One may ask: How can I do this without it costing my company a lot of money? First of all, it may not cost your company anything. Well, in an effort to provide cash flow solutions to allow US-based companies to become more competitive, the latest tool in a company's financial arsenal is called "Reverse Funding."

Reverse Funding can be even more profitable when a company prefers to have use of their funds for growth and development or profitable outside ventures. This tool can help to optimize cash flow and also allow your company to focus on meeting payroll, managing investment recapture on your own terms, tax planning, deferring liabilities to successive tax years, taking on new clients or orders, capital equipment acquisition, paying down loans and debts with accruing interest, extending credit terms or incentives to new customers, paying down taxes and even hiring additional employees.

Oftentimes account payables departments are harassed by their vendors for payment. With the comparatively high money market rates available, companies walk a tightrope between obtaining the maximum yield on their cash, paying their vendors on a timely basis and not damaging their Dun & Bradstreet rating. This can sometimes become adversarial and result in deterioration of critical customer, vendor or supplier relationships in addition to your company's credit rating. Reverse Funding enables your company to significantly improve present and future vendor relationships, improve or maintain your company's credit, become more bankable and make your stock more attractive.

While fixed costs remain constant, many companies realize the significant opportunity to boost profits by having access to the substantial working capital for an extra 30 to 60 days without creating any corresponding debt, liabilities or incurring any costs. The payables to vendors become the engine which helps drive profitability and optimal cash flow management.

By using other peoples money with Reverse Funding, your company can also pay down or reserve bank credit lines for "as needed" basis events, thus extending the life of your lines without adding any liabilities to your balance sheet.

Here is a simple example of what "Reverse Funding" can do for profitability by taking on new customers or clients:

BENEFITS FROM REVERSE FUNDING

Total Gross Income from new business $1,200,000
Company Profit from new business  $ 370,000
Company Profit Margin from new business 31%

In this simple scenario, Reverse Funding enabled the company to increase its sales by just 10 percent and take advantage of excess capacity. This resulted in a bottom-line profit margin growth of more than 50 percent and a profit increase of 85 percent.

This example assumes that only $30,000 was being paid to vendors in a company with revenues of $1,000,000 and that there was an increase in sales of only 10 percent. Real world accounts payables to vendors are typically much higher as a percentage of costs. These numbers can change dramatically if more accounts payable need to be paid out to vendors or if there were additional value added uses for the funds by the company.

So who is eligible for Reverse Funding? Well, practically any creditworthy US-based company with monthly accounts payable to vendors of $30,000 to as much as $100,000,000 monthly. This tool is currently being implemented in Fortune 1000 companies down to regional & local manufacturing, service, and retail oriented companies. After a brief evaluation process, most companies can start to reap the benefits of Reverse Funding in as little as two to four weeks.

There are only a couple of companies in the world that have the financial and strategic resources to offer this sophisticated yet elegant Reverse Funding tool. Future articles will address how this tool can combine with other strategies such as receivables funding, and sale leasebacks among others to provide your company with a virtually endless stream of cash flow to help grow your bottom line.

Reverse Funding enables your vendors to get paid in full within 24 hours of submitting their invoice to your company while your company can simultaneously float those payables by 60 days. It is a win/win cash flow management tool, which is being used by more and more companies everyday. Reverse Funding will eventually be the standard MO (Method of Operation) for most US-based companies to remain competitive in the global marketplace.

Dupont Funding Group, LLC, NY, New York (rich@dupontfg.com) http://www.dupontfg.com/ & http://www.reversefunding.com/. Dupont Funding Group specializes in providing innovative cash flow solutions for most companies utilizing Reverse Funding, Invoice/Receivables Funding, Purchase Order Funding, Sale Leasebacks and Purchasing of Business & Real Estate Notes.