How Accounts Receivable Factoring Fits Into the Fintech World

Accounts Receivable Factoring in many ways predates Fintech in the field of financial technology.It may seem strange that accounts receivable factoring, a form of financing that dates back further than the Silk Road, could fit into the modern world of Fintech, an industry that is less than a decade old. However, like any business that has survived since antiquity, accounts receivable factoring has constantly evolved with changing times and in many ways pioneered the path for the new Fintech industry. While you would be hard pressed to find an a true factoring company that only exists in the online realm, you would be just as hard pressed to find a traditional factoring company that doesn’t offer a large variety of online tools.

In the same way that online banking and ATM machines have made it so many Millennials never had to write a check or step inside a bank branch location, accounts receivable factoring can now provide your business with the financing that you need without needing to walk away from your computer. In fact, here at DSA Factors we’ve been offering online tools to our clients for over a decade now. So in many ways, we were a Fintech company before Fintech even existed. But unlike Fintech, we haven’t stripped down our factoring program to only offer the services and benefits that a web page can provide. Plus we are still happy to work with clients who prefer doing things the old fashioned way, via phone, mail, and fax.

Online Credit Approvals

For years now, offering online approvals has been a standard service that accounts receivable factoring companies have offered. What this means is that when you get a purchase order, you just login to your factoring company’s portal and request an approval. Often times the computer is able to make an actual credit decision on the spot and offer you an instant online approval. Of course, as in any business, there is a limit to what can be completely automated, so in the case where the computer can’t approve an order, it gets sent to your factoring company’s office for review. When this happens at DSA Factors, we do our best to get back to you with a credit decision within 30 minutes, and will e-mail the credit decision to you.

Real-time Aging Statements

Most factoring companies will provide their clients with aging statements each week so that they know where their accounts stand. At DSA Factors we take this one step farther. At any time our clients are able to login to our portal and view a real-time aging statement.

View Transmittal Sheets

Just like how banks and credit card companies allow you to view statements online, at DSA Factors we give our clients to view transmittal sheets from our online portal. And unlike banks or credit cards that may limit you to only one or two years of statements, here at DSA Factors you can go back as far as you want to that very first payment we sent you when you first started factoring.

Access to a Variety of Online Reports

In addition to aging statements and transmittal sheets, at DSA Factors we offer our clients a variety on online reporting options. This includes being able to pull account statements for any customer. Viewing all open or used approvals. Pulling sales reports that show you how much volume each of your customers gave you over a specified period of time. Plus, if there is a report that you would like to see on the portal, all you need to do is give us a call and we will do our best to create it for you. As a family owned business, we pride ourselves on the quality service we provide our clients with, and that extends to the online services we provide as well.

Allow Customers to Pay Online

At DSA Factors we don’t just extend online benefits to our clients, but also to their customers. At any time your customers may login into our portal with a login and password we provide at the bottom of every account statement we send them so that they can view a real-time statement and make payments online. After all, don’t your customers deserve access to the same online conveniences as you.

Why Choose Accounts Receivable Factoring Over Fintech?

If the online services that we offer at DSA Factors doesn’t seem like enough, keep in mind that we offer one huge benefit that no Fintech company is able to offer. At any time you are able to pick up a phone, give us a call, and one of our principals will be able to talk to you and help you come up with a solution that works for you. That isn’t something that you will get from a large Fintech company, that is something that you can only get from a family owned accounts receivable factoring company. And the value of being able to speak with someone who can actually help you and cares about your business, is much greater than the inconvenience of being limited to only the functions that a web page is able to handle.

If you want to improve your cash flow, outsource you accounts receivable, get credit insurance, and have the convenience of being able to work online, but still want the personalized service that you deserve, give us a call today at 773-248-9000. Or if you want to go “Fintech”, feel free to send us an e-mail at info@dsafactors.com or chat with us right now on this web page.

The Original Fintech Factoring Company

Fintech Factoring vs Traditional Accounts Receivable FactoringEveryone knows that accounts receivable factoring has been around for a while, in fact, if it wasn’t for factoring, in fourteen hundred and ninety two, Columbus wouldn’t have been able to sail the ocean blue. However, in recent years, in response to rapidly developing technology and an unwillingness by banks to lend money, a large number of fintech companies have emerged offering entrepreneurs a variety of ways to raise money for their businesses. These fintech companies offer everything from crowdfunding to factoring. However, it is important that you compare the services that these new fintech companies provide as well as the fees they charge to more established funding sources.

Crowdfunding vs Venture Capital

Crowdfunding is indeed an excellent alternative to venture capital. Companies like Kickstarter and Indiegogo allow start-ups to raise money for their business through pre-sales, rather than receiving loans or giving up a percentage of ownership to venture capitalists. So not only does crowdfunding allow you to maintain ownership of your business without taking on new debt, but it also provides young companies with advertising and the chance to build up a large and enthusiastic customer base. Of course crowdfunding isn’t free, you will have to pay a commission on any funding you receive in addition to payment processing fees, but then again venture capital isn’t free either. The other big difference between crowdfunding and venture capital is the scale. Typically crowdfunding works on a much smaller scale, giving new start-ups the ability to raise thousands, tens of thousands, and occasionally hundreds of thousands dollars. Venture capital on the other hand isn’t always all that interested in such small investments, but could be a good place to start if you are looking for a million dollar deal.

