| By :
Kristin Gabriel
In August the NFIB index shows optimism based on an increase to 88.8 from July's 88.1, and while four of the index's 10 components rose, one was unchanged. The average measure in the five years before the economic decline was 100.6. Improvements were gains in expected real sales and expectations for business conditions six months out. While four of the index's 10 components rose, one was unchanged. The average measure in the five years before the economic decline began in December 2007 was 100.6. Many financial companies use the index to review and analyze the small business marketplace. On the other hand, the job market is still suffering with only 67,000 reported new private sector jobs in August, and of those, 45,000 in the education and health care industries, according to the Bureau of Labor Statistics (BLS). What's more, Bloomberg reports that according to a private survey, confidence among U.S. small businesses rose in August for the first time in three months as the outlook for economic growth changed. Other recent surveys indicate that financials of small businesses are stabilizing, an important observation as it is a prelude to growth, which is expected to be slow through the remainder of this year and into the beginning of 2011. Expectations for the economy and sales improved, which explains why the outlook for hiring and capital spending at small companies weakened last month. More jobs and increases in consumer spending are needed for the economy's recovery. 50 percent of NFIB survey respondents indicated that they will go to the bank for credit when required, even though the banks are currently not lending to small businesses due to increased requirements. Many banks have indicated that there is money to lend providing the financial statements are strong enough. And for businesses whose financials may not meet the banks requirements, alternative sources such as invoice factoring can provide cash for operations and to support growth until the financials will support traditional lending. Accounts receivable factoring enables a company to provide credit to its customers while at the same time obtaining cash for business operations and expansion. In fact, many businesses are now using factoring companies that advance up to 90 percent against invoices as part of their normal operations when they do not get paid for 30 to 60 or 90 days. Bank loans involve two parties, whereas invoice factoring involves three parties, and while banks base their decisions on a company's credit worthiness, factoring is based on the value of the receivables. Invoice factoring is not a loan - it is simply the purchase of financial assets, or the receivables. Factoring solutions include export factoring, a factoring service for companies who export from the United States and Canada; P.O. funding to finance purchase orders when a company receives a purchase order and needs to purchase supplies to fulfill the order; pllus inventory financing, a solution promoting a company's growth by funding them when they seek to purchase inventory or expand. Factoring companies usually do not expect to buy 100 percent of a company's receivables, and there are no minimum or maximum sales volumes required. Upon receipt of invoices, the factor checks the credit of the debtor named on the invoice and makes sure that the sale represented has been satisfactorily completed. After this is done the debtor is advised of the purchase by the factor and the client receives their money. Source: Discover Small Business Survey.
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