Common Sense Approach to Funding

Fundbox: An Alternative To Invoice Factoring or Discounting
When you visit the homepage of Fundbox, you don’t see the words invoice factoring or short-term business loans. Instead, the headline reads:
Overcome Cash-Flow Gaps. Get Paid Instantly.
One of the first things that Eyal Shinar, the CEO of Fundbox, said to me during a recent  interview was “businesses don’t like invoice factoring.”  While invoice factoring comes in many different varieties, a common variant includes a company selling their invoices to a factoring company in exchange for a certain amount of cash upfront. The factoring company then proceeds to collect the money from the company’s customers listed on the invoices.
Many businesses don’t like a third party having a direct relationship with their customers. The actions of the factoring company, which is “eager” to collect money, could affect their relationship with the client.
However, factoring serves a very important function. It enables companies to overcome short-term gaps in their cash flow. While expenses can be consistent or need to be paid in advance for a big job, payment for work can often arrive 30, 60, or 90 days after work is done.  Eyal cited research which estimates you should have about two months of “normal” operating expenses on hand to function smoothly.
While traditional factoring may cause customer relationship problems, the traditional lenders (banks) typically don’t want to lend small amounts for short-periods of time to small businesses.  When they do, through a traditional working capital loan, they typically charge a business for the right to borrow money, regardless of whether they actually borrow money.
Fundbox is a solution to the the problem of short-term working capital. What is Fundbox?
1) Fundbox offers 12 week loans to small businesses. (The CEO would call it a cash advance.)
2) Payment for these loans (including principal, interest, and fees) is deducted from a company’s bank account in 12 equal amounts on a weekly basis.
3) There is no penalty for early payment. In fact, the interest rate on the loan is reduced if the loan is paid early.
Point 3 is very important. There are a number of companies that charge calculated interest on short-term small business loans. In other words, the business is responsible for paying interest for the entire term of the loan, regardless of when it’s paid off.  With Fundbox, the borrower only pays interest for the time that the money is actually borrowed. For example, if a company has a big invoice coming due in 4 weeks, and pays off Fundbox when the invoice comes in, the company has effectively taken a 4 week loan.
There are two other ways in which Fundbox loans are connected with invoices:
1) The amount of the loans are tied to specific invoices which are scheduled for payment in the near future. When a company uses FundBox, they pick specific invoices to get up front payments from Fundbox. The loan is effectively matched with future receivables, which should prevent the re-payment of the loan from creating a new cash flow issue for the borrower.
2) The interest rate of the loan is tied not only to the creditworthiness of the borrower, but to a lesser degree the company which received the invoice. On one level this doesn’t make sense, as the borrower must pay Fundbox back regardless of if the invoice is paid. However, this practice encourages companies  to borrow money with invoices that they have a degree of confidence will be paid. If the invoice gets paid, the company will have the cash on hand to pay Fundbox back.
I should point out that the CEO of Fundbox strongly took issue with my description of the company’s product as a short-term business loan. It’s very, very different from everything else out there in the small business loan space.
There were a few questions that I was eager to ask Eyal about Fundbox.
What is the typical interest rate?
Borrowers pay between 0.7% and 3.0% of the loan amount in interest per month, however, the typical borrower would be closer to 2.0% (Editor’s note: The Fundbox site has a calculator which allows one to see the approximate amount that would be paid. On a $5,000 loan paid back over the full 12 weeks, the borrower would pay back  a total of  between $5,243 and $5,343
Can any business be approved for using Fundbox?
Around 40% of businesses that apply are accepted. However, this number includes both fraudulent applications and those that don’t meet the financial criteria. Typically, we approve companies to get advances on up to $10,000 invoices at a time, however, this varies from company to company.
Does Fundbox report to the credit reporting agencies?
Not at this time.
Eyal Shinar, Fundbox CEO
Eyal is an expert in financial services and technology management. As a Vice President in Battery Ventures, Eyal led many projects and investments in the areas of finance, machine learning, SMBs and SaaS. Notable examples are IDI Direct Insurance, Istra Research (algorithmic trading), Cortera (online risk solutions for credit professionals), cVidya (revenue assurance and fraud prevention), Leadspace (semantic prospecting) Champions Oncology (big data analysis), Sportority (FTBpro) and others. Prior to his work at Battery Ventures, Eyal was one of the first employees of Old Lane, a $5.5B NY-based global hedge fund (later acquired by Citigroup) where he focused on complex options structuring and risk and financial engineering, and has also worked for Castle Harlan, a leading $6B NYC-based buyout firm. He attended the top percentile program for outstanding students at the Hebrew University (LLB) and later was the recipient of the prestigious Orion Scholarship in Exact Sciences. Eyal earned his MBA at The Wharton School of Business at the University of Pennsylvania.

