Posted by admin | Posted in Alternative Financial Products for Small Business, Cash is King, Factoring Receivables, Grow Your Business, New Business, Receivables Factoring, Small Business, Success in Small Business | Posted on 12-06-2013
I read a lot about the shape of the economy from the viewpoint of small business owners. The biggest hurdle that the entrepreneur faces is “Cash Flow”. That is the most pressing problem faced by small business. We all know that cash is king and cash is the life blood of any business. The economic recovery appears to be gaining steam, but what does that mean for the business owner?
Most business owners, when faced with cash flow shortfalls, respond by cutting back the number of employees, reducing the benefits to their employees, or even decreasing their offerings in terms of goods and/or services. The latter is not due to choice, but rather a simple failure in keeping up with the demand. Put simply, if a business owner does not have the cash to procure raw materials, or pay employees, something has to give.
There are a number of reasons for the cash flow crunch that is hovering over the head of many a small business owner, but the two that I am hearing the most about are the reductions in funding options and receivables aging. Currently many small business owners find that their lines of credit and/or their current loans have either been reduced or called in early by the lender. There is also a trend in business for companies to push the payment of invoices out to 60 – 90 days… some even further.
Invoice factoring is an option to the standard banking relationship, particularly helpful for those small businesses that have either not been in business long enough to establish a banking relationship, or are in the growth phase of business. A receivables factoring company provides a small business the option of building their credit-worthiness. We at American Funding offer the necessary financial tools to assist the small business owner to grow their business to success.