Money is like gasoline during a long road trip. You do not want to run out of gas and be stranded on the side of the road! Similarly, you do not want to run out of cash when you have a vision and are tirelessly working on your business dreams. For driven entrepreneurs who get their companies past the initial start-up phase, it is supposed to be a clear sailing from there. But, in the business world, things do not always go as planned and many businesses fail before they get a chance to really see success.
One of the most widespread causes of business failures, especially for start-ups, is a lack of necessary cash flow to keep the business afloat. In many cases, entrepreneurs have business plans that allow for the first six months of the business to be paid for by start-up funding. After that period, they expect their Company to sustain itself. The problem is the Company is still nonbankable and unless they get needed working capital the Company may have to shut down its doors.
When a Business begins its search for additional working capital, it needs to have a realistic overview of what options are available, its needs and what it may qualify for. Given these factors, many businesses find themselves with few choices.
One of the most accessible and flexible options is to generate the funding needed for Accounts Receivable. Accounts Receivable Factoring allows a Business to reboot its growth by providing a reliable cash flow. The Factoring Company will advance up to 92% of the accounts receivable amount at highly competitive rates.
You will get the working capital you need to keep your Business afloat in a quick, low-cost and tension-free way.
For small Companies and start-ups, financing options are limited and the borrowers are often discouraged when they try to ask a bank for a loan. Banks will only lend money to a company’s proven profitability. Typically, a business has to provide a minimum of two years of tax returns, profit-and-loss statements, and balance sheets supporting their profits. In total, only about 1/5 of businesses are approved for a bank loan.
However, Factoring Companies can provide a cash flow solution for Businesses that have experienced negative retained earnings and/or poor profits. A Business can utilize Accounts Receivable Factoring when it is burdened by weak guarantors or has a negative tangible net worth. Even if the Company has a highly leveraged balance sheet or the extension of credit terms stretches its cash resources, with Accounts Receivable Factoring there is a funding solution to put the Business back on track.
Factoring can help out in emergency situations, but it should also be considered as a valuable tool for Businesses that are not experiencing financial problems. Using Accounts Receivable Factoring to turn your invoices into cash before your Business starts to see economic challenges puts you in a better position to avoid problems in the future.