While crowdfunding is a great way of getting your product seen and sold directly to consumers, it does not typically help you with funding large orders from retailers. For this, an excellent alternative to venture capital is purchase order financing, which is a service provided by many traditional accounts receivable factoring companies. With purchase order financing you can obtain a short term loan based on a purchase order, and then you pay back that loan by ultimately selling the invoice associated with that order to your factoring company.

Fintech Factoring vs Traditional Accounts Receivable Factoring

Factoring has always been an excellent alternative to getting a bank loan. However, fintech factoring companies haven’t really innovated the factoring industry, but rather offer short-term, high-interest small business loans that improve your cash flow, but don’t provide the other services that traditional factoring companies provide you with. Like traditional factoring, the fintech factoring companies are not too concerned with your business’s or your personal credit, meaning that companies that do not qualify for a traditional bank loan will qualify for a loan with them. However, coming from their IT backgrounds, the principals of these firms don’t have any real experience in the factoring industry, nor do they understand all of the benefits that traditional factoring offers small businesses.

In an interview with ABF Journal, George Bessenyei, director of 48 Factoring, stated “we are not coming from the financial space, we are coming from a technology space. I see us as a technology company that provides finance.” In another interview with ABF Journal, Eyal Lifshitz, CEO of BlueVine said “I was looking for a way to disrupt the lending industry. I started learning about factoring. I wanted to modernize it and make it a streamlined process where the borrowers can click a button and get money.” While it is true that these new fintech companies have streamlined the process of getting funded so it can be done entirely online, they also stripped-down factoring to its bare bones. Key aspects of factoring such as not taking on any new debt, outsourcing your credit checking and collections, insuring your receivables, and an unlimited potential for funding have been eliminated by the fintech factoring companies.

While fintech factoring may offer a faster, more streamlined approach to getting funded, and its rates mirror traditional accounts receivable factoring rates, they actually will cost you quite a bit more both timewise and financially than traditional factoring. Because fintech companies don’t handle your credit checking, you are still responsible for assessing the credit worthiness of your customers and will need to subscribe to expensive credit agencies in order to do so. You are also responsible for handling all the collection work, which as your company grows could eat up much of your time or require you to hire additional employees. Finally, without credit insurance, when a customer is unable to pay an invoice, you are out the money. While you could be very conservative in who you offer payment terms to, doing so will mean that you will be turning down a lot of business that a traditional factoring would most likely be willing to improve. Alternatively, for large orders, you can purchase credit insurance for an additional charge from insurance companies.

Technological Innovations Offered by Accounts Receivable Factoring Companies

It is true that accounts receivable factoring may be old, but that doesn’t mean that traditional factoring companies don’t innovate. The fact is, traditional factoring companies have been using innovative software and providing online tools to their clients for many years now. Nearly every traditional accounts receivable factoring company allows their customers to submit accounts for credit approval online, and oftentimes can provide their clients with instant approvals directly on the web page. Invoices can also be sent via e-mail to ensure speedy processing. Plus, your factoring company has the ability to pay you via ACH or wire so that funds are electronically deposited into your bank account as opposed to having to wait for a check to arrive in the mail and then take it to a bank. While the process might not be as streamlined as fintech factoring, accounts receivable factoring companies always pride themselves on speedy turnaround and funding you within 24 hours, if not the very same day that you submit your invoices to them.

Another common misconception that fintech factoring companies have about traditional factoring is that accounts receivable factoring companies are all owned by banks and only care about large accounts doing millions a year in sales. While it is true that many factoring companies are owned by banks and prefer not to deal with smaller businesses, this is not true of all factoring companies.

DSA Factors has always been family owned and operated, and we provide factoring to all businesses regardless of how much volume they do. At DSA Factors we have always been innovating ever since we started factoring in 1986 and programmed our very own factoring software using Basic on DOS 3.3 computers. While we have long ago moved on from our original software, we still continue to develop all of our own software and are continuously improving it in order to give our clients more options in how we finance their businesses. Today we offer online instant approvals to our clients along with a number of online reports including real-time aging statements as well as give them the ability to view previously paid transmittal sheets for as long as they have been factoring with us.  Additionally we provide your customers with a login where they can view an account statement and make payments online. We even welcome ideas from our clients on how to improve our online portal so that they can get the most out of our factoring services. So if you are looking for financing and want a factoring company that combines technology with knowledge, experience, and service, look no further than DSA Factors.  Give us a call today at 773-248-9000 and one of our principals will be more than happy to speak with you.

Factoring vs Fintech: Finance in the High Tech World

Finance in the High Tech WorldFor most small business owners, obtaining a line of credit from a bank has never been easy. In recent years a number of technology companies have discovered this problem and it has led to the emergence of fintech, a form of online lending. However, what many small business owners don’t realize is that there is another alternative to the banks, which is factoring. Factoring companies however offer a whole lot more than the fintech companies, but also have much more experience and knowledge, better customer service, and typically cost less.

