No business owner wants to face a downward business trend. When revenue falls difficult decisions have to be made. Do you need to sell equipment? Do you have to let employees go? Is your business going to survive?

When you’re facing a downturn in your business you need to ask some tough questions. You need to determine the cause of the problem. Then, and only then, formulate a plan to reverse the trend, a plan that needs to include a way to keep your business running until you’re able to recover.

Facing The Difficult Questions
Let’s have the conversation that you probably don’t want to have. What is causing this downturn and is it reversible? Look at what’s going on in the economy, the industry in general and within your specific customer base. Identify one or two main factors that are hurting your business.

Take an objective look at your own company. Is there something that your company has done to drive away customers? Even if you’ve done everything right, is there something to improve to bring in new business?

Keeping Your Business Running
Having a plan in place is all well and good, but it takes some time to see results and reverse the negative trend. In the meantime, you need to be able to keep your business running. You need cash in hand to take care of day-to-day expenses.

There is a wide array of financial products on the market that infuse cash into your business. That doesn’t mean that all are appropriate for this type of situation. In fact, most business loans cost you more time and money than they’re worth.

What you need is a funding source that is designed to provide cash for short-term needs. You don’t need a big term loan. You’re not buying a piece of real estate or new equipment. You just need to pay employees and keep the lights on.

A great financial product that fits this bill is factoring. A good factoring program often means the difference between the success and failure of your business.

How A Factoring Program Works
Factoring is a type of business financing that is specifically geared for improving cash flow. There are a few different types of factoring, but all work essentially the same way. With factoring, you assign your invoices to a factoring company. The factoring company provides you with a cash advance against those invoices. When the invoices are paid, you receive the balance of the invoice minus the fee charged by the factor.

This arrangement gives you the flexibility you need to make payroll, keep important vendors current and pay for anything else needed to keep your business running. A factoring program provides the cash needed to make it through a rough patch in your business.

Light At The End Of The Tunnel
A downward trend doesn’t mean the end of your business by any means. When the problem is directly addressed, the trend is usually reversible. Where most run into problems is the trough between the decline and the reversal.

Don’t neglect this part of the process. Be acutely aware of the challenges your business is going to face as you balance ongoing expenses with the reinvestment needed to reverse the trend. Be proactive and plan your cash needs in advance.

A factoring program is a great way to cover those cash needs. It provides flexibility unlike any other type of financing. It allows you to get cash immediately after invoicing. When you’re focusing on your business’ recovery, the last thing you need is to spend time and energy worrying about is collections. 

With proper assessment of the problem, a plan to address the problem and funding to keep the business running, a downward trend is reversible.

“When obstacles arise, you change your direction to reach your goal, you do not change your decision to get there.“ – Zig Ziglar

Fast A/R Funding specializes in helping small businesses bridge the cash flow gap with factoring. Download our Factoring 101 Guide, or call 888.833.2286 to speak with one of our small business finance consultants.