It’s that time of the year again -- the season of giving. No doubt you’ve made your list and are dreading fighting the crowds to find the perfect gifts for friends and family, but have you considered the gift for your company this year?
Companies thrive when they have enough cash to meet payables, take advantage of year-end discounts and grow. Making sure you have adequate business funding is one of the best things you should do for your company as this year comes to a close.
Benefits Of Business Funding
Cash is the lifeblood of any business. Without cash you can’t pay vendors, you can’t make payroll and you can’t do any marketing to bring new customers in the door.
A business may be successful on paper, but still be cash poor. Cash poor businesses always struggle no matter how great sales may be.
When you have sufficient funding for your business, you have the flexibility to take advantage of opportunities that you would otherwise miss out on.
How much better would your business be if you could:
- Take advantage of early-pay discounts.
- Ramp up your marketing just prior to the busy season.
- Buy supplies or inventory in bulk at a discount.
- Make year-end purchases as a part of your tax planning.
Sufficient cash flow lets you focus on the issues important to the growth and success of your business.
Finding The Right Funding For Your Business
Businesses are financed in a number of ways. The most appropriate form of financing depends on the size of your business, your industry, structure, customer quality, and in some cases your personal credit.
Since we’re talking about financing to provide working capital -- the dollars you use for day-to-day operations -- it’s best to focus on receivables financing. Other forms of business funding such as equity injection or some type of a term loan are used for working capital, but they don’t have as much flexibility or the growth potential that receivables financing does.
Account Receivable Financing
Financing based on your accounts receivable is perfect for working capital. As your sales grow, your financing grows with you. The loan is then repaid as your customers pay their invoices. It’s a very clean, straightforward way of financing your business.
It also saves you from paying for funds that you don’t immediately need. It simply doesn’t make sense to get a big term loan and have that cash just sit in the bank while you’re paying interest on it.
Financing needs tend to follow sales. It makes sense to finance your business with a financial product that follows that model.
Small Business Factoring
A more specific form of receivables financing is factoring. It provides a tremendous amount of flexibility, allowing you to choose which invoices you want to finance and which you would like to keep in-house.
A factor purchases your invoice at a discount, which gives you cash immediately. When the invoice is paid, you get the remainder of the invoice less the fee that the factor charges.
It’s perfect for small businesses that need a little extra cash from time to time. It’s also great for businesses that don’t want to worry about assessing the credit quality of customers or deal with collecting invoices.
Factoring is an easy way to get your business the cash it needs in order to be successful.
As the holiday season approaches and cash gets tight, consider how your company could benefit from additional business funding. Assess the specific needs of your business to see if factoring may be right for you.
Fast A/R Funding specializes in helping small businesses bridge the cash flow gap with factoring. Schedule a demo below, or call 888.833.2286 to speak with one of our small business finance consultants.
