As a business owner, or advisor, it is important to consider various alternatives and oftentimes the most obvious path is the one pursued. Many times when a company is in need of cash flow the immediate thought is to pursue a credit line from a Bank or other financial institution. The first impression is to “get a loan” and use Accounts Receivable as collateral. This may be a possible solution; however, there may be an easier way and that is to “obtain factoring”. Let’s look at the reasons it may be easier and more efficient.
When a business owner considers the need for a loan, many times the initial thought process begins something like this: “I need money for ____. How much do I need? How fast do I need it? Can I qualify for the amount I need? Do I want to go through the process of finding out if I’m even approved, little less the time it takes to actually get the money? How much is it going to cost me?”
Factoring Loan: Finance Made Easy
Businesses need funding to survive. You have to have cash to purchase inventory, pay employees and cover overhead. I have, unfortunately, seen many businesses struggle due to inadequate funding. When cash is tight for an extended period of time, there comes a point where you, as a business owner, have to make tough decisions about your business.
When most business owners are looking at short term business loans they are only looking for a source of business funding. They don’t stop to consider what the finance company provides outside of additional capital.
Most people see factoring as nothing more than an accounts receivable loan. Business owners typically look to factoring to have more control over their cash flow. This gives them the funds they need to keep their business running. It also relieves much of the stress that comes with trying to coordinate the timing of payables and cash receipts.
Small business owners all around, regardless of the industry you’re in should be conscious of how important cash flow is.
Cash flow financing is a great way to provide business funding. It fills the gap between the time you invoice and the time that you collect payment. This gap is what causes so many problems for business owners.
Cash flow financing allows you to buy materials for the next job, make payroll and pay your bills without worrying if your customer really put the check in the mail last Friday. It gives your business flexibility and agility while relieving your stress as a business owner.
Quick and flexible funding is of paramount importance in running your business. Whether this is accomplished though a large cash reserve or via outside financing is unimportant. The key is having access to funds to seize opportunity when it arises.
Tags: Business Loans
Future of Online Business Funding
Mario Andretti once said, “If everything
seems under control, you're not going fast enough.” Speed may be the primary metric
we use to judge a race car, but you have to look at more than that when evaluating fast business loans. Bob’s Loan Shack on the corner may be able to get cash in your hands quicker than anyone else, but do you really want to trust your company to Bob’s Loan Shack?