Did you glance twice at this title? Yes, we are actually going to give you three and a half reasons for why you should consider invoice funding to garner additional cash flow for your business. Most tip sheets available on the internet give you five, seven or even 10 great reasons why you should do something. When
it comes to factoring online there are so many reasons why it makes sense, but if you want the top few, make sure you skim through the ones below, especially the “third and a half” reason. This reason alone drives home the importance of accounts receivable factoring.

When it comes to managing the cash flow in your business, you don’t need to look much past the next three and a half important items to know you don’t want to get stuck short on cash. 

First, pay your employees.
Employees are the lifeblood of your company. Without them, everything grinds to a halt. It is important to always maintain excellent communication and trust with your employees. Missing a payroll has disastrous effects on employee morale that are often beyond repair. Even the most loyal employees have loyalties above your company, including themselves and their own families. Don’t assume and never expect your employees to put your company affairs ahead of their own individual priorities. If you miss a payroll, you are doing this to them as they have financial obligations of their own.

Second, pay your taxes.
Many companies think that paying the government or respective taxing authority is not that critical, that catching up later with some small penalties is feasible. While many taxing authorities do provide a bit of leniency, they ultimately wield a very heavy hand and have the ability to abruptly confiscate cash that is in your business bank accounts if you are severely behind on making tax payments. Business owners often overlook their ability to “talk” to the taxing authority and come up with a payment plan that keeps their business going. You are better off if you leave your ego at the door and open a direct conversation to make needed payments.

Third, pay your suppliers/vendors.
When your cash flow gets tight, it seems like an easy out to just slow pay your suppliers and vendors. The problem is you’re creating a cascading effect where the ripple effect severely tarnishes your business’ reputation. If you’re dealing with small companies, your slow payments could hurt their ability to pay their employees or taxes! If you’re dealing with a large company, your slow payments may cause them to extend less credit to you.

Third and a half -- Peace of mind and ability to sleep at night!
While I’m only ascribing a ½ for this reason, I believe it is the most important reason to have extra cash readily available in your business checking account. The amount of operating and strategic decisions a business owner must make each day, week and month is mind-numbing and a source of stress. Most decisions typically have an economic effect and have some impact on cash. If you have cash around, you’re more likely to be objective and make a business decision based on sound judgment. The alternative is desperation, and many businesses have made shortsighted decisions out of desperation that have had devastating results. So, keep extra cash around and have the ability to access cash if/when you need it. Sleep well at night knowing you are prepared for a rainy day or a day where an opportunity arises because you were ready with cash and in a strong position to succeed.

So, when it comes to considering the benefits of accounts receivable factoring, you really don’t have to look further than the fact that 1) you need to have cash available for making critical business payments and 2) invoice funding by factoring online is an excellent solution to accomplish this! 

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.