This year, roughly 35% of people plan to strike out on their own and launch startups. Of those that follow through with their plans and get out of the starting gate, only 62% will remain in business after the first three years. Some will lose interest or return to full-time employment elsewhere. However, the number one reason most startups shutter their operations is financial issues, specifically related to debt and cash flow. Startups that figure out how to maintain a strong cash flow are able to build up momentum, sustain finances, and achieve growth. Invoice factoring for startups plays a major role in the success of startups nationwide.
1. You Can Wear Fewer Hats
Startup owners find themselves wearing many hats. They are the sales department, HR, marketing, project manager, and more. The one role that eats up the most time is accounting. Making sure there is enough capital on hand to cover expenses, and ensuring there are no outstanding receivables can force startup owners to burn the midnight oil, seven days a week. Invoice factoring for startup companies helps to automate the accounting process by turning unