Can You Predict Your Cash Flow?
If you provide terms for your products or services to your
customers, it can be a challenge to predict how your cash flow
will be from day to day. You are actually providing financing
for your customers. I hope you understand that is what takes
place, you are being the bank.
Terms are a necessity in today's business environment and to
land some accounts, it is an absolute. Even though the agreed
upon terms are 30 to 60 days or more, it does not always come
in on time, however an inconsistent and unstable cash flow does
not have to exist.
If you are struggling with inconsistent cash flow, you need to
look into factoring. It is a very powerful form of finance that
will allow you to predict your cash flow, and grow your company
at a rapid pace. You do this by selling your credit worthy
accounts receivable to a factoring company. This allows you to
get an immediate injection of cash. The factoring company will
wait for your customers to pay the invoices while you use your
money to meet your cash flow demands.
Factoring is one of the oldest forms of commercial finance,
however it remains unknown or misunderstood in the commercial
finance market place. Factoring is also known as accounts
receivable financing and can be the perfect solution for start
ups as well as seasoned and rapidly growing companies.
A start up company can qualify for factoring due to the fact
that the invoice is the asset being used. As long as the
invoice is to a credit worthy company the invoice then becomes
an asset that can be sold to a factoring company for immediate
cash. The factor waits on the customer to pay the invoice
instead of you waiting on the payment. It is as if you are
turning all of your term invoices into COD without taking away
your terms to the customer.