3 Cash Flow Gaps an Invoice Factoring Company Can Fill

Business Man Looking Down Into a CliffUnfortunately, many businesses suffer tremendously from cash flow problems. When your cash flow isn’t steady, you are more likely to experience a cash flow gap. This gap forces your business to run lean with not a lot of funds left for much else other than operations.

The cash flow gap can typically have a negative impact on your business. Without on time payment from your clients, you don’t have the funds you need to pay off vendors, pay employees, complete jobs on time, and much more.

Partnering with an Invoice Factoring Company to Close Common Cash Flow Gaps

These are factors that no business owner wants to face. Thankfully, there’s a solution. Partnering with an invoice factoring company will allow your business to strengthen cash flow and steadily close the cash flow gap. Here’s three of the most common cash flow gap issues that an invoice factoring company can help fill.

1. Late Payments from Clients

Late paying clients are your cash flow’s worst nightmare. Without on time payment from clients, your business will suffer tremendously. You have already fulfilled the order for the client, which costed your business major funds. This is obviously repaid through the amount of the invoice, but when that cash is not received, it leaves your business cashless and struggling.

When you partner with an invoice factoring company, your business can get practically instant payment for its work. This is accomplished through invoice factoring. An invoice factoring company purchases your outstanding invoices and advances you up to 96% of its total in just 24 hours or less. This allows your business to get paid faster and keep their cash flow steady or rebuild it.

2. Too Much Inventory Not Enough Sales

For many businesses in the manufacturing or apparel industry, you naturally have to invest in your inventory, then make the efforts to sell it.

As you may know, your business is often left with massive amounts of inventory for weeks or months without enough sales to make the investment worthwhile. Your business’s cash flow can get pretty dry during this period, leaving you stuck.

An invoice factoring company that offers spot factoring will allow your business to get a cash advance on a single invoice. This allows small businesses to comfortably make the big orders, without the risk of having little to no money left after. Spot invoice factoring is a great alternative financing option that gives businesses the opportunity to grow and expand their clientele comfortably.

3. No Money Left for You

As a business owner, you’ve heard the statement, “Pay yourself first” time and time again. Although this is burned into your brain, many business owners tend to care for their business and clients first.

When cash flow gaps happen, you are the first to feel the consequences, but you don’t have to be. With invoice factoring, your business can build a strong enough source of working capital to ensure that there are always enough funds for everyone.

Using Invoice Factoring to Secure Capital

Invoice factoring allows your business to skip the waiting period between project completion and payment. This helps your business get access to the funds already owed to it. This ensures that your client’s inability to complete invoices on time doesn’t affect your personal finances.

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About the Author:

Robert Bernfeld started in the commercial finance industry in 1974. His early years included positions with Aetna Business Credit and Foothill Group. During the next thirty five years. Mr. Bernfeld established both equipment leasing and accounts receivable factoring companies. He partnered in founding Business Facilitators, Inc. in 1999. Mr Bernfeld graduated from the University of California, Riverside in 1974 and received his Juris Doctorate from Loyola University School of Law in 1977.

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