The initial question in this blog asks, “Is cash flow financing the way to operate?” I really don’t know that there’s a right or wrong answer. Now before you skip over this blog thinking, “my business is in good shape, I really don’t need any sort of financing,” read on a little further.

As a business owner, you really need to look at how you operate your business. There are a few questions you need to ask yourself:

• Does your business always flow cash well?
• Do your receivables always turn efficiently?
• Do you always turn your payables efficiently?
• Do you have multiple operating cycles?

The keyword in the above list is ALWAYS. In the all the years I’ve been in the commercial finance industry, I have yet to come across a company that doesn’t need a little help from time to time.

You may be the type of business owner or manager that manages cash well, stays on top of collecting receivables and keeps a tight rein on expenses. You may be the type that’s always planning ahead to ensure that cash needs are always met (i.e. payroll, expenses).

Now that you’ve read through my list up there though, you may realize that there are times where cash flow gets a little tight. Sometimes you have that one large order that isn’t paid as fast as you would like, and you do in fact have multiple operating cycles. Depending on the timing of those cycles, cash flow is somewhat cramped. If this is the case, cash flow financing may be something for you to consider. Fast business loans are an easy and convenient way to have access to the cash you need to ensure your business' cash needs are always met.

If you’re reading this thinking, “things tend to get tight at times, but I have cash reserves, I plan ahead for when things get tight,” that doesn’t necessarily mean you shouldn’t consider some sort of cash flow financing or fast business loan. There are times where things come up that eat up cash reserves:

• Inventory replenishment
• New equipment
• Unexpected equipment repair
• Slow turn on receivables

As a result, cash flow tightens up and you find yourself struggling to make payroll, pay payables and keep any other debt obligations current.

In the years I’ve spent in the commercial finance industry, I’ve seen how cash flow financing benefits small businesses. 

Types of Fast Business Loans:

There are several kinds of fast business loans, which include asset-based revolving lines of credit and merchant loans. One of the more common types of fast business loans is factoring. Factoring is a great way to supplement cash flow by selling the receivables of your creditworthy customers to a third party known as a factor. There is cost for such services, however it is a small price to pay to make sure you:

• Make payroll.
• Keep payables current.
• Make sure you have the inventory necessary to conduct business.

Conveniences:

Depending on the company you choose to factor invoices with, there are many conveniences to a factoring line. Some of which include:

• Easy and relatively quick to establish.
• In some cases you don’t have to factor every invoice. If you have a large order that may have extended terms, you may just want to factor the invoice related to that order.
• Everything is done online, virtually paperless.

So, is cash flow financing the way to operate? Are you a business owner or manager who does a good job at managing cash flow, and are always planning? Do you always ensure your company’s cash needs are met? Cash flow financing may be a good thing to look into, for an added level of security.

Fast A/R Funding specializes in helping small businesses bridge the cash flow gap with factoring. Download our informative “Factoring 101” guide, or call 888.833.2286 to speak with one of our small business finance consultants.