Submitted by: Jack Wilson, Owner & Principal, Liquid Capital

When the Institute of Development for African-American Youth (IDAAY), months behind on its bills and facing lengthy funding delays, found itself struggling to meet payroll, founder and Executive Director Archye Leacock knew something had to be done. So he turned to Jack Wilson, and Liquid Capital’s factoring services, for help.

Wilson knows firsthand the struggles that small business and nonprofits face when dealing with limited finances. A former AT&T executive with decades of business experience, he launched Pennsylvania’s first Liquid Capital – the only franchised full-service factoring company – in July, and before he knew it, he was helping one local nonprofit get back on its feet.

“Nonprofits face the same challenges as all businesses when it comes to finances, but because they may not always have access to standard lines of credit, they struggle with meeting their financial needs,” Wilson says. “That’s where factoring can help.

Factoring is a specialized financial service that helps small- and medium-size businesses grow and succeed by providing immediate financing secured by credit-worthy account receivables. In a nutshell, Liquid Capital purchases credit-worthy invoices from its clients and collects the money owed by its clients’ customers. Once goods and services are delivered, Liquid Capital advances clients 75 to 85 percent of the invoice upfront. Upon collection, Liquid Capital pays the remainder of the invoice amount, minus its fee.

Like many nonprofits, IDAAY is vulnerable to economic hardship because it relies on external factors – funding from local and state governments, for example – to determine its income. When those sources face their own financial difficulties, nonprofits are the first to have their funding delayed. This is especially true at the end of governmental fiscal years. During this period, governments must pay their own bills before helping other organizations. This means payments which are usually supplied 25-35 days after contract submission are extended to 90-95 days. Although their funding is delayed, nonprofits are still expected to provide se