Businesses in all sectors are trying to get a more stable footing in the COVID-19 economy. Regions around the country are reopening, giving businesses the opportunity to resume operations and hopefully get back to pre-pandemic production rates. Cash flow is crucial to the future success of businesses as the economy reopens, and gaps in revenue can cause major setbacks.
Why Do Gaps in Revenue Occur?
Gaps in revenue can occur for a number of reasons, but the most common cause is from unpaid receivables. Businesses issue invoices with staggered payment schedules of 30, 60, or even 90 days. This is a standard business practice designed to give clients a grace period to make payments, and the staggered schedules, in theory, provide businesses with a constant stream of revenue. More often than not, staggered payment schedules lead to gaps in revenue while businesses wait for their clients to make payments on the balances they owe. While businesses are waiting on payments – sometimes for a month or longer – there are expenses such as overhead, quarterly tax obligations, payroll, and more that need to be met. Gaps in revenue can force businesses to deplete capital reserves or go into debt by taking out short-term loans to smooth out uneven revenue cycles.
Avoiding Gaps in Revenue
To avoid uneven revenue cycles and eliminate gaps in revenue, businesses use accounts receivable factoring. Accounts receivable factoring unlocks the revenue tied up in unpaid invoices by converting them to cash. Factoring is a debt-free solution that shortens the distance between businesses and revenue, so they can continue operations and get a stronger foothold in the marketplace. In a way, accounts receivable factoring helps to automate cash flow for businesses by making funds available within 24 hours on submitted invoices. This allows businesses to meet their financial obligations, make payroll, and gain momentum in the current economic climate.
At New Century Financial, we provide comprehensive factoring services for businesses nationwide. Our accounts receivable factoring services offer flexibility, so businesses can submit invoices or parts of invoices as they desire. With New Century Financial, there are no hidden fees, no mandatory long-term contracts, and we make funds available within 24 hours to boost your cash flow. Contact New Century Financial today to get started.