Cash Flow Management & Growing Your Business

Is there a process companies can use that helps to improve cash flow? Well, when the economy is strong, and customers have more working business capital, companies are able to use prompt payment incentives and discounts with their customer base to improve their cash position. Unfortunately, with the world mired in a deep recession, these practices no longer produce the desired results. So, what else is there? To answer this question involves looking at the benefits of accounts receivables factoring. What is receivables factoring and how can it help businesses better manage cash flow? More importantly, why has it become such a dominant financial player for today’s businesses looking to different ways to finance their growth?

Every company understands that to grow their business requires securing a constant and repeatable source of affordable business credit. Unfortunately, as the economic situation has worsened, more and more businesses are faced with the constant threat posed by customers taking longer and longer to pay their invoices. These late payments reverberate throughout the economy and force conventional lending institutions like banks and credit unions to raise interest rates. This raises costs and makes business credit no longer affordable. However, receivables factoring is different. The decision to advance money isn’t based on the company’s credit rating. Nor is it dependant upon the company’s financial standing. Instead, the decision to advance the business funds is based entirely on whether the company’s customer can pay their invoices. That’s right! Receivables factoring’s success depends upon the age of the invoice and the likelihood that the company’s customer can pay that invoice. Therefore, good paying customers allow the company to tap into the liquidity of their existing assets. The financing company advances funds, collects from the customer and reimburses the company the difference. In the meantime, the company secures an affordable source of business capital, improves their cash flow position and is able to fund their daily operating expenses.

Receivables factoring allows companies to do away with business financing as a going concern. It’s easy-to-use, simple and an impactful form of business financing for today’s businesses. When it comes to looking for alternative financing options, receivables factoring may just be the source of business capital that companies need to enact their strategic plans for growth.