Cash Flow is Vital 

Good cash flow is necessary for you to run your business. You need to access the funds that will run your business in an easy, timely manner. If your clients are taking too much time to pay their accounts, your business will encounter countless issues. 

You may not be able to pay your employees. You may not be able to pay your fixed costs, or make the necessary investments in your business. Simply put, good cash flow allows your business to run seamlessly. 

Invoice Factoring 

Invoice factoring makes the most sense for businesses who need cash to cover expenses immediately after invoicing clients. It can also be a good choice for businesses that are just starting out, since traditional financing may be difficult to access.

What is Invoice Factoring 

Invoice factoring is the practice of selling your invoices to a third party, who will then give you the majority of the invoice, and collect payment from your client at a later time. When they collect, they will then pay you the remainder of the invoice balance without a small fee they subtract. 

Invoicing companies exist to give you access to the funds you invoice for instantaneously. Having the lump sum from the invoice immediately can allow your company to pay needed expenses and operate with greater financial flexibility. Some of the industry leaders will be able to give you the funds immediately, whenever you send them an invoice. 

The Best Invoice Factoring Companies 

Deciding which factoring company to work with can be difficult. The companies vary in the percentage of the invoice they provide up front, what fee they take, and when they can deliver the lump sum. Here’s a breakdown of the industry leading factoring companies. 

Different companies specialize in different sectors. Some offer benefits depending on your industry, like special fuel deals for trucking companies. If you work in an industry like trucking or construction, consider working with a trucking specialized factoring company or construction specialized factoring company. 

Difference Between Recourse and Non-Recourse Funding 

One important thing to think about when deciding which factoring company to work with is determining if they offer resource or non-recourse factoring. What’s the difference, you might wonder? 

Imagine the situation where you give an invoice of yours to your factoring company, collect the lump sum, and go about running your business. Shortly after, the company you invoiced goes out of business and cannot pay the invoice. Who is responsible for that debt?

If your factoring company is non-recourse, then you will not be responsible. You will get to keep the lump sum, and the rest of the invoice will be paid to you whenever the factoring company is able to track down the debt. However, if your factoring company is a recourse invoice factoring company, you will be responsible for the debt. Non-recourse is obviously preferable, though they usually take a higher fee. Before working with any factoring company, carefully go over their factoring agreement.

Consider What Lines of Credit are Available to You

If your business has a good credit score, or if you simply need capital, it may make sense for you to consider a loan. Many banks offer attractive loans to small businesses, especially when the economy is strong. 

If there are strong macroeconomic indicators, and the Fed has maintained low interest rates, you may want to consider taking out a loan. This can be a short term boost to your cashflow, allowing you to make investments to grow and expand your business. 

Of course, loans are not a permanent cash flow solution. They don’t structurally change your business. This means you should not consider them a long term solution to cash flow problems. 

Consider High Interest Savings Accounts 

How you store the funds for your business can make a tremendous difference in terms of both cash flow and liquidity. A good, high interest account will allow your business to generate profit when funds aren’t needed, and secure your assets. It can also optimize how you can run your business’s finances. 

Benefits of Business Banking

-Improve cash flow

-Accrue interest

-Improve financial flexibility

-Increase financial security

There are a vast array of options to consider when opening an account for your business. Each bank has strengths and weaknesses, and some better to work with than others. Here are some of the savings account options which are available.