For more information about Fundbox, click here.
– See more at: https://fundbox.com/about

 

Have trouble concentrating? Try these suggestions…

We all know the feeling of being overwhelmed, of being beset by distractions.

Too many things clamor for your attention. People are trying to reach you, by phone, email, text, Twitter, or old-fashioned yelling up the stairs. Colleagues interrupt. You need to update, check in, post, or ping. Ads jump at you from the most unlikely places. Devices buzz, ring, chirp, and vibrate.

There are steps you might consider to quiet the buzz in your brain – even if you don’t want to take up meditation.

In addition to feeling calmer and more focused, you’ll probably be more efficient, too. Turns out that people aren’t very good at thinking about two things at once. One study showed that when people were interrupted to respond to email or IM, it took about fifteen minutes for them to resume a serious mental task.

So consider taking steps like these, at least occasionally.. They may not all work for you, but you may find a few that will help you focus.

1. If you keep the TV, radio, or music turned on in the background – while you’re getting dressed, say – turn it off. Some people love background noise, but I find it very draining.

2. I have a sticky note in my bedroom that reads, “Quiet mind.” Whenever I see it, I drop my shoulders, relax my jaw, and try to smooth out my thoughts. It actually works.

3. Organize space so it’s attractive, well organized, and well lit. One of my most important Secrets of Adulthood: Outer order contributes to inner calm.

4. Cut down on the multi-tasking. Don’t talk on the phone while you’re doing dishes, don’t check your email while you listen to a conference call, don’t sort the mail while your child explains the school project that’s due next week.

5. Turn your cell phone ringer off. Hearing your cell phone ring – or even imagining that you’re hearing it ring – is a big source of jumpiness.

6. Take a break from doing errands. Keep a list, but don’t try to cram them in throughout your day.

7. Use the internet only to look up specific pieces of information; no jumping from link to link, no browsing.

8. Turn off your email for some parts of the day.

9. In her book The Creative Habit, Twyla Tharp mentioned an interesting approach: occasionally, for a week, she’d “stop counting.” She avoided looking at clocks, contracts, bank statements, bathroom scales, or anything to do with numbers, in order to let the other part of her brain take over.

10. Exercise. If I don’t exercise regularly, I’m too jumpy and restless to sit still and concentrate. I keep popping up and down. It’s true that taking regular breaks is good for focus — but within limits! (Here are some tips for getting regular exercise.)

11. Flee temptation. I find it hard to work in my home office, because my family, the phone, my email, and the internet constantly beguile me away from my work. So when I have serious writing to do, I go to a library near my apartment which has a study room with a strict rule of silence.

It’s important to have space in which to think. Yesterday, I overheard someone complain, “My phone was dead, so I was so bored during my cab ride home. I just had to sit there.”

There are few things that I love more than looking out the window of a car, train, or bus. One day, when I was gazing out of a bus window, I was struck by a thought: “What do I want out of life?” “Well,” I thought, “I want to be happy.” It occurred to me that I never thought about whether I was happy or not, or how I could be happier, or even what it meant to be happy.

“Zoikes,” I thought, “I should have a happiness project!”

If I’d been checking my emails, I might never have had the idea for my book The Happiness Project.

What other strategies have you found to help you keep a quiet focus? What have I overlooked?

Need a great summer book? Allow me self-promotingly to suggest The Happiness Project. I can’t resist mentioning: #1 New York Times bestseller, and a bestseller for more than two years. That’s right, TWO.
Order your copy.
Check out the gallery of foreign covers. It’s so interesting to see what different countries put on the cover.
Watch the one-minute book video.

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Gretchen Rubin is the author of the blockbuster New York Times bestsellers, The Happiness Project and Happier at Home. She writes about happiness and habit-formation (the subject of her next book, Better Than Before) at gretchenrubin.com. Follow her here by clicking the yellow FOLLOW button, on Twitter, @gretchenrubin, on Facebook, facebook.com/GretchenRubin.