In the About Us portion of the site we provide you with information explaining why you would want to be funded by us-why Sales Driven Financing© is different. (See Why We Exist)

If you are interested by our approach to financing in the business-to-business sector, please read over the following information to learn more about our financial products and what is required to make the best use of them.

What is Sales Driven Financing©?
Sales Driven Financing© is a form of factoring. Thus, to label the family of products available from Acorn Partners we focused on its common characteristic-advances on your business' revenues from larger organizations. Basically, if you sell it we will finance it.

We differ from most other factors because we obtain our money from independent investors-also referred to as angels. This allows us to offer a unique and flexible variety of equity financing in addition to providing advances on your invoices.

Another distinguishing feature is that any financing constraints you might encounter with us are based on the credit worthiness of your customers and not your own financial strength.

Purpose for which Funding is Provided and Basic Eligibility
The funds available from us are typically for the purpose of meeting your short-term financing needs. While they can be used as you see fit, things such as improvements in plant and office space are usually financed by long-term loans.

The basic eligibility for obtaining funds is that you have incoming revenues (liquid assets) to sell to us at a discount. For some of the products the incoming revenues can be spread over a period of years.

Products Offered

The following table features the products offered, their basic eligibility requirements and brief explanations of each. Follow the links for additional details on each product.

If you would like to open an Invoice Discounting account or obtain an advance on your SR & ED refund review the section How to Open an Account with Acorn Partners.

The other products require custom tailoring. If you are interested, please email us with the name of the financial product you wish to use along with a brief summary of your business. An Executive Summary plus product literature is very helpful if attached.

Consultation is free of charge.

Widely Used In Retail
The idea of selling your invoices may at first seem an unusual way to obtain quick access to needed cash. However, if you use a credit card then you have probably already engaged in this type of transaction and may do so on a regular basis.

In the business-to-consumer sector, the credit card helped retailers expand their businesses by increasing sales to consumers. This was possible because it decreased the burden of assessing and granting credit and freed the retailer from tying up cash to support sales. Further, not only did it stimulate the growth of those firms with real potential, it reduced the barriers to growth for all.

The process is simple but highly effective. When consumers make a purchase on their credit card, the retailer is paid by a financial organization which in turn is later paid by the consumer. The retailer pays a small fee for the service and the consumer, provided they make their payment on time, is not charged.

For the business-to-business sector of the economy, Sales Driven Financing© is an alternative to bank loans and venture capital that is based upon the same successful and widely employed concepts underlying the use of a credit card.

When you agree to sell us your invoices we are in effect taking the role of the credit company. You are the retailer and pay a fee in exchange for our service. Your customers are the consumers. Provided they pay their invoice on time, the arrangement between your business and Acorn Partners does not affect them at all.

Cost and Value of Sales Driven Financing©
Cost.
For invoices paid on normal commercial terms (about 50 days), we charge about 7% to 8% of the value of the invoice. For high volume, long-term arrangements with individual invoices in the six figure plus amounts, the cost could be as low as 5%.

Value.
The critical question here is what else can you accomplish by having funds in hand and what can be done with those funds to create value for the business? The financial impact calculator helps provides insight into the profitability of increasing sales by having funds at your disposal.

The old saying "all that glitters is not gold" always applies when considering value and there will inevitably be drawbacks and advantages depending on the particular situation. One important consideration is that with cash in hand, you will be able to focus on your scarcest resource-time. This means that juggling cash flows, collections and credit granting is avoided and more effort can be put into production and sales.

The best appraisal of the trade off between value and cost comes from those who have used the factoring approach that is built into Sales Driven Financing©.

Rob Bennet of Municipal Software Corp., used factoring "quite successfully" in his effort to keep the business growing. By 1998 Municipal Software was expanding rapidly but the company's receivables were close to $500,000 and customers often took sixty days or more to pay. The banks became nervous and denied an increase in Bennet's line of credit. As Bennet put it, "there was gap there that banks just wouldn't fill for us."

According to Bennet, the value of his factoring agreement with a local merchant banker was that it "provided cash, it didn't involve our clients at all and it was very easy to administer." The financial cost-an annualized interest rate of ten percent-was not overwhelming since "we were dealing with very short periods."

In terms of potential value and cost, it is perhaps most important for your client think very carefully before choosing a type of financing. In Bennet's words, "as long as all the terms and conditions make sense for your company and your customers . . . and you can find the right group to work with, factoring can definitely help you to build your business."

