There are many reasons why it is important to have a stable capital base for operating your business. Stability offers safety in today’s volatile markets. Whether the source of your stable capital is equity investment by the owners/shareholders or whether you have some sort of commercial finance loan, the benefits of knowing you have money available at a moment’s notice gives you the flexibility you need as a business owner. 

Predictability Of Cash Available = Opportunities
Why is it so critical to have cash available? Entrepreneurs need to be nimble and take advantage of any available opportunity. Opportunities come up each week for business owners and when they are able to act on it, it positively affects the bottom line. Examples of some of these opportunities are:

• End of the month/quarter discount pricing on machinery required for your business
• Early pay discounts on accounts payable
• End of the year purchases to take advantage of tax deductions

Acquire & Maintain Good Client Relationships
As you grow your business and look to provide goods or services to large customers, many of those customers want to peek under the hood and understand the financial resources and stability of your business. Why? They do this because they want to be sure you (the vendor) have the stability to deliver on future orders and provide the level of service customary within your industry. These customers may look for or ask questions about items that often show up in your financial statements including:

• Do you have AR Financing to smooth your cash flow so you don’t get stressed if your other customers begin to pay slowly?
• Do you have equity or commitment from the business owners/shareholders to invest additional capital to support the company’s growth?
• Do you have a line of credit and, if so, how far drawn is it relative to the total size of the line?

Being able to answer their questions to their satisfaction will strengthen and deepen your client relationship.

Traditional Bank Loans Vs. Fast Business Loans
For the long-term growth of your business you may want to consider a traditional bank loan or a fast business loan. While people in the finance world typically get their feathers ruffled with moving too quickly, there are types of finance companies that make cash available to businesses quickly because the underwriting process is focused on different areas. 

• Traditional bank loan – While the borrowing rates may be attractive, attaining a traditional bank loan may take a very long time (several months) and the underwriting is primarily focused on the owner’s personal credit and the business having verifiable, historical profitability.
• AR financing is a type of commercial finance arrangement where the finance company moves very quickly and securely because it is primarily underwriting the credit of your customers, as the customers are the primary source of expected repayment. The streamlined underwriting process and fast approvals available with an invoice factoring company, coupled with your strong customers, is a winning combination and a very safe way to have stability in your business. 

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.