Monthly Archives: September 2020

Taking Your Business Online? Supercharge Your Cash Flow!

Businesses continue to evolve, most often spurred on by external influences. The COVID-19 pandemic forced many businesses to rethink operations, and many entrepreneurs took their companies online to reduce potential health risks to their employees and their customers. By moving operations online, businesses found they could reach a wider audience. Businesses that once relied on local clients were suddenly tapping into demand, statewide, nationally, and even globally. They also discovered the sales side of e-commerce moves at a much faster pace than traditional sales. However, faster sales do not always translate to improved cash flow. Fortunately, there is a way to bring parity to online businesses.

Old-Fashioned Methods and the Digital Age

Technology may have advanced tremendously over the past few years, but standard business practices have remained the same. Employees still get paid on a regular schedule, banks still keep the same hours, and invoices are still issued with staggered payment schedules. Waiting for 30 days or longer for customers to make payments on invoices can place a major strain on cash flow for online businesses. E-commerce has a much higher volume potential, so maintaining a robust cash flow is essential to cover inventory, production, payroll, and overhead. Lag in revenue due to staggered payment schedules can undermine operations.

Rectifying Cash Flow Issues for Online Businesses

Accounts receivable factoring has been helping traditional businesses in all sectors, and it works the same for online businesses. Factoring takes unpaid receivables and converts them into cash within a single day, which is a big change from waiting 30, 60, or even 90 days to receive payments from customers. Online businesses in healthcare, manufacturing, distribution, and more use factoring to supercharge cash flow so they can keep up with increased demand and improve their digital presence.

At New Century Financial, we provide comprehensive factoring services to businesses of all types. We do not lock clients into long-term contracts, and we give businesses the freedom to choose which invoices or parts of invoices get factored. Additionally, there are no hidden fees, and we offer tools to help businesses check on the creditworthiness of their customers. Contact New Century Financial today to learn how we can improve cash flow for your business.

Debtor-in-Possession Financing: Reliable Capital for Struggling Businesses

Debtor-in-Possession financing (or DIP financing) is an often overlooked solution for businesses that are facing bankruptcy or restructuring. DIP financing is an essential way to keep distressed businesses cash-fluid while they are going through the Chapter 11 process.

How DIP Financing Works

At its heart, DIP financing is extended credit designed to meet the working capital needs of businesses that are seeking bankruptcy protection. DIP financing provides businesses with immediate cash to sustain operations and maintain liquidity throughout their reorganization during bankruptcy.

Why Access to DIP Financing is Important

Debtor-in-Possession financing is nothing new, but the need for DIP financing has come to the forefront. The COVID-19 pandemic led to many businesses downsizing, and some had to put operations on hold for months. As the pandemic stretched into the second, third, and likely fourth-quarter of 2020, some businesses could not sustain themselves, even with scaled-down operations. While the CARES Act does make provisions for financing alternatives, borrowers need to be creditworthy. This can cause problems for businesses that have pushed their own credit to the limits to keep operations running through the pandemic.

Using Factoring as DIP Financing

Many businesses are using factoring as a form of DIP financing. Accounts receivable factoring is perhaps the most flexible way to get DIP financing through the restructuring process of Chapter 11. Since factoring is not based on the creditworthiness of your business, you can leverage unpaid invoices for immediate capital without placing additional debt on the books or signing over assets to a bank. Since factoring is not offered by traditional lenders, the option is frequently overlooked by struggling businesses in need of assistance.

Other Options

If your business is in need of Debtor-in-Possession financing for restructuring, contact the team at New Century Financial. We provide comprehensive factoring services, as well as DIP financing options for businesses nationwide. When the going gets rough, you want a financing partner who is on your side to help you get the outcome you want. Contact New Century Financial today to learn more.