Financial strains are unavoidable when running a business. For many business owners, cash flow typically becomes tight for one of three reasons. Fortunately, there is a way to overcome financial strains without setting your business up for bigger problems in the near future.
Financial Strains After Launch
Launching a business takes a good deal of capital, and entrepreneurs usually take out one or more sizable loans to get their operation off the ground. The whole reason behind “grand opening” sales is partially a marketing move, but also to rack up sales to start paying off the debt from those loans. The first few years of a business is driving sales to overcome the financial strains of debt combined with regular overhead costs, to get to a place where the focus can shift to growth and expansion.
Growth-focused businesses experience financial strains when they approach their upper limit in productivity and their ability to fill orders is still exceeded by customer demand. Maybe the solution is as simple as hiring a few more employees or getting new equipment. Maybe the demand requires opening an additional base of operations to better serve customers. Regardless of the solution, trying to make the big leap forward can be challenging if the capital needed is coming in at staggered increments from customer invoices.
Overhead Costs Exceed Revenue Despite High Sales
You and your sales team may be on fire, converting leads to sales and growing your list of client accounts. Yet overhead costs can still create financial strains if your customers are paying their invoices according to staggered payment schedules. Certainly sending out “friendly reminders” can run the risk of jeopardizing relationships with clients, but there has to be a way to at least approach a one-to-one ratio of sales and revenue.
One Solution for Three Problems
In the three examples listed above, financial strains are caused by revenue tied up in unpaid invoices. By using factoring services, businesses can expedite the amount of revenue coming in while eliminating the strain caused by unsettled customer accounts. Invoice factoring gives businesses access to hard-earned revenue so they can pay financial obligations, make plans for growth, and rightsize cash flow.
At FSW Funding, we offer factoring services which provide businesses with the working capital they need, when they need it. Contact our offices today and keep your business on the road to long-term success.