Since the middle of 2021, service industry businesses have experienced a major uptick. Companies and government agencies rely on cleaning/sanitation companies, maintenance agencies, management firms, and independent consultants to restructure, redesign, and implement new ideas to move forward efficiently and productively. Post-pandemic planning and adhering to new guidance means the service industry is in high demand. However, even with a growing client base and increased sales, businesses in the service industry are experiencing gaps in revenue. The good news is that there is a way to overcome revenue gaps, eliminate long waiting times between payments from clients, and enable growth into new markets.
Why Gaps in Revenue Occur
Service industry businesses make sales from one-off customer requests, recurring services, and even contracts. When sales are made or services are rendered, those businesses issue invoices with payment windows of 30, 60, or even 90 days. These staggered payment schedules are a standard procedure. In theory, staggered payments are supposed to provide a constant stream of revenue, while simultaneously giving customers some leeway to evaluate the services provided and to gather capital to make payments on their invoices. In reality, staggered payment schedules of a month or more create gaps in revenue, and service industry businesses find themselves waiting for customer payments while digging into their own finances to cover overhead, purchase supplies, make payroll, and more. More times than not, businesses in the service industry need to take out short-term loans to smooth over gaps in revenue caused by staggered payment schedules.
Eliminating Revenue Gaps Without Loans
Instead of waiting on payments for 30 to 90 days, service industry businesses use accounts receivable factoring. When service companies submit unpaid client invoices for factoring, those receivables are turned into cash, which eliminates staggered payment schedules. The increased cash flow allows businesses to cover overhead, make payroll, and avoid taking on unnecessary debt from short-term loans. Additionally, accounts receivable factoring accelerates cash flow so service industry businesses can build up the capital necessary to expand operations and tap into new markets, or court larger accounts.
New Century Financial provides accounts receivable factoring designed specifically for businesses in the service industry. We will convert invoices quickly and make funds available within 24 hours. To get started, contact the team at New Century Financial today.
Review our “Entrepreneur’s Guide to Factoring” for more information and call us at 866-579-1483 or Apply Now to get started.