This year, 2014, is not predicted to be a significantly better year for small businesses. They will continue to flourish but, in many cases, not to their full potential. There are many aspects of a small business that hamper their growth. When you analyze a hundred enterprises however, you invariably find one or two issues that overshadow the others.
The number one issue that seems to continually stifle new business growth is a secure and regular cash flow. ‘Cash is King’ is a well-known expression – often said in passing – but in reality nothing could be further from the truth. Lack of a well-defined and regular cash flow has been the downfall of thousands of businesses. On the other hand a healthy, well-organized cash flow has proven to be the central tenet that has created growth and profit for many entrepreneurs.
Talking about having a well-organized and predictable cash flow is often easier that actually achieving it. Can a small business owner really organize their cash flow such that they know who will pay and, more importantly, when? It is the ‘when’ factor that leaves so many small businesses stranded and starved for cash.
Sales of goods and services have evolved on a ‘net 30-day’ basis. Simply put, this means that the buyer has 30-days’ grace before they write the check and pay the invoice. If you have a good memory you may remember when that 30-day rule was the norm. Today unfortunately, it is often stretched to the breaking point for many suppliers.
Entrepreneurs need to investigate programs that allow them to deliver their goods or services and then literally within days, not weeks or even months, get paid. The program is invoice discounting. This program has been available for many years in the financial service marketplace, but has unfortunately only been available to companies of considerable substance and longevity.
The Interface Finance Group, through their innovative IFG 50/50 franchise offering, has now brought the service to the small business market sector. Interface engages with their clients to buy specific invoices at a small discount that effectively turns that sale into a ‘cash on delivery’ approach.
By delivering this service through a franchise network, Interface has solved the problems often associated with any financial services facility, i.e. time to get started. Interface can turn a request for assistance in actual funding usually in three to four business days. They have found out how to get cash into the hands of their clients quickly and cost-effectively to enable small business growth.
The Interface facility offers an innovative approach to facilitate small business growth.
How Do You Deliver a Financial Service Through a Franchise?
We are all familiar with franchising. When you ask the question, ‘Do you know of a franchise?’ the answer will almost certainly name a fast food outlet dominated by golden arches. Franchising certainly grew up in the food and fast food area, but much has happened since those days: the automotive support marketplace has seen a considerable boost with the franchise approach, and now franchising moves into areas that were traditionally corporate operations.
One such area is that of financial services. We see an increasing number of financial services that can be and are delivered through a franchising format. One seemingly unlikely operation that has been franchised is that of invoice discounting. Until recent times this was a service very much geared to medium and large-scale operations. As with so many financial services, nobody had found a way to make it available to the small business entrepreneurs of this world on a cost-effective basis.
Franchising played a major part in the growth strategy for The Interface Financial Group. Interface is a leading supplier of invoice discounting and spot factoring services to the small business marketplace in eight countries. Before embarking on a franchise approach some twenty years ago, Interface was indeed a corporate invoice discounter. All operations were conducted on a corporate in-house basis for almost twenty years. In searching for an expansion medium, Interface decided to review franchising and ultimately found that it was a good fit.
With the ability to franchise, it has enabled Interface to become not only a national, but an international provider with offices in North America, Europe Australia, and New Zealand. Why franchising works, and works well, for Interface is the fact that a common system has been taken from the corporate office and moved successfully into the local area of the franchisee. In making this move, there has been no change in the integrity of the franchise and the service offered to clients. In fact, if anything, the service has greatly improved. This knowledge shift also incorporates the decision-making process, so with a decision maker on hand to meet locally with prospective clients the entire process of approval, documentation and funding can be achieved in the minimum time frame possible.
Invoice discounting provides a valuable lifeline to many small business owners who are anxious to smooth out the ups and downs of their cash flow. By taking invoices as they are produced and discounting them, they achieve a cash flow geared to sales rather than collections. For franchisees, they are in control of the process as they work on a local basis alongside their clients, creating a win-win situation.
Interface franchisees find that they can effectively run their franchise operation from a home-based office and have no need for staff or other costly overhead expenses. Interface, as a franchise destination, has proved very popular with downsized or right-sized corporate executives who are ready to enter the world of entrepreneurism and self-employment. They gain the ability to help business owners grow their business, while growing their own franchise at the same time.