(Peer to Peer www.PROFITguide.com May 21, 2002 and Peter MacDonald, PROFITmagazine www.profitguide.com Dec/Jan 2003)

Financial Impact Calculator
In exchange for providing access to the calculator and saving you the time and effort of building it, we would appreciate it if you could leave us your business contact information in the entry fields below.

What Size of Transaction Does Acorn Deal With?
Profiles of the invoices clients have sold to Acorn Partners vary widely. Some sell one or two invoices in the low to mid six-figure range. Acorn Partners deals with these clients episodically; for example, when they have a large order or when the wish to get an advance on their SR & ED refund claim. Others sell five, ten or a hundred invoices every week with the value of these being a few hundred dollars each.

Invoice Purchases
For a single transaction the invoice must be for at least $10,000. However, if there is an ongoing sale of invoices to us the amount can be in the hundreds of dollars. Single invoices up to the six-figure range are purchased and larger amounts will be considered.

SR & ED Refund Claims
For SR & ED refunds the minimum level is $10,000. We have and do purchase refunds in the six-figure range.

What Will Customers Think?
Actual customer responses to the prospect of paying a third party vary from "no problem we have often done this," through "I have never been involved in this type of arrangement before," to "no way, I pay the party that supplied me."

Thus, all sensible entrepreneurs ask this question. Most anticipate a negative reaction and the loss of business is the sum of all their fears.

Any change raises questions-especially a request to pay a third party. This is particularly true if it arrives as a surprise on someone's desk. So what customers think depends in part on what you tell them, their prior experiences and overall satisfaction with the relationship to that point and finally, how easy it is to replace the supplier.

The key to having a customer think positively about paying a third party is to explain to them that the only thing that has changed is who they pay, not what they pay or when.

The best way to proceed is to phone the customer and seek approval. If there is a negative reaction, determine why. If necessary, Acorn Partners establishes a lock box arrangement for receipt of payments and establishes special terms and conditions to ensure that the fiduciary relationship between your client and Acorn Partners is clear. These include the right to directly contact the client if an invoice remains unpaid after forty-five days.

Definition of Key Terms

Angel investor: Angels are individual 'freelance' investors. They have acquired their own money and are looking for good business prospects to support. Angels typically deal in small amounts ($250,000-$2,000,000). Angel capital is fairly expensive and obtaining it can be difficult. It's ideal if you are looking for a singular infusion of a modest amount of capital.

Bootstrapping: Building your business without external funding-sale-by-sale, customer-by-customer. Avoids problems associated with obtaining outside funding but means you have to be extra vigilant about collecting on your invoices.

Exit: An investor's method of recouping capital put into an investment deal and hopefully, a profit as well. Its exact nature varies depending on the type of investment and how accomplished the investor is. It might be through an IPO, the sale of the company, dividends or shares, or royalty on the business' sales.

Factoring: Arrangement whereby a firm sells title to its accounts receivable at a discount in exchange for an advance on their value.

Foundation firms: The founder sees a business opportunity and is prepared to build a business to exploit it. The opportunity may be substantial enough over a period of ten or twenty years to create a decent sized firm with 25 to 100 employees and perhaps many more. The potential, combined with the owner's/manager's aspirations yield this result. Think about McDonalds or Tim Horton's. In the case of the former, a change of owner with a new vision (Ray Krock) yielded a business worthy of venture capital. That being said, foundation firms almost never go public if they are recognized as such. They have no compelling story to tell the analysts.

Life-style firms: Regardless of the potential of the business opportunity the founder enters the business for reasons of personal life style, e.g., operating a retail bookstore or consulting in an area of expertise. He or she keeps the business small by design. These firms never go public since and most are screened out by investors.

Venture capital potential firms: the founders believe that the business potential is such that it will support a firm selling $100M per year within five years and they have the capacity to make this happen. They then convince venture capitalists of their beliefs. Their odds of success range between 1% and 5%. The odds of a successful exit via an IPO are 1% of the 1% to 5%. This slim chance is still 8 times that of acquisition.

SR & ED refund claims: Federal and Provincial Scientific Research and Experimental Development tax credits are available for up to 60% of your qualified research and development expenses. Acorn Partners provides advances on these in the much same way that it purchases invoices.