When running your business a cash shortage can be a nightmare. You have to pay bills, pay staff and order the goods that keep your business running. Which of these can you let slide if cash comes up short? Even businesses that are performing well and profitably encounter cash flow difficulties. With long payment terms on invoices your business can be in the green but still not have access to the liquidity needed to keep up with day-to-day activities. When you have taken on a big order, have to purchase supplies, payroll is coming up and your outstanding invoices still haven’t been paid, where do you turn?
This is where already having a funding partner is key. Traditional lending from banks and ‘quick-cash’ advances for your business create a new bill to be paid every month. The more you need cash, the higher the rates, creating a negative feedback loop of lending that takes profitable businesses far into debt. Merchant Cash Advance (MCA) firms offer cash in just days, or even hours, with simple paperwork but include frequent payments (sometimes even daily!) and high interest rates. Often, traditional bank loans are simply too cumbersome to quickly provide for short-term business cash needs.
There is another solution. Accounts receivable financing services allow you to factor receivables or discount invoices two ways to turn customer invoices into the cash you need to run your business. By using invoice factoring you create cash without adding another payment to your liabilities each month. Invoice factoring works by providing your business with the majority of the value of an invoice (Bibby Financial Services typically provides more than 90%). The company providing accounts receivable financing then collects on the invoice for you, saving your company the time and headache of collections calls. Once the invoice is collected, your business receives the remainder of the balance, less fees for the service. By using a funding partner to factor receivables your business gets the benefit of professional invoicing and collections support services in addition to critical liquidity without any debt. Invoice Discounting is another funding option that allows you to obtain an immediate cash injection with self-managed credit control. This is a fast, flexible source of funding which allows for confidentiality.
Quick-cash services want you to stay in debt and bank lenders see your business as nothing more than a number. When funding your business, you want a partner that understands your unique circumstances and wants to work with you for continued success. Key to this is working with a firm who not only provides invoice factoring but actively strives to be your partner and customize financial products to your needs. There are many companies who factor receivables, Bibby Financial Services (BFS) prides itself in building and maintaining close relationships with the companies we partner with. BFS provides a service but is also a partner who wants to understand your business and its challenges - not just look at your financials and tell you what product to use. Contact us today to learn more.