Achievable Commercial Finance for Any Business

Posted by John Mauldin on Wed, Apr 17, 2013

Fast Business Loans You Can Get Your Hands On

Small business owners all around, regardless of the industry you’re in should be conscious of how important cash flow is.

I think when it comes down to it…….while the income statement side of your business is important because it does show how much your company is earning in terms of revenue and expenses. 

The balance sheet is even more important just simply because it shows the overall health of your company.  This is because it reflects your company’s cash position. 

Remember folks…………….CASH IS KING!

Now we all know many ways for a small business owner to get their hands on a little extra money:

  • Find an angel investor.  Be aware……you may lose some decision making control in your company.
  • Efficiently collect your receivables.  Remember the root cause of your cash flow woes is primarily due to slow turnaround on your receivables. 

 Your customers taking a month or longer can kill your cash flow even if your revenues are like wild fire.

  • Your more viable option is to seek out small business or fast business loans.  I make this recommendation just simply because there are so many options out there that can cater to your needs. 

In my time in the commercial finance industry, I’ve seen how small business loans can help a business (no matter the industry) cure cash flow problems.

Achievable Commercial Finance Options………………………….

Here’s the thing……if you’ve attempted to get traditional bank financing in the past, but you’ve been unsuccessful for whatever reason……seasonality, cash flow is inconsistent, cash position isn’t strong enough……..then maybe looking at a factoring line is right for you.

If you’re not sure what online factoring is…….then here’s a quick rundown.  Factoring is where you sell your accounts receivables relating to credit worthy customers to a third party known as a factor.  Once the invoice is paid, you get the remaining portion back less any fees.

Factoring is great just simply because it bridges the gap between when you bill an invoice the customer pays it.  It eliminates the waiting 30, 60, 90 days for your customers to pay making it incredibly difficult to run your business and plan your cash flow.

Why It’s Achievable………………………………….

I say this form of financing is achievable because in most cases what helps you getting approved for a factoring line is the credit strength of your customers. 

Here’s what I mean……. you sell your invoice to a factor.  The factor advances you whatever the specified advance rate is.  The customer will then pay the factor directly. 

This is where the credit strength of the customer comes into play.  A factor will not want to purchase receivables relating to customers who are not strong from a credit standpoint.

Some Helpful Tips:

If you decide to pursue a factoring program, here are some helpful tips when factoring invoices:

  • Consider trying to factor all of your receivables.  If you consider yourself to be someone who is  not all that organized, you’ll discover that by attempting to factor all of your receivables, you will not have any issue with getting business organized and having solid cash flow.
  • Stop extending quick pay discounts to your customers.  By factoring your receivables, you are getting the cash you need in hand. 

 In my tenure in the commercial finance industry, I’ve seen customers take advantage of the discount even if they’re paying outside of the required time frame. 

  • When you need a little help with your company’s cash flow, you may only look at factoring some of your receivables relating to your most credit worthy of customers.  There’s a chance the more credit worthy customers pay faster.  That’s fine, because, in the long run you’re minimizing your factoring costs while meeting your cash needs.

At the end of the day, if you’re looking for help with regards to cash flow.  I can’t think of a better way to supplement your cash flow than with factoring.  Good luck.

Tags: Business Loans, Accounts Receivable Factoring, Online Factoring