Industry Knowledge

Fintech companies provide their customers, who don’t qualify for a small business loan from a bank, with short-term, high-interest loans using their receivables as collateral. Because they are using receivables as collateral, companies such as BlueVine claim that they provide accounts receivable factoring, but really they are just providing their customers with a loan. Other companies like Fundbox claim they provide invoice financing, which they differentiate from factoring. While it is true that they do not provide factoring, what they don’t realize is that invoice financing and accounts receivable financing mean the same as factoring. This demonstrates a very big difference between fintech and factoring. These fintech companies are really young IT start-ups with little or no experience in the industries that they serve; in fact, they may not even know basic industry terms. Factoring on the other hand has been around for hundreds of years, even Christopher Columbus used factoring. While most factoring companies haven’t been around quite that long, they all have quite a bit of experience and a background in the industries that they serve. For example, DSA Factors started off as the consumer finance arm of a retail furniture store under the same ownership. Eventually they decided to start offering factoring services to furniture and bedding wholesalers who they bought from. As the factoring business grew they started expanding out to other industries such as giftware, housewares, apparel, and trucking. Now, having factored for over 30 years, they are still helping small and medium sized businesses grow.

Improved Cash Flow – Debt vs No Debt

While the goal of both fintech and factoring is to help you improve your cash flow, perhaps the biggest difference between fintech and factoring is how they accomplish this. A fintech company provides you with a loan, meaning you are taking on debt. Furthermore, the loan has a very short term and if you offer extended terms, such as net 90 days, to your customers, it is quite possible that the loan will become due before you receive payment on the invoice that was used as collateral. With factoring, the factoring company is purchasing your accounts receivable, or invoices. The funds you receive from a factoring company are yours to keep and spend however you like. Even if one of your customers pays late, you don’t need to worry about paying back the funds you received.

Accounts Receivable Outsourcing

Of course services provided are another really big difference between fintech and factoring. Fintech companies seem to pride themselves on how they will never contact your customers; they seem to think that you will appreciate this. However, all that this means is that if your customers don’t pay them, they will come after you.  With fintech you still need to stay on top of your accounts receivable and send out statements and make collection calls. For a small business this means that the owner typically needs to spend a lot of time just trying to get paid by their customers. For medium sized businesses you will probably need to hire another employee just to manage your accounts receivable, meaning additional payroll. With factoring you are outsourcing your accounts receivable. Factoring companies have already invested heavily in the software necessary to manage A/R, and are able to do so because they manage A/R for many clients. They have professional and courteous collectors who are able to make the phone calls for you. Plus, because your customers may purchase from several other vendors who factor their receivables, a factoring company has a lot more leverage in collecting from a customer who may not be willing to pay. The fintech companies try to scare you by saying that factoring companies can ruin your relationship with your customers, but this couldn’t be further from the truth. Factoring companies are not collection agencies, they understand the importance of the relationship you have with your customers, after all, they have a similar relationship with you. As a result, your factoring company provides your customers with gentle reminders that payment is due, and always treats your customers with the respect they deserve.

Credit Insurance

Another big difference between fintech and factoring is the insurance they provide. With Fintech you receive no insurance on the invoices you put up as collateral, if the invoices don’t get paid, you still have to pay back the fintech company. However, many factoring companies, such as DSA Factors, provide non-recourse factoring, meaning that you are insured in the situation where one of your customers is unable to pay due to financial problems. Furthermore, since your factoring company is insuring your receivables, they also handle all of your credit checking for you, meaning that you don’t need to subscribe to expensive services such as Dun & Bradstreet. While it is possible to purchase credit insurance separately, it of course comes with additional fees, and typically only covers large orders for very creditworthy companies such as Amazon or Walmart. If your customers are mom and pop stores, or your invoices are smaller than five or six figures, credit insurance is not something that is readily available to you.

Purchase Order Financing

Of course, for many small companies simply getting funded for your invoices isn’t enough. For a company that has just received their first six figure purchase order, it may be very difficult to put that order together. To make matters worse, if you are unable to accept such a large order, it is unlikely that the company placing the order will come back to you in the future. If you manufacture in China you typically need to put 30% down to start production and then a month later when production is complete, pay the remaining 70% to get the merchandise put onto the boat. It will be another month before the container arrives in the US and you are able to ship and invoice your customers, and a fintech company will not provide you with a loan until you do so. For service companies you may need to hire additional labor and will need to meet payroll long before you complete the job and invoice your customer. If use fintech for your financing they won’t lend you the capital in advance, and you won’t be allowed to take out a loan with a bank. However, many factoring companies, such as DSA Factors, will provide their clients with purchase order financing, which is a short term loan based on the PO so that you can fulfill a large order.

Customer Service

Finally there is one more major difference between fintech and factoring companies, and that is customer service. Fintech companies are all about technology; they integrate with business software such as QuickBooks, and believe that customer service is about giving their customers fancy online tools. Of course this means that you too need to use QuickBooks or whatever other software they may integrate with. Factoring companies on the other hand realize that a big part of doing business is developing a relationship with the people they work with. Perhaps factoring companies don’t offer all the fancy technology and software integrations as the fintech companies do, but they aren’t dinosaurs. Nearly every factoring company has an online portal where their clients can login, request approvals, and view a variety of reports. While there are some large bank-owned factoring companies, there are also plenty of family-owned factoring companies such as DSA Factors. At DSA Factors you can always call and speak with a principal, no need to deal with account managers or low-level employees who can only answer simple questions. As a result, factoring companies are able to work with you creatively and aren’t restricted to just the 1’s and 0’s of the digital fintech world.

Choose Your Financing Carefully

When it comes to financing your small business it is important that you look at the big picture. While fintech may be new and exciting, you get a whole lot more with factoring. Plus, with factoring you most likely will save money as well!

If you would like to give factoring a chance, call DSA Factors at 773-248-9000 and either Ben, Max, or Howard will be available and able to help you. There is no obligation or long-term commitment, and you can start receiving funds in as little as 24 hours.  Start growing your business today with a time-tested and proven method that works, accounts receivable factoring.

Living Rooms are the Most Popular Room for an Area Rug

Area RugsWhile area rugs are becoming increasingly popular and can be found all around the house, they are most commonly found in living rooms. 44% of all homes have an area rug that is 5-by-8 or larger in their living room, making it the most popular room in the house for a rug. Living rooms are followed by master bedrooms, which feature a large area rug 20% of the time, and by dining rooms, where you can find an area rug 19% of the time.

You will see an area rug in a family room or den 13% of the time, however among affluent households who make more than $100,000 a year, that figure rises to 25%. Children’s bedrooms contain area rugs 9% of the time, and it should come as no surprise that this figure rises to 18% among Millennials who are most likely to have children living at home. Only 8% of kitchens, 6% of guest bedrooms, and 4% of home offices feature area rugs. 6% of other rooms have area rugs, this includes play rooms, bathrooms, hallways, laundry rooms, sun rooms, outdoor rooms, closets, and more.

When it comes to colors, browns and beiges are the most popular accounting for over a quarter of all rugs.  Blacks and grays come next accounting for a little more than a fifth of all rugs.  This is followed by blues and purples which account for a seventh of all rugs and multi-colored rugs account for an eighth of all rugs. Greens, reds, and whites each account for about one in twenty rugs. Yellows and golds are slightly less popular than one in twenty, and oranges only show up in about one in fifty rugs.

As for shape, a whopping 90% of all area rugs are rectangular. Runners account for only 4% of the rug market.  After that only 3% of rugs are circles, 2% are squares, and 1% are oval.

When it comes to shopping for area rugs, online is the way to go. Seven in ten consumers shop online while only a little more than four in ten consumers will visit a brick and mortar store. Of those who shop online, four in five consumers will compare prices with most preferring to do so with online-only retailers. A quarter of consumers will spend less than a week researching rugs before making a purchase. A fifth will spend up to two weeks before making their purchase, and another fifth will spend three to four weeks researching before making a purchase.

If you are a rug manufacturer or importer and could use some help financing as you grow your business, look no further than DSA Factors. Unlike banks, we make decisions based on your customer’s good credit, not your own credit.  And we spend minutes, not months, to make decisions.  Other advantages to factoring include unlimited potential for funding, so as your business grows so does the amount we can fund you. We also offer purchase order financing if you need help getting a container released or starting production on a large order.

Traditional Factoring vs Fintech

Accounts Receivable Factoring vs FintechThere has been a lot of talk in the news about fintech (financial technology) lately.  Certainly there is a lot to be said about alternative approaches to financing over more traditional methods offered by the banks. However, accounts receivable factoring has always been an alternative financing method over what the banks offer, and has a long track record of success. In fact, many of the fintech companies even offer factoring programs, but they tend to be bare bones versions of factoring that only offer some of the benefits gained by factoring, and oftentimes even charge higher rates than traditional factoring companies.

The factoring industry has been around for a long time. It was well established in Europe when the original colonists brought it over to America. In fact, the king and queen of Spain offered a form of factoring to Christopher Columbus when he wanted to set sail for the “New World”. While this may seem antiquated in our modern technology driven world, the fact is that most factoring companies do take advantage of modern technologies, offering most of the benefits of fintech, but with much more experience, a proven track record of helping to grow small to medium sized businesses, and much lower rates.

To see the difference, the chart below compares traditional factoring with DSA Factors to similar programs with PayPal Working Capital, Bluevine, and Fundbox, three of the more popular fintech companies offering similar programs to invoice factoring.

 DSA FactorsPayPal Working CapitalBlueVineFundbox
DSA FactorsPayPal Working CapitalBlueVineFundbox
Take on New DebtNo, the funds DSA provides you with are yours to keep.Yes, PayPal is offering you a loan, so you are taking on new debt.Maybe, if your customers don't pay BlueVine, they will require you to pay them back after 90 days.Yes, Fundbox is offering you a loan, so you are taking on new debt.
Credit LimitNo, with DSA Factors we will fund you for all of your receivables.Yes, the lesser of 18% of your annual sales on PayPal or $97,000.Yes, $20,000 to $500,000 based on your company's credit.Yes, $25,000.
Based on Your CreditNo, since DSA is giving your customers a line of credit, credit decisions are made based on your customer's good credit.No, the loan amount is based on your annual sales volume with PayPal.Yes, BlueVine will assign you a credit limit based on your credit worthiness.Yes, Fundbox determines your credit limit based on your credit worthiness.
Charges You InterestNo, DSA offers a flat rate factoring fee.Yes, the interest is charged to you up front when you get a loan, regardless of how long it takes to pay the loan off.No, BlueVine also offers a flat rate program, but at 10-15% their rates are at least triple or quadruple the rate that DSA offers.Yes, based on the size of the loan, Fundbox may charge you anywhere from 5-12% over the course of a 84 day loan.
Term LimitNo, DSA Factors has no problem working with extended terms.Yes, PayPal requires you to pay back 10% of the loan every 90 days, with the full amount due in 540 days.Yes, if payment has not been received after 90 days, you are required to pay back BlueVine.Yes, you must pay off the loan in 12 weekly installments.
Collections OutsourcingYes, DSA Factors handles all of your collection work.No, your customers must make payments through PayPal, but PayPal does not help with collections.No, your customers are required to make payments to a BlueVine drop box or bank account, however BlueVine does not help you collect.No, Fundbox does not handle collections for you, it is strictly a loan that you need to pay back.
Insure Your ReceivablesYes, with DSA's non-recourse factoring your invoices are insured against non-payment.No, PayPal only does payment processing for you.No, if an invoice has not been paid after 90 days of being funded for it, you are required to pay back BlueVine.No, Fundbox is strictly a loan that must be paid back in 12 weekly installments.
Choose Which Invoices You FactorYes, DSA Factors does not require you to factor all of your receivables.No, a percentage of all payments made through PayPal will be applied towards your loan.Yes, you can choose which invoices you want to get funded on.Yes, however there is a $100 minimum in order to get funded for an invoice.
Minimum Volume RequirementNo, at DSA Factors you are not required to factor a certain amount, and there are no annual fees.Yes, PayPal requires you to pay back 10% of the loan every 90 days if you aren't doing enough volume.No, BlueVine does not require you to fund a minimum amount each year.No, Fundbox does not require you to draw a minimum amount each year, however, they will not fund you if an invoice is worth less than $100.
Long Term CommitmentNo, with DSA Factors you can stop factoring at any time, but since many of our clients have been with us for over 20 years, we don't think that you will want to stop.No, once your loan with PayPal is paid off you can start looking for alternative sources of financing.No, BlueVine allows you to stop drawing on your line of credit at any time, but you will need to pay them back for any invoices that they have not received payment on.No, once you have paid off your loan with Fundbox, you are free to pursue other financing options.
Charge Payment Processing FeesNo, DSA will never charge you for processing a payment.Yes, you are required to accept payments through PayPal and pay their payment processing fees.No, although BlueVine will funnel all payments into their account without your customers knowing that BlueVine is receiving the payment.N/A, Fundbox does not process payments.
Available TechnologyDSA offers its clients an online portal where they can get automatic approvals, view agers, remittance reports, and other reports in real time. Your customers may also go online to make payments.With PayPal you get a loan online and customers make payments online.BlueVine requires the use of Quickbooks or similar software to get funded.Fundbox requires the use of Quickbooks or similar software to get funded.
Good Old Fashioned ServiceAs a family owned and operated business, you can call DSA at any time and speak with a principal who can come up with creative solutions to help grow your business.PayPal doesn't even list a phone number on their web site.BlueVine may have a phone number, but it is doubtful that you will be able to speak to anyone who can actually help you.Fundbox may have a phone number, but it is doubtful that you will be able to speak to anyone who can actually help you.

As you can see, traditional accounts receivable factoring with DSA Factors offers all of the benefits that the fintech companies offer, along with many more.  You still get an online portal where you can efficiently do business and your customers can make online payments, but you also can pick up a phone and speak with one of our principals at any time.  As a result, we can come up with creative solutions for your business that might not fit into a fintech company’s software, such as purchase order financing.  So if you are looking for ways to finance your business, go with a time-tested method that works, accounts receivable factoring.  Give DSA Factors a call today at 773-248-9000 and we can be funding you in as little as 24 hours.

Most Redecorating Projects Take 2-3 Months

Shopping for Living Room FurnitureMost consumers take their time shopping for furniture

When it comes to redecorating an entire room, most homeowners take their time to get it right. Nearly two-thirds of homeowners will spend at least 2 months to redecorate a living room or master bedroom. Nearly a quarter of homeowners will spend 6 months or more to redecorate a living room, while a fifth will spend 6 months or more to redecorate a master bedroom. What this means is that consumers are taking their time to research available options when they are purchasing new furniture.

Of course this still leaves a little over a third of all shoppers making a quick decision. A quarter of consumers will spend 3-4 weeks shopping for furniture. Another 10% will spend 1-2 weeks shopping. But only 3% of consumers are impulse shoppers and will purchase furniture in less than one week.

