Last month interest rates on loans were raised for the third time in 2018. As our economy gains momentum, the Fed may implement more rate hikes to guard against inflation. However, rising interest rates are also making businesses more cautious about taking out loans and looking for more flexible financing methods that don’t place debt on the books.
Avoiding Debt and Rising Interest Rates
Instead of seeking funding from traditional lending channels businesses are building capital by factoring receivables. Accounts receivable factoring provides debt-free capital by converting unpaid invoices to cash. Most businesses follow the standard practice of issuing invoices with a payment schedule of a month or longer. Instead of waiting on a staggered stream of revenue, factoring can convert invoices within a single day. The improved cash flow allows business to quickly build up a source of working capital without the need to rely on loans.
No Debt. No Installments. No Rising Interest Rates
Accounts receivable factoring offers a number of benefits that traditional loans do not. Perhaps the biggest advantage of building capital reserves through factoring services is that no debt is placed on the books. In essence, factoring is considered a sale of receivables, so no liabilities are generated. Because of this, there is no need to make regular installments on the financing, and factoring is not subject to arbitrarily rising interest rates. Additionally, accounts receivable factoring services give businesses more control over the amount of financing they receive from invoices. Businesses can choose to factor all of their receivables or only a portion, depending on their needs.
Invoice factoring gives businesses the ability to achieve rapid growth with losing any potential by placing debt on the balance sheets. Businesses can use accounts receivable financing to improve cash flow to smooth out uneven revenue cycles and to build up capital to roll out large growth projects. As opposed to single-purpose, single-use loans, factoring provides the versatility, flexibility, and efficiency business owners demand.
The current economic climate is full of growth opportunities for businesses. Instead of debt-based financing and increasing interest rates on loans, accounts receivable factoring can supercharge your cash flow and help you position your business for growth. Contact New Century Financial today and learn how factoring services can give your business a competitive edge.
Carrier fleets are in a very interesting position right now. Shippers and customers rely on carrier fleets to get materials and goods to their destinations. Simultaneously, carriers are positioning themselves for growth to recruit more drivers and put more capacity trucks on the highways to meet the demands of the current economic climate. However, carrier fleets need ample capital to jump on growth opportunities while still covering payroll and other regular expenses.
The Cash Flow Bottleneck
Hauling shipments all over the country generates a large number of receivables. The standard procedure is to issue invoices with staggered payment schedules of 30,60, and even 90 days. The delays in payments can place a severe strain on cash flow, which can force carrier fleets to put growth projects on hold, and sometimes leave them struggling to cover overhead costs. This cash flow bottleneck can have bigger repercussions outside of just the trucking industry, causing supply chains to slow down due to staggered revenue.
Factoring for Carrier Fleets
To speed up and strengthen cash flow, carrier fleets use factoring services. Factoring turns receivables into cash with 24 hours, which gives carriers faster access to capital than waiting 30 days or longer. By using accounts receivable factoring, carriers can quickly build up the cash reserves needed to cover payroll and other costs. Additionally, carrier fleets can move forward with their recruiting efforts so they can put more drivers and capacity trucks on the road to meet the demands of clients. Because invoice factoring is debt-free, trucking companies can preserve their credit ratings and reduce the need for loans. Besides, with the rising interest rates on bank loans, financing receivables through factoring presents less risk to the transportation industry.
Boost Your Cash Flow and Keep Operations Rolling
New Century Financial offers accounts receivable factoring to carriers of all sizes. Our team will work with you directly to create a factoring strategy to meet your needs and help you achieve your goals. Whether you need to unlock revenue tied up in receivables to cover overhead expenses or you are positioning your business for growth, contact the experts at New Century Financial today.
The demand for service companies has skyrocketed over the past year. Among those, maintenance companies have seen increased orders and contracts from both residential and corporate clientele. While many maintenance companies do not have the real estate or other assets to get traditional financing, there are ways to get the funding necessary to meet the demands of a growing customer base.
Maintenance Companies Rely on Cash Flow
A healthy cash flow is the key to long-term success for all maintenance companies. But with contracts and invoices, waiting on payment from customers can place a severe strain on cash flow. If there were a way to receive payment at the rate of delivering services, maintenance companies could grow exponentially without having to take out short-term loans for extra working capital. Fortunately, there is a way to unlock the potential of your cash flow without taking on unnecessary debt.
Boosting Cash Flow
Most maintenance companies provide services based on contracts and issue invoices with staggered payment schedules of a month or longer. Waiting 30 days or more to receive payment from clients not only places a strain on cash flow, but can keep maintenance companies from buying supplies, marketing to potential clients, or even making payroll. By using factoring services, those unpaid invoices are immediately converted to capital. This supercharges your cash flow and allows you to sustain and grow operations. The maintenance industry relies on providing services instead of goods, so building up capital reserves is necessary for long-term success.
Sidestepping the Debt Trap
Most entrepreneurs in the maintenance industry feel the only way to get capital is through debt-based loans. But with higher accessibility requirements for loans and increasing interest rates, traditional financing methods are ultimately cost-prohibitive. The maintenance industry needs a solution that is flexible while not impacting credit ratings or putting debt on the books. Invoice factoring is just such a solution, and gives maintenance businesses the freedom to take advantage of growth opportunities during this economic uptick.
New Century Financial provides factoring services to businesses within the service industry. Whether you own a maintenance company, janitorial business, or any other operation that provides services, we can help to boost your cash flow to give you the capital you need, debt-free. Contact our offices and get started today!