Debt factoring is an excellent alternative source of finance for businesses by significantly improving their cash flow. With debt factoring, a business can release immediate cash from their invoices with the help of a factoring company, instead of waiting for 30, 60 or even 90 days for their customers to pay.
Starting and operating a small business is rewarding and exciting but it comes with a host of challenges. From managing start-up and growth costs, marketing, finding customers and creating positive cash flow, it’s no wonder that not all new businesses make it past their first few years – and no wonder many business owners lose sleep over it.
If you’re struggling to create the cash flow necessary to hire a new employee, buy new equipment, ramp up production or just not getting the support you need from your bank, you should seek alternative cash flow solutions such as debt factoring from Tekla Factoring and Finance. Debt factoring can be a flexible alternative to traditional loans provided by restrictive banks who don’t always step up to help businesses when they need it most.
What are the alternatives to big banks?
As a small business owner, you owe it to yourself to explore the options that will help your business succeed. Debt factoring gives you access to money you’ve already earned, but don’t yet have in your account because of outstanding invoices.
If a client takes 30,60, or 90 days to pay an invoice, they’re sitting on your money for that long. It can take a strain on your cash flow when all your clients are taking a long time to pay. That is money – your money – you could use to fund your next growth project or simply to keep your business going. Instead of waiting for it to trickle in, you can use debt factoring to get most of it now.
How debt factoring can improve your cash flow
Positive cash flow can mean all the difference for your company. These are just a few of the ways debt factoring will change your business for the better:
- Create cash flow: With cash-in-hand, you can hire that new employee, expand your operations or focus on growing your business.
- Manage slow payments: Debt factoring isn’t a loan. It’s simply giving you access to the money you’ve already earned, bridging the gap (of 30, 60 or even 90 days) between a successful sale and actual payment.
- Meet operating expenses and improve working capital: Working capital reflects your ability to take care of short-term debt and day-to-day operations. Small businesses haven’t always had the time to amass much working capital, and it can be a struggle to meet daily needs until your business gets on its feet. The cash you receive via debt factoring can help you stay on top of bills and negotiate discounts with your suppliers because you’re able to pay earlier or order in bulk.
What invoices can be considered for debt factoring?
- Invoices relating to business-to-business transactions can be considered, not consumer receivables.
- Invoices that are still within normal trading terms and are neither bad nor doubtful debts.
- Invoices for goods delivered and work fully completed, not work in progress claims.
Original article post on: https://www.articlecity.com/blog/debt-factoring-as-an-alternative-as-banks-have-forgotten-how-to-bank-small-business