Brick and mortar is still the first place to shop

Despite the growing influence of eCommerce, brick and mortar shops are still the most popular place to look for new furniture. Four in five consumers will do some in-store shopping when picking out new furniture for a living room, and that number improves to five in six when shopping for a new master bedroom set.

However, just because consumers are still going to furniture stores, it doesn’t mean that they still aren’t doing research online as well.  Three quarters of consumers will visit retailer websites, two-thirds will do Goggle searches, while over half will use Pintrest and visit blogs. The other major online source for furniture shopping is reading reviews which is something nearly half of consumers will do.

You may be surprised to find out that nearly 40% of consumers will still do their research by reading magazine or newspaper articles, but only 15% of consumers will pay attention to ads in these sources. This is still better than online ads which only appeal to 10% of consumers. Of course word of mouth is another way that people shop for furniture, over a third of consumers will get recommendations from their family and friends. Instagram is another option that is used by approximately 15% of consumers.

Then there are the less popular forms of media. Only 8% of consumers watch product videos. Less than 5% of consumers will use Facebook while shopping for furniture. Twitter appeals to less than 1% of all consumers. Of course the most shocking numbers come from television commercials, only 2-3% of consumers are influenced by what they see on TV.

How much are consumers willing to spend on new furniture?

When it is all said and done, the average consumer will spend $2200 on new living room furniture and $1375 on a new master bedroom set. Generation Xers tend to spend the most money of any generation, spending $3500 on a living room and $2000 on a master bedroom. Baby Boomers come next, on average they will spend $3000 on a living room and $2000 on a master bedroom. Millennials will only spend $2000 on a living room and $1250 on a master bedroom.

Of course more important than the age of the consumer is their income level. For families making less than $50,000 a year, the average spent on a new living room is $1400 and it is $1000 for a master bedroom. Those making between $50,000 and $100,000 a year will spend $2500 on a living room and $2000 on a master bedroom. For those with income levels above $100,000, on average they will spend $4000 for new living room furniture, but still only $2000 for a new master bedroom.

All of these prices are strictly for furniture only and do not take into account the cost of accessories, rugs, lighting, wall decor or bedding.

What does this mean for the furniture industry?

Clearly purchasing new furniture is not a decision that consumers take lightly, after all, it will cost at least $1000, if not much more, just to furnish a single room. As a result, furniture manufacturers need to make sure that their product is visible and unfortunately advertising is not a very good way of doing it. The most important thing you can do as a furniture manufacturer is make sure that your furniture is on display in a large number of showrooms as well as readily available from a large number of online retailers. Other options include posting images of room ideas featuring your furniture on Pintrest and getting designers, writers, and bloggers to showcase your furniture in articles both in print and online.

Of course doing all of this can take a lot of time, and if you are spending most if your time performing credit checks and making collection cards it can be very hard to get this important work done that can lead to higher sales volumes. Why not give DSA Factors a call today at 773-248-9000 and outsource your accounts receivable to seasoned professionals so that you have more time to make your product visible. As an added benefit, with accounts receivable factoring you also get improved cash flow and insurance on your receivables. With over 60 years in the furniture industry and over 30 years providing accounts receivable factoring, DSA Factors has the experience and knowledge you need to help grow your business.

Furniture Buying Trends

Shopping for FurnitureA lot goes into buying new furniture for the home, after all, furniture is something that has a major impact on the look and comfort of your home and is something that you expect to last for many years. As a result, buying furniture requires a lot of research and a lot of shopping, it isn’t like picking up a gallon of milk at a convenience store. On average consumers will spend 3-4 weeks researching furniture, and purchase from a wide variety of retailers. Typically consumers will spend a lot more time researching upholstery than they do case goods, and they are much less likely to purchase upholstery from an online source.

Consumer Research Patterns

Upholstery

When it comes to upholstery, just over a third of consumers will make a purchase in 2 weeks or less.  A quarter of consumers spend 3-4 weeks researching options.  One fifth of consumers will take 5-9 weeks to make a decision, and another fifth require 10 weeks or more.  This research is done both online and in stores.  Six in ten consumers will visit stores while looking for a new sofa or chair, and three quarters of consumers will do their research online.  However, given how important it is to do research online, 45% of consumers say that they will never purchase a couch from a web site.

Case Goods

Case goods have a slightly shorter research period with nearly half of all consumers making a decision in 2 weeks or less.  Nearly a quarter of consumers will spend 3-4 weeks doing research, while three in ten consumers will spend 5 weeks or more.  Those shopping for a new dining room set or bedroom set not only do their research faster, but also do less research than those shopping for a new couch.  About seven in ten will do their research online, and just over half will do their shopping in stores.  Consumers shopping for case goods are also less averse to buying online with only 21% saying they would never purchase a bedroom set or dining room set from an online source.

Where Consumers Purchase their Furniture

Of course, at the end of the research process, consumers will eventually purchase a new piece of furniture for their home, and just like with the research, who they buy it from depends on if they are shopping for upholstery or case goods.

