Businesses of all shapes and sizes can realize cash flow problems, and in this slow-growing economy, cash flow problems are more prevalent. Cash flow is often measured as the pulse of your business, and problems here can cause your business to seize up and enter crisis mode.
Fortunately, there are many ways to prevent this from happening, including small business factoring. Some of them require a little more diligence on your part while invoice factoring may require a little out of pocket cost. Either way, monitoring your cash flow is a good habit to develop if you haven’t already.
Using a Factoring Company, Enhancing Customer Service to Improve Cash Flow
You are almost certain to have cash flow issues when customers start paying their bills late. Prevent this from happening in the first place by being proactive. A billing insert or even a courtesy call pleasantly reminding customers about payment can prevent lateness. Some businesses have gotten creative by offering a small discount for paying in less than 15 days.
Sometimes, however, diligent customer service and close monitoring of your books isn’t enough. Invoice factoring, a financing option that uses the value of your invoices to secure cash immediately in order to replenish your cash flow, is another popular option. By using a factoring company like Business Factors, you can get the funds you need to cover payroll, purchase or lease new equipment, and cover your own bills.
Particularly if you are a small business, invoice factoring can help get you through those ebbs and flows of the business cycle that most startups find hard to avoid. Invoice factoring allows you to be flexible so if you suddenly get a large order for the holiday season, you can get the money you need to ramp up production.
It Costs Money to Get Money, and Factoring Services Are No Exception
Reputable invoice factoring services will pay an average 95% of the value of your invoices so you can get your cash right away. Though you will have to part with 1-5% using invoice factoring, it is a far better option than shutting down your business.
Your incoming and outgoing funds aren’t always going to line up the way you want them to. Invoice factoring helps you deal with this reality in a way that is manageable, so you can keep your business up and running through these difficult times.