It’s no secret that running your own business is a lot like running a marathon. There’s a lot you need to prepare for before you even head to the finish line, and there’s always a chance of failure even if you’ve trained for months. In fact, up to 50% of new businesses will fail within their first five years.
The good news is that many of the problems new businesses deal with can be identified, monitored, and fixed. And one of those major issues is cash flow.
Why do new businesses struggle with cash flow?
Many new businesses have cash flow issues, but the problem isn’t a lack of funds. It’s a lack of available funds.
Young small businesses often have thousands of dollars in outstanding accounts receivables at any given time. This may not sound like a catastrophic problem; after all, that money will eventually arrive in your bank account. However, business owners with delayed payment processing often struggle paying their vendors, their employees, and their property rent on time.
Unfortunately, many new businesses will turn to high-interest loans to make up for these cash flow gaps. But these loans can take a toll on your business credit, especially when you have difficulty getting your clients to pay you on time. The good news is business factoring services can help.
How do I know if I need invoice factoring?
Business invoice factoring services understand that both new and established companies struggle to get their invoices in on time because of slow-paying customers. That’s why business invoice factoring enables companies like yours to submit their invoices for cash up front with minimal fees.
But how do you know if your business needs business invoice factoring? Here are five signs invoice factoring is desperately calling your name:
- Your clients are slow to pay you. Your clients have a period of time in which they can pay their invoice. But if your clients wait until the last few days of the deadline to make their invoice payments or they periodically change which date they pay their invoice, this can cause big cash flow gaps.
- You have to make collection calls to your clients. It might be time to consider business factoring services when your clients take longer than the designated time given to them to pay their invoice. You don’t want to spend valuable business time making collection calls to clients when you could be spending time growing your business.
- You’ve taken out a loan. Business factoring services may be needed if you’ve already taken out a loan to make up for cash flow gaps. Loans can be expensive because they come with high-interest rates that can affect your credit score. Business invoice factoring doesn’t have any interest. You’re only using the money you would have received from your invoice, just at an earlier date.
- You need a consistent payment schedule. Cash flow can be frustrating when you’re not sure when your payments from your clients will be coming in. Business factoring services can bridge those gaps and give you peace of mind by being able to write out an exact schedule of when your payments are coming in.
- You’ve needed to postpone major branding events. Trade shows and other branding events are vital for the success of your new business. They’re marketing opportunities to tell the world about who you are and what you can provide. But if you don’t have the finances for these events because your invoices haven’t come in yet, you could reduce the chances of your business’ success. Business factoring services ensure you have the money you need to budget for these events when you need it and not when your client decides to pay their invoice after the deadline has passed.
Where can I find business factoring services?
Factoring companies can help small businesses bridge cash flow gaps by providing upfront payments up to 90% of the original invoice. This can be a big gamechanger because cash flow gaps are one of the top reasons why businesses end up closing down.
If you’re considering small business factoring services for your company, we are the factoring service for you. To learn more about how our small business invoice factoring and freight factoring services, contact us today.