Upholstery

For upholstery the most popular retailers to buy from are lifestyle furniture stores, such as RH, IKEA, Crate and Barrel, and Pottery Barn, as well as traditional furniture stores.  Both lifestyle and traditional furniture stores receive business from nearly three in ten consumers.  Just over two in ten will purchase a used couch or chair, which can come from any source including second-hand stores and garage sales.  Only 7% of consumers will wind up buying a couch from an online retailer.

Case Goods

For case goods the most popular option is used furniture.  Nearly four in ten consumers will buy something used, and again from a wide variety of sources such as second-hand stores, flea markets, thrift shops, antique shops, as well as from garage sales both online and on the street, and auctions.  Another three in ten consumers prefer lifestyle furniture stores when purchasing a new bedroom set or dinette set.  Only 12% of consumers will make their purchase at a traditional furniture store.  While consumers may be less averse to purchasing case goods online than they are with upholstery, still only 7% of consumers will make their purchase from an online retailer.

What’s Next for the Furniture Industry?

Purchasing furniture is clearly a major decision for most consumers, and they may put just as much time and effort into buying furniture as they would put into buying a car or even a house.  As a result, it is important that manufacturers make sure that their product is visible to consumers while they are doing their research. In the same way that you wouldn’t buy a car without doing a test drive, or buy a house without getting a tour, consumers won’t buy new furniture without sitting down on it first. While online sales may not account for much volume, an online presence is still very important if you are trying to sell your product.

Car manufacturers and dealerships all offer excellent online sources for viewing features, options, and pricing for consumers buying a car. There are also a handful of web sites that connect to MLS for those looking to move to a new home, plus realtors tend to have excellent online tools as well.  However, when it comes to furniture, there typically isn’t much to look at on the web beyond customer reviews on Amazon.

With online research becoming increasingly important, if you do not have an excellent web page that features your product lines, combined with SEO to make your web page show up in Google searches, you are potentially missing out on a lot of sales.  Give DSA Factors a call today at 773-248-9000 to find out how we can help you grow your business.  While we may not be able to develop a web page for you, we can provide you with the cash flow you need through accounts receivable factoring to grow your business.  The funds you receive from us are yours to keep and can be spent in any way you want, from developing an online presence to attending trade shows to a new marketing campaign, or anything else. Call us today and find out just how easy accounts receivable factoring can be.

Smartphones in a Smart Home

Smart HomeThere is no doubt that technology has changed the way we communicate and the way we shop, but smart technologies are starting to become a major part of the way we live as more and more household products become connected with smart technologies. In the same way that smartphones have had an impact on how we stay connected, soon our furniture and appliances will be connected as well.

Nearly three quarters of American adults own a smartphone, and over two thirds of US households have high speed internet connections according to Pew Research Center.  The iPhone alone has more than 75 million users in the US.

While the number of smartphone users and internet users may not come as too much of a surprise, you might be surprised by just how many of the products we find in our home are now connected to our smartphones.  The most popular item in the house connected to the smartphone is the TV.  Whether you are using the smartphone as a remote to change the channel, to record a show at home when you are at work, or to stream video off the internet, TVs offer far and away the most smart features of any product in the home.  65% of households with TVs have at least one TV that is connected to the internet.

After TVs, home security systems come next in connectivity, allowing you to monitor your home from your office, a ballgame, or even when your on vacation thousands of miles away.  Next comes audio systems which may use bluetooth technology to play music from your phone or stream music from Pandora or other popular apps.

The other most popular connected products are garage doors, indoor lights, thermostats, locks on doors, outside lights, detectors (such as smoke or carbon monoxide), and kitchen appliances.

The reasoning behind owning connected devices varies.  When it comes to TV and audio, certainly convenience plays a major factor in why consumers would want a connected product.  For home security and smoke detectors it less about convenience and more about safety.  In the case of a connected thermostat the goal might be cost savings.  But of course the most important thing to look at regardless of what product you are considering connecting is that it’s just fun!

According to HGTV, almost half of all consumers find it extremely important to have products in their home that utilize smart technologies, and over half of all homeowners would consider making their home a smart home in order to increase its value and make it more appealing to potential buyers.  It should also come as no surprise that Millennials are 10 times more likely to make a smart home improvement than any other generation.

Despite the popularity of being connected, the furniture industry has lagged behind in integrating smart technologies into their products.  However, by offering smart technologies furniture companies have a lot to gain.  Over half of consumers under the age of 50, and nearly 3 in 10 consumers over the age of 50, would be interested in a couch that offers a smartphone docking station so that they can charge their phones while watching TV.  Over a third of consumers regardless of age would appreciate a couch that has integrated reading lights.  For those under the age of 50, one third would like a couch with integrated speakers, and a little more than a quarter would like bluetooth connectivity so that they can control motion features from their smartphone or tablet.

There is no doubt that technology is changing how we live our lives.  While many companies have been focusing a lot on eCommerce and social media, it is also important that they look beyond marketing and expand technology into the products themselves.

Whether you are looking to integrate smart technologies into your current products, or you are a new start-up that just invented pants with a smartphone controlled fly, it is important that you have the funds to not only develop your product, but to keep up with increased sales volume.  While many companies look for SBA loans or investors, with accounts receivable factoring you can get the cash flow you need without taking on any new debt or giving up any portion of your company.  Call DSA Factors today at 773-248-9000 and find out just how easy it can be to get the funds you need to grow your business.

Most Consumers Shop Online for Furniture

Online ShoppingAs furniture companies are gearing up for the Las Vegas Market which opens this Sunday, Furniture Today reported that according to a recent survey seven out of ten consumers shop for furniture online.  But don’t worry, the key word to keep in mind here as you are busy preparing for the Las Vegas Market is “shop”.  The vast majority, just over seven in ten, still buy their furniture from traditional brick and mortar stores.  Nevertheless, it is very important that you have your merchandise available both at brick and mortar stores as well as online.

What this means is that approximately 30% of consumers still shop and buy their furniture at traditional brick and mortar stores.  Another 40% will shop and do price comparisons online, but still purchase their furniture from a brick and mortar store.  These numbers do vary slightly based on the age of the consumer, but this shouldn’t come as much of a surprise.  It was found that only 24% of Millennials, ages 18 to 35, do their shopping and buying all at brick and mortar locations, while 47% will shop online but purchase at a brick and mortar location.  For Baby Boomers, ages 52 to 70, 38% will both shop and buy at brick and mortar stores, while only 36% shop online but buy from a brick and mortar store.  Generation X, ages 36 to 51, falls right in the middle with 31% both shopping and buying at brick and mortar stores, while 40% will shop online but make their purchase at a brick and mortar location.

Of course this still leaves three in ten consumers purchasing their furniture online.  About 12% of consumers will shop in traditional brick and mortar stores, but then purchase their furniture from an online store.  While 16% of consumers will do all their shopping as well purchasing from online retailers.  What is interesting is that age has no impact on how you shop for furniture that you buy online.  These percentages don’t change much when you break them out for Millennials, Generation X, and Baby Boomers.

Another important thing to consider about online shoppers is how they do their shopping.  The biggest change comes from where they do it.  In 2010 only 5% of internet users used a mobile device to do their shopping, this number has steadily risen and in 2015 over half of online shoppers are using mobile devices.  Then there is how they do their shopping.  It was found that eight in ten internet users will use the internet to compare prices before they make their purchase.  Finally, there are the sites that internet users visit when doing their online shopping.  56% of shoppers will visit online-only retailers, 51% of shoppers will visit stores that also have a brick and mortar counterpart, 35% will visit the manufacturer’s site, 16% will use deal comparison sites such as Google Shopping, while only 10% will visit social media sites.

It is important as a furniture manufacturer that your furniture is available both at brick and mortar and online stores, and with over a third of internet users visiting manufacturer sites, you too need a strong online presence.  This can be difficult to do if you are too busy making collection calls and have all of your money tied up in receivables.  Let DSA Factors help, we have been factoring for the furniture industry for 30 years.  Give us a call today at 773-248-9000 and if you’ll be at the Las Vegas Market keep a look out for Ben as he will be visiting the market and will be able to answer questions you may have about our accounts receivable factoring program.

Online Furniture Sales are Booming

Online Furniture SalesOnline furniture sales for 2014 reached $9.7 billion, an over 14% increase from 2013’s $8.5 billion according to Furniture Today.  Leading the pack were Amazon who experienced 19.5% growth, Overstock with 14.8%, Wayfair with an amazing 44% sales growth, and Zulily with a whopping 72.% sales growth over 2013.  All four of the companies had sales volumes in the billions.  However, overall furniture sales only increased by 3% over this last year.  This online sales growth can be accredited to the fact that 8 out of 10 consumers in the US have bought furniture or bedding online in the past year.

Now it may not surprise you that most of the people buying online were young, but you might be surprised by how affluent online shoppers are.  Well over half of the households that bought bedding online this past year were under the age of 35 and make over $75,000 a year.  22% of households were under the age of 25, with 34% of them between the ages of 25 and 34.  When it comes to household income, 32% of households that bought bedding online make between $75,000 and $100,000, with 12% making between $100,000 and $150,000, and another 12% making over $150,000.  This might explain why only 59% of consumers agree that online retailers carry affordable furniture.

To further explain these numbers, 61% of online furniture consumers own their house, and 59% have a full time job.  When it comes to education, 33% of consumers hold a bachelor’s degree with another 20% holding a master’s degree or higher.

The average consumer will visit five different web sites when shopping for furniture online.  However, only 56% of shoppers will start their search online, the rest still start their furniture search in more traditional brick and mortar stores.  The main reasons why consumers are ultimately buying online is because of the large product selection available through online retailers, and online retailers provide them with design ideas.  Many of these retailers will help out consumers with design ideas by maintaining active blogs.

If you aren’t selling your merchandise to online retailers you are missing out on a lot of business.  Let DSA Factors help you by factoring your online retailer accounts.  We have lots of experience working with Amazon, Overstock, Wayfair, and Zulily, as well as with One Kings Lane, Hayneedle, Gilt, Hautelook, and many more.  Give us a call today at 773-248-9000, don’t let these sales opportunities slip away.