting a financial strain on the business. Versant was able to quickly put a factoring facility in place to advance cash against those invoices, which will provide the company with the liquidity needed to expand into additional counties. Versant Funds Administrator.

“Versant’s offering was an excellent match for this newly formed business in need of growth financing,“ according to Chris Lehnes, Business Development Officer for Versant Funding, and originator of this financing opportunity. “Because our approach to factoring focuses solely on the quality of accounts receivable and does not require an underwriting of our client, we were able to fund this business that would not meet the credit standards of most traditional lenders.”

About Versant Funding

Versant Funding’s custom Non-Recourse Factoring Facilities have been designed to fill a void in the market by focusing exclusively on the credit quality of a company’s accounts receivable. Versant Funding offers non-recourse factoring solutions to companies with B2B or B2G sales from $100,000 to $10 Million per month. All we care about is the credit quality of the A/R. To learn more contact: Chris Lehnes, 203-664-1535, clehnes@chrislehnes.com

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

Connect with Factoring Specialist, Chris Lehnes

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 Food Producers in a Week

Posted on July 11, 2024 by Chris Lehnes

Funding Food Producers in a Week

Funding Food Producers in a Week. Our factoring program can be a vital source of financing for food producers which may not qualify for traditional financing, but have a strong customer base such as those that sell to major grocery chains or distributors.

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.

Factoring Proposal Issued – $1 Million – Non-Recourse – SaaS

Posted on May 24, 2024 by Chris Lehnes

Factoring Proposal Issued – $1 Million – Non-Recourse – SaaS

The future of Software as a Service looks promising and dynamic, with several key trends expected to shape the industry in 2024 and beyond.

Key Trends in SaaS:

Vertical : Vertical solutions, tailored to specific industries such as healthcare, finance, and hospitality, are on the rise. These specialized services offer more precise solutions and better integration with industry-specific tools, providing higher returns on investment by addressing niche market needs more effectively
Low-Code/No-Code Platforms: The adoption of low-code and no-code platforms is revolutionizing SaaS development. These platforms enable users, even those without technical expertise, to build applications through visual interfaces. This democratizes app development, speeds up the process, and reduces costs. It’s anticipated that by 2024, a significant portion of new apps will be created using these platforms
AI and Machine Learning Integration: AI is becoming deeply embedded in SaaS, enhancing capabilities such as personalization, predictive analytics, and automation. AI-driven tools can analyze vast amounts of data to provide actionable insights, improve customer interactions, and streamline operations. Generative AI, like the features seen in tools like Canva and Salesforce’s Einstein Copilot, is expected to become more prevalent
Micro-SaaS: Micro refers to small-scale solutions that target very specific needs. These lightweight, modular applications are gaining traction for their flexibility and ease of integration into existing systems. They offer tailored solutions for niche markets, often developed by small teams or individual entrepreneurs
Consumption-Based Pricing Models: More companies are shifting towards consumption-based pricing models, where customers pay based on their actual usage rather than a fixed subscription fee. This model is particularly appealing for businesses looking to optimize costs and align spending with usage (Exploding Topics) (RIB Software).
Integration Platform as a Service (iPaaS): iPaaS solutions are becoming essential for connecting disparate applications and systems within organizations. These platforms facilitate seamless data flow and integration across multiple tools, enhancing operational efficiency and reducing the complexity of managing integrations manually (Exploding Topics).
Enhanced Security and Compliance: With the growing reliance on SaaS, security and compliance have become critical. SaaS providers are investing heavily in cybersecurity measures and ensuring compliance with various regulations like GDPR and HIPAA to protect user data and maintain trust (Bombay Softwares) (SaaSworthy).
Blockchain Technology: Blockchain is starting to impact particularly in terms of security and transaction transparency. Its decentralized nature can enhance data security and integrity, making it a valuable addition to SaaS platforms (SaaSworthy).

Strategic Tips :

To thrive in this evolving landscape, SaaS companies should:

Embrace Agility: Stay adaptable to market changes and technological advancements.
Invest in Cybersecurity: Protect sensitive data with robust security measures.
Prioritize Customer Experience: Focus on user-friendly interfaces and excellent support.
Leverage Data: Use data analytics for better decision-making and personalization.
Form Strate

The industry is set for significant growth, driven by these innovative trends and strategic shifts. Companies that stay ahead of these developments will be well-positioned to capitalize on the expanding market opportunities.

Connect with Factoring Specialist Chris Lehnes on LinkedIn

Contact Chris Lehnes

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.