You could demand cash on the barrel-head from your customers, but you probably wouldn’t have many customers (or much cash). So, you give them terms. Thirty days, 45 days, 60 days, maybe even 90 days. Now you’re not just a builder or transporter or manufacturer, you’re a lender. That money is unavailable to you until your customer pays.
Along comes your next customer who wants to do business with you, and you’ve got all systems, equipment and personnel to conclude a very profitable business deal with them. But you don’t have the money anymore. Your previous customer still has it. You might offer the previous customer a discount to pay earlier. You might approach family members or private investors for working capital. But private investors tend to want a piece of your company in return.
The cleaner transaction is to factor your invoices. Factoring is selling your creditworthy invoices to a finance company that advances you between 70% to 85% cash immediately, and pays the remainder, minus a 2% – 4% percent fee, after the customer has paid.
A company can’t grow or function without continuous reinvestment. You’ve got to keep the lights on, pay your leases and taxes, make payroll, keep your technology current and push sales. That requires cash, not mere balance sheet assets. Accounts receivable are not spendable. But account receivable factoring can turn your invoices into cash that you can send back into your business.
Don’t wait for a cash flow crisis before you begin to plan for your working capital needs. You know how banks are: slow and opaque. If you want a more responsive and transparent financial partner, find a good account receivable financing company.
It’s to your advantage to establish a business relationship with an account receivable financing expert, and teach them about your business. You want them to have enough knowledge of your business cycle that they’ll anticipate your working capital needs, and tailor cash flow solutions to your circumstances.
Meridian PO Finance has established a reputation for such tailoring. If you’re in the Pacific time zone, we answer our phones Monday through Friday til 5pm. Of course, that’s one hour later for each additional time zone east of us. (East Coast businesses can call us til 8pm.) We’ll ensure that your business benefits from our account receivable financing. Our experts ensure that your business will benefit from our receivables financing. For more information, contact us today or call toll-free at 866.988.6868.