Stocking away money for your business may seem like a pipe-dream even in the best of times. During these challenging times, putting cash away in the bank may seem like an impossibility. Sales are slow, operational expenses remain constant, customers are taking longer to pay you, and yet your vendors – and employees — are still demanding to be paid on time. According to NYSSBDC.org, cash reserves enable you to better handle cash flow gaps and cover payroll even while you are waiting to get paid. Moreover, money in the bank can give you security knowing you can effectively take care of an unexpected expense or tend to an urgent manner.
Factoring Receivables Is an Option for Businesses Lacking Liquidity
Yet if maintaining a cash reserve remains out of reach for your business, there are other options available, such as invoice factoring aka accounts receivable factoring. Though nothing may be as good as having a cash reserve, factoring accounts receivables can provide you with a steady and reliable cash infusion each month so that you can feel confident in your ability to pay your bills, cover payroll, and maintain business working capital.
Secure Steady Cash Infusions by Factoring Accounts Receivables
By partnering with invoice factoring companies, you sell them your current invoices in order to get cash you need right away to cover your expenses. The invoice factoring company collects on the invoice as usual and even handles collection issues for you should they arise. This way, you get a steady flow of cash coming into your business even if a customer is tardy in payment. Though you will pay a percentage or fee for the invoice factoring services, it is an agreed-upon, no-surprises rate you can depend on. This regular influx of cash can better enable you to manage your expenses and puts you in control as you are no longer at the whim of your customers waiting to get paid. In short, the invoice factoring company will do all the waiting for you.
So if you are unable to build a comfortable cash reserve during these trying times, you are not alone. Small businesses especially are struggling with this and have turned to other options such as factoring receivables to rely on regular and dependable cash infusions. These businesses are finding that the costs of invoice factoring are in fact worth their peace of mind.