As a business owner, you have a lot of responsibilities to meet. Staying caught up on bills, rent, insurance, and payroll are among the most important objectives. To do this, a sufficient amount of working capital is needed.
Simply put, working capital is the money you have available to meet your debts. Below is the formula for calculating working capital.
Current Assets – Current Liabilities = Working Capital
For some businesses, a cash-flow issue arises when their customers take too long to pay their invoices. This is especially common for business-to-business industries such as telecom, trucking, oilfield, and government contractors. According to an article by nytimes.com, it states that:
“In the past, extended payment terms often were a signal that a company was experiencing worrisome cash flow problems, but these days, robust companies are imposing new schedules on suppliers as a business strategy.”
When you’re waiting for customer payment, it makes it nearly impossible to have the working capital needed to meet your business obligations.
To make sure you have enough working capital available to meet your business expenses, there is a simple solution – invoice factoring.
While business loans or business lines of credit are a common way to obtain financing, it’s not always the best option. First, they can be hard to obtain for some. Second, there isn’t much flexibility to meet the growing and changing demands of your business.
Business loans and lines of credit are dependent on your credit history and financial strength. Depending on your company’s financial strength, you may not be able to obtain the funding needed for your business.
Loans and lines of credit can take weeks or months to obtain. When you’re already waiting 60 days or more for customer payment, you don’t have time to wait 60-plus days for funding from a bank.
Invoice factoring, also known as accounts receivable financing, is a common and flexible financing solution businesses in a variety of industries turn to.
Instead of waiting to get paid on your invoices, invoice factoring provides you with the same-day cash for your invoices. This gives you the working capital needed to get caught up on bills, meet payroll, invest in your company and more.
Invoice factoring is simple and easy to get started. Scale Funding quotes companies in as little as 15 minutes.
If you’re a start-up business with no financial history or have less-than-perfect credit, we can help. Invoice factoring looks at the credit and financial history of your customers rather than yours.
If you need working capital to meet the demands of your business, contact a financial expert at Scale Funding. We have more than 20 years of experience helping companies in various industries and stages maintain and grow their operations through our cash-flow solutions.