What is working capital? This is the amount of cash your business needs on-hand to run its day-to-day operations. Your working capital is used to meet payroll, purchase supplies and inventory, or even pay off your vendors, while you are getting paid for your work.
No matter what industry you’re in, your business needs a secure source of working capital in order to run everyday. Unfortunately, many businesses struggle to increase or even have sufficient working capital in order to operate. This is due to slow cash flow. When customers and clients fail to make payment on their invoices, it can put a strain on a company’s working capital.
When you have to wait up to 90 days to receive payment, your cash flow can suffer tremendously. This holds you back from paying your hard working employees, taking on new clients, and ultimately holds your business back from advancing in its market.
Using Non-Recourse Invoice Factoring to Increase Working Capital
When businesses experience cash flow issues, they tend to look to a bank or financial institution for help. When your cash flow is low, or your business has low credit, getting a loan through a bank can be practically impossible.
Banks typically only lend to businesses that have a sting source of working capital or those that have a solid credit score. If your business does not meet the bank’s standards, it will not get financing, or it will, but on costly terms.
Alternate Financing Through an Invoice Factoring Company
Thankfully, there’s a way to combat this issue. Rather than going through a bank, try getting financing through an invoice factoring company.
An invoice factoring company will purchase your business’s outstanding invoices and advance you a percentage of the funds in just 24 hours or less.
This allows you to have instant access to your working capital. Not only will you be able to tap into the money owed to your business, but also strengthen your cash flow immensely.
Understanding Non-Recourse Invoice Factoring
Partnering with an invoice factoring company that specializes in non-recourse invoice factoring will allow your business to get invoice factoring without any risk.
With regular invoice factoring, your business will be liable for repayment of the amount factored to your business if your client fails to complete payment.
With non-recourse invoice factoring, the invoice factoring company will take on the liability of repaying the amount factored in the case that your client fails to make payments—allowing your business to secure a strong source of working capital, and hang on to it longer.
This is a major benefit to all businesses. You will not only keep your credit safe from major repayments, but also be able to grow your business faster than you ever thought possible. You’ll have more cash in your pocket to take on bigger clients, increase the size of your staff, and expand your business into more markets.
Using Non-recourse Factoring to your Advantage
As a business owner, nothing is more frustrating than waiting up to 90 days to receive payment for your work. You can stop waiting once and for all using non-recourse invoice factoring and secure a strong source of working capital for your business.