Even if your business isn’t strictly seasonal, most companies deal with natural patterns of high and low customer volume. That can make cash flow especially challenging to manage. In fact, a lack of adequate cash flow is the top reason that many new businesses fail within the first five years. Fortunately, several solutions exist that can help your company withstand the cash shortage.
Business Line of Credit
A business line of credit can be an attractive alternative to borrowing a lump sum of money when you’re not sure if you need all the funds. The bank assigns a credit limit to your company, and you can borrow up to that amount as often as necessary. You can also write checks to your own business for a quick cash infusion.
The upside of a cash advance is that you can typically obtain it quickly and not need to meet the same approval criteria as a loan or credit card. The downside is that the interest can be quite high. Companies that have cash register sales each day can request to repay the cash advance through a percentage of daily receipts.
A cash flow crunch can be especially difficult to manage when you have money coming in from accounts receivable, but customers still have weeks or months until their due date. You might wish to consider invoice factoring if you have good customers who normally pay their debts with your organization on time. It works by selling outstanding invoices at face value minus processing fees to a third-party invoice factoring company. That company then takes over billing your customer when the invoice becomes due.
Schedule an Appointment with Us to Uncover More Cash Flow Solutions
The above are only three solutions to common cash flow problems. We invite you to schedule an appointment with Safe Harbor Commercial Capital to explore other options or the possibility of obtaining business financing from our company.