Authored by Phil Cohen
A stable cash flow is a key to business success. But what happens when slow-paying customers disrupt that steady stream? Invoice factoring can serve as the perfect buffer, closing the gap from your completed sale to when your invoice is finally paid. Read on to learn how invoice factoring can stabilize your cash flow without adding debt.
The situation
Does this sound like your company?
ABC Company has shown profits for the last two quarters of the year. Orders are up and their new product is taking off.
Unfortunately, ABC Company is roughly two weeks away from closing their doors. They are two months behind on their lease and are unable to satisfy creditors’ invoices for supplies. There is not enough cash to continue production of their new product, so once current inventory is exhausted they will have to cease sales.
Sales and profits are obviously important to any company’s success. However, too many business owners focus only on these numbers and ignore the most important figure: cash flow. The single line space between cash and accounts receivable may actually be a gaping chasm for the unprepared business owner.
The gap between generating sales and receiving payment is critical no matter how small it is, and successful business owners must be prepared to close it. It isn’t enough to know what is coming in and going out – you have to plan for when and, of course, how you will bridge the gap when there is a delay in payment.
If you run a company that works with other businesses and/or one that requires you to hold inventory, you may be particularly susceptible to cash flow gaps. However, you also have options to help you anticipate and close those gaps. Invoice factoring for small business (and large business!) converts your accounts receivable into immediate cash that you can use to cover expenses rather than waiting 30 days or more for your customers to pay.
Factor Finders’ nationwide network of invoice factoring experts can tailor a competitive, flexible program to help your company meet its unique goals. Turn your profits into cash today – contact us to learn more and receive a free factoring quote.