As a business owner you know that managing cash flow can be one of the most difficult tasks that you will ever encounter. Not only can sales fluctuate but payment time frames can also become a grey area. Even if your terms are due upon receipt, not all customers are going to pay immediately.
That leaves you in the precarious position of running your day to day business operations from savings or other funds that you have access to. Sadly, a lack of consistent cash flow can delay growth and expansion or even cripple a company and ultimately result in the company’s failure. Using personal resources might work for a brief time or for limited funding needs but larger cash demands might require cash flow loans to keep the company functioning to capacity and offer the maximum growth potential. A cash flow loan is basically a way to borrow money using expected receipts as the collateral. Past sales and future projected sales are key factors in determining your approval. These loans can have a huge impact on a company’s success and can create some great opportunities when used correctly.
A Solution to Start Up Expenses
The early months of operation are always stressful for a new business owner. It seems like there are always new expenses to cover but there is simply no cash coming in to cover those costs. Without a cash reserve to draw from, many businesses fail within the first few months while waiting on revenue to begin coming in from sales. But a cash flow loan against those first sales is a great way to bridge the time between billing and actually getting paid. It offers you peace of mind and avoids the uncomfortable calls to clients to ask when exactly they are going to pay you. It lets you maintain a professional appearance and not look cash poor or unstable financially to your clients.
Stay Current on Payables
Most businesses, even those who are not producing and selling an item, need to make purchases to keep the company going. There are always office expenses, professional services and day to day expenses that need to be paid for immediately. Occasionally there is an option to pay later but that usually has a fee attached to it. So using a cash flow loan will allow you to stay current on your accounts payable and get the best possible pricing without paying any finance or service fees.
Fund an Unexpected Opportunity
Having an unexpected opportunity to increase sales should never be a bad thing. But if you are a new business and are working on a very restricted budget, then an unplanned sudden demand can feel like a very bad event. You might need to figure out how you can increase production of a product or meet the needs of a much larger number of customers but not have the resources to convert the opportunity into a profitable event.
A cash flow loan can allow you to hire temporary labor, purchase additional materials and meet the greater demand that has arisen for your product or service, like a title loan without a job or title loans with no car inspection. Now you will be able to focus on managing your business and meeting this new challenge without worrying how you will pay for the expenses until your client pays you. A cash flow loan is also a great way to manage seasonal increases in business. It allows you to pay your increased operating bills without completely depleting the cash that you have on hand.
Unexpected Expense vs. Crippling Emergency
In every business, just as in any other part of life, there are unexpected situations that arise and must be dealt with immediately. Most of the time we refer to them as emergencies but in reality they are not life threatening, they are simply annoying or difficult. It could be that a crucial company computer fails, a delivery vehicle breaks down or a water pipe breaks at your office.
All of these events will require money to repair but they shouldn’t demand any more of your attention than that. But if you don’t have the cash to pay for the repairs then you will be distracted from managing your business and begin to fall further and further behind. Instead of letting a single bad event spiral into a series of time consuming and financially draining catastrophes, just use the funds from a cash flow loan to make the needed repairs and move forward. It was an inconvenience but it was not an issue that could bring your business to a halt while you search for a way to pay for needed repairs.
Growth is a Good Thing
Seeing your business thrive should always be a great experience. But if you don’t have the money to invest in growth and expansion when the time comes, it can be frustrating and scary. You know that you will need to hire more employees, purchase more materials and maybe even buy new equipment but without the needed cash it seems impossible. Now, what should be a great experience is causing you nothing but stress.
And resisting needed growth might even mean that your business is going to suffer. Customers might not be satisfied with the level of service and be seeking a new company to work with. It’s clear that you need to grow to continue the success you have built but it takes money to grow. A cash flow loan will allow you to meet the increasing demands and not have to worry about how you will pay for the expansion.
A good business owner will always try to plan for any potential event. But no one can foresee the future so there is always a chance of something unexpected happening. It could be something good or maybe something no so good. But knowing that you have a cash reserve to deal with any situation is a great feeling. It lets you focus on your day to day operation without those nagging thoughts of “what if” in the back of your mind. It’s the same comfort that a person has knowing that they have a savings account or an emergency fund just in case they need it. Cash flow loans are a great way to harness the potential of your company and make it work for you immediately.