In our tenure in the commercial finance industry, we’ve come across two types of business owners:

• The ones that have it together.
• The ones that don’t.

Here’s what we mean. The business owners that have it together have a good control over their business. They are able to control expenses based on their revenue and margin levels. They adequately plan their cash flow and are able to keep their vendors happy. They know what customers pay when and work hard to keep up with their receivables. Most importantly they’re not scrambling around Thursday afternoon or Friday morning trying to figure out how to make payroll. 

In addition, they have a backup plan in the event there is that one order that takes longer than usual to pay. They have sought out A/R financing from a commercial finance company or have some other revolving line of credit that is also well managed, where as soon as it’s utilized it is paid down.

Then there are some business owners who don’t have good controls and overall a poor business model.  There are some that struggle to stay on top of collections, expenses are not monitored as they should be and there is a periodic fire drill when it comes to making payroll.

Where To Turn
If there’s one piece of advice to send your way (for to the business owners who struggle to keep things organized), consider fast business loans.

Fast business loans come in many forms, but the most common, and the one that makes the most sense, is a factoring line.

Factoring is simply selling your creditworthy receivables to a third party known as a factor. Advance rates are typically around 80%. Then, once the invoice is paid you receive the remaining portion less any applicable fees.

The Truth
Really, here’s the truth behind fast business loans:

• They come in very handy when you have a cash flow crunch.
• While there is a cost, it won’t break the bank.
• Depending on the factoring company, you don’t have to factor every invoice.
• If you choose to do business with a factor rather than getting traditional bank financing then you won’t be indebted to a bank for an extended length of time.

Some Helpful Hints And Tips:
There are things you are able to do to make factoring receivables easier for you and the factoring company and minimize expenses. Here are some helpful tips when factoring receivables. 

• Factor receivables of creditworthy customers. You may find that the more creditworthy customers pay faster. Depending on the factoring company you choose, fees are based on how long they are outstanding on the aging. If the customer pays faster, that’s less in fees you have to pay.
• Calculate what your cash flow needs are and only factor invoices of your more creditworthy customers to satisfy those needs.
• Factors typically verify receivables; have a contact at the customer who is able to verify invoices.

If you’re a business owner who feels like you’re always scrambling and can’t seem to get ahead, look into a fast business loan to help with your cash flow crunch.

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.