Shaw Capital Management and Financing Benefits from Factoring Financing

How Distribution Companies can benefit from Factoring Financing

Product distribution companies can be very capital intensive businesses. Read this article to learn how to get working capital for your distribution company and avoid scam.

Shaw Capital Management and Financing provide same-day-funding. We can help you meet your cash flow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full.

Shaw Capital Management and Financing offer a complete line of factoring services, purchase order funding, and asset based financing, accounts receivable management, and other related financial services.

Shaw Capital Management and Financing offer funding for a wide range of industries and flexible funding requirements that most businesses can easily qualify for.

Based in Baltimore, Maryland. Importing into the tri-state area mostly from the far east such as China, Thailand, Taiwan and South Korea.

For product distributors, cash flow is always a big concern. Unless you have been in business for a long time, most suppliers will insist that you pay them soon after delivering the goods. Or worse, prior to delivery. However, most of your clients will insist in paying your invoices on net 30 or net 60 days. This creates a simple problem – you have to pay suppliers quickly, but clients pay slowly. Although your business may be profitable, unless you have adequate working capital, you will have cash flow problems.

When faced with a cash flow problem, most business owners try to get a business loan. Although business loans can work well in many situations, they can be inflexible especially if your business has growing capital needs. Also, qualifying for a business loan can be difficult since institutions usually require substantial collateral and track records showing profitable operations for many years. This makes them a tough option for new or small businesses.

But there are better solutions though. Let’s examine the situation. The problem is the time delay between having to pay your supplier and getting paid by your client. What would happen if you could reduce the time delay? For example, let’s say that your client paid you in two business days rather than two months. Would that solve your cash flow problem? For most, it would.

You can achieve just that by using factoring.

The value proposition of invoice factoring is simple. It reduces the time delay between delivering goods and getting paid. This puts your business in a better cash position and enables you to take on new opportunities.

Factoring involves selling your invoices to a factoring company. The factoring company buys your invoices in two installments. In the first installment, you get 80% of the invoice advanced to you. You get the remaining 20% (less a fee) as a second installment, once your client actually pays for the goods.

One of the advantages of factoring accounts receivable is that is a very flexible solution, where the maximum amount you can finance is mostly determined by the ability of your clients to pay your invoices. Said differently, your factoring financing line is tied to your sales and grows with your sales. Because of this, small companies that do business with large credit worthy clients can benefit from using factoring. By Marco Terry

Financial Markets Focusing Greece and Spain - Shaw Capital Management Newsletter

The situation in Greece and in Spain has obviously caused great concern in London. But the Bank is also aware of the risks as a time when the economy is still in a very fragile state, and of the need to compensate for the fiscal retrenchment by maintaining a supportive monetary policy, and low short-term interest rates. There are therefore reasons for concern about the prospects for sterling. If the latest measures do succeed in reducing the fiscal deficit to manageable levels without aborting the economic recovery, and if the problems affecting the euro continue, or become even more serious, then sterling may well maintain current levels or even appreciate further.

Shaw Capital Management, Korea - Investment Innovation & Excellence.  We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.

But the situation is very uncertain, and the odds do seem to favour a further period of weakness until the effects of the latest government measures can be more accurately assessed.

The yen has weakened slightly over the past month as the improvement in market sentiment has increased

the “risk appetite” of investors for the equity markets, and for commodity-related currencies.

The economic background in Japan has continued to improve, helped by the export performance; but there are still doubts about whether this improvement can be sustained, and these doubts have been increased by the latest announcement by the new prime minister that the main priority of his government will be a reduction in the huge fiscal deficit, rather than the promotion of fresh measures to accelerate the growth rate.

There is also a further uncertainty created by the decision by the Chinese authorities to adopt a “more flexible” policy on the renminbi that presumably means that it will be allowed to appreciate slightly faster. It is not clear what the consequences of this move will be; but overall it seems likely that conditions elsewhere, especially those affecting the euro, and some disappointment with “risky” investments in global markets, will continue to provide some stability to the Japanese currency.

Commodity Markets - Shaw Capital Management Investment

The general improvement in sentiment in the financial markets over the past month has also been evident in the commodity markets.

There has been further evidence that the global economic recovery in continuing, there has been more support for the view that the pressures resulting from the sovereign debt crisis in Europe may be easing.

As a result, base metals are generally lower over the month, even after the rally on the latest Chinese announcement about the renminbi; most soft commodity prices are slightly lower, although there have been sharp rises in beverage prices on concerns about future supplies; precious metal prices have moved higher as investors have continued to seek “safe havens in the storm”; and there has been a strong recovery in oil prices, helped by optimistic signs of a pick up in US demand.

Base metal prices are ending the past month well above recent low levels, but still slightly lower overall, and there has been an additional boost to confidence in the announcement of a “more flexible” policy towards the renminbi.

It is assumed that even a modest appreciation of the Chinese currency will boost the purchasing power of Chinese buyers, and increase still further China’s position as the world’s largest importer of a broad range of global commodities.

But there is clearly a risk that the importance of this fairly modest move is being exaggerated; and the extent of the earlier reaction should be a powerful warning of the degree of speculative activity in the markets, and the vulnerability of prices. Chinese demand clearly remains a critical factor, and the evidence suggests that it will remain reasonably strong.

Soft commodity markets have again produced a more mixed performance.

Movements in grain prices have been fairly modest, although there has been some support from a recent report by the US Department of Agriculture that the increasing importance of ethanol production will continue to draw down stock levels and help to offset the effects of what is expected to be a bumper grain crop this year.

Most price movements elsewhere have been fairly small; but there have been two significant exceptions. Cocoa prices have been pushed to their highest levels for more than 30 years because of disappointing crop levels in West Africa, and particularly in the Ivory Coast, and the warning that the fall in production will continue unless there is significant investment in new trees and in fertilisers.

There are fears that demand will outstrip supply for the fifth successive year in the 2010/2011 season, and this has forced cocoa buyers to push up prices to cover their requirements, and has exposed the position of banks and others that sold call options in the expectation that prices would fall. The second significant exception has been coffee prices, which have increased by almost 20% during the past month.

The indications are that one commodity-trading house has accumulated a very large number of futures contracts and has indicated that it intends to take delivery of the coffee.

Other funds that had sold futures contracts short have been unable to obtain the coffee to honour those contracts, and so have been forced to scramble to close them and have suffered considerable losses as prices have moved higher.

It is not yet clear whether this technical position has now been cleared; but the fundamentals do not appear to justify the price action, since Brazilian production is expected to be very high in the current season, and so, once the technical position had been cleared, prices could fall fairly sharply.

Oil prices have also been affected by the improvement in market sentiment, and have recovered very sharply over the past month.

Speculative activity has been an important factor; but there has also been an encouraging report from the US Department of Energy indicating strong demand for oil products in the US, and a larger-than-expected reduction in crude oil inventories.

There has also been evidence of continuing strong demand from China; and a warning of the onset of the hurricane season in the Gulf of Mexico, and its possible effects on production levels.

So far however the dramatic oil spill at the BP production well in the Gulf does not appear to have had a noticeable effect on market prices, although the possible consequences, especially for deep-water drilling operations in the future, could clearly become a very significant factor.

The recovery in prices has been very impressive; but it may not be sustainable. OPEC itself has recently issued a very cautious monthly report which argues that “recent developments have moved oil prices out of equilibrium”, and which emphasises that increasing supplies from non-OPEC countries are keeping downward pressure on prices.

It concludes, that “although demand has seen some improvement recently, it has been more than overwhelmed by the higher growth in supply”. It seems likely therefore that the present rally will lose momentum unless there is a serious deterioration in the political situation in the Middle East. Precious metal prices have also moved higher over the past month; investors are clearly still seeking “safe havens in the storm” despite the improvement in sentiment about prospects that has pushed some other commodity prices higher.

Gold prices have reached $1250 per ounce, and silver prices have also moved significantly higher, with exchange-traded funds aggressive buyers of both metals.

The World Gold Council, in its recent quarterly report, indicated that demand for gold was “exceptionally strong”, and that it was expected to remain so for the rest of year, “driven by jewellery demand in India and China, and investment demand in the US and in Europe”.

However it is clear that investment demand is the more important factor, with EFT gold holdings now above 2000 tons, and central banks also adding to their holdings again.

There is an obvious risk that the latest surge in prices will lead to some profit taking. But given the present situation, and particularly the risk of sovereign debt defaults, it would be unwise to assume that the improvement in precious metal prices in over.

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