Happy New Year! Welcome to 2013. If you’re like most people, you probably have your New Year’s resolutions ready to go. Maybe you want to get in better shape or read a new book each month or quit a bad habit. Those are all admirable resolutions, but have you thought about setting goals for your business this year?

When you think of making a list of resolutions for your business, what comes to mind? I’m sure you would love to add new clients, increase sales or become more efficient. Maybe you want to bring on additional employees or purchase a new piece of equipment?

There is no doubt that each of these would be great for your business to achieve and doing so should be simple enough. It’s simply a matter of breaking each goal into bite-sized milestones and then asking a few questions.

Do you have the infrastructure to handle more volume? Can your vendors supply your need for additional raw materials? Do you have adequate business funding in place to support all of this?

Set A Business Funding Resolution

The most precise, logical, well-planned goals don’t mean a thing if you don’t have the finances to fund them. Businesses cannot run, much less grow, if they don’t have adequate capital.

Capital is a function of sales. Assuming your company is profitable, capital increases as sales increase; however, the timing of that capital is tricky. There is an element of timing between invoicing and collecting that is difficult to predict.

You have to have enough of a cash buffer to pay employees, pay vendors and keep the lights on while waiting on payment from your customers.

There are two ways to address this issue. You either have to have enough cash in the bank to fund all of this out of your pocket or use outside financing.

The Best Business Funding Option To Maintain Cash Flow

There is a wide array of business funding options; however, receivables financing is specifically geared to improve cash flow.

Cash flow is generally counter-cyclical to accounts receivable. In periods where AR is increasing, cash flow decreases. When you use financing that is based on your AR, availability increases in conjunction with increasing AR. That means that in periods when cash flow is tightest, availability is highest.

Drilling Down Into Receivables Financing

A subcategory for this type of financing is small business factoring. Factoring allows you to get cash when you invoice, rather than waiting for your customers to pay. It removes the biggest unknown in cash flow planning.

The financing company, known as the factor, advances funds based on the dollar amount of an invoice. If you invoice your customer for $10,000 and your advance rate is 80%, the factor would advance $8,000 as soon as you invoice. When the invoice is paid, you would receive the remaining $2,000, less the fee charged by the factor.

Receivables factoring is one of the most flexible forms of financing and is specifically designed for small and medium-sized businesses.

• It’s very flexible -- factor one or all of your invoices.
• Fees are only based on the invoices you finance. You don’t pay for funds you don’t need.
• The seasoned experts at the factoring company provide you with risk assessment and credit monitoring on your customer base.

Don’t Let Cash Flow Restrictions Limit Your Business

Don’t go into 2013 without a solid plan in place to fund your business. Don’t miss out on opportunities to grow your business, reduce costs and improve profitability because you didn’t have the business funding on hand to take advantage of opportunity when it arose.

2013 is full of promise and potential. Make sure you have a solid financial infrastructure in place to provide the cash flow needed to meet and exceed your goals this year.

Fast A/R Funding specializes in helping small businesses bridge the cash flow gap with factoring. Get started on your cash flow resolution today by clicking the button below. Or, if you prefer, call 888.833.2286 to speak with one of our small business finance consultants on the phone.