We have spent many years now in the commercial finance industry, helping countless small businesses achieve cash flow success. During this time we have picked up a few things along the way, which are beneficial to helping small businesses achieve success. 

It’s of the upmost importance to earn solid revenues, strong margins and have a good bottom line for your business to be a success. Part of making sure all of this is a reality is making sure your company has good cash flow management:

• Adequately manage receivables
• Keep vendors happy
• Make Friday payroll 

The root of cash flow management comes from your operating cycle, which includes converting your billed receivables into cash. Of course we all know that no matter how efficiently you try to collect your receivables, some businesses take 30, 60 or even 90 days to remit payment. This is where seeking out financing options comes into play. 

Here are three insider tips to help you seek out financing options to improve cash flow:

• First, while you may look to traditional bank financing for financing receivables, you may find it to be somewhat difficult to obtain this kind of financing, especially in this current economic environment. There are so many variables traditional banks look at. Some of these variables include:
  • Your company’s current financial position and cash flow 
  • Trends of your company’s financial position and cash flow 

It also takes substantially longer to get you approved and have the cash on hand needed to operate your business successfully. Typically, bank loans are long-term commitments.

• Second, you could look at bringing an angel investor in that is willing to take a chance on your company. The problem here is that you lose a piece of ownership in your company. This could result in you losing some operation control and decision-making ability.

• A third option to consider is to seek out a different kind of commercial finance institution, such as a factor. A factoring company is a third-party commercial finance company, which specializes in receivables financing.

Factoring is where you sell your accounts receivable of creditworthy customers to the third-party finance company. Advance rates vary, but are typically around 80%. Once the invoice is paid, you are able to get the remaining portion of that invoice less any fees.

It is really a great way to close the gap between when you bill an invoice and later collect the cash. You don’t have to wait 30, 60 or even 90 days to wait for an invoice to be paid. Nobody's business operates efficiently under those terms without a little help.

It also makes your cash flow planning a lot easier, because you have the cash in hand immediately. 

Depending on the company you choose to work with, getting approved is a relatively simple process and takes as little as a week.

If you’re a small business owner looking to improve your cash flow, hopefully you have found these tips helpful. Remember, CASH IS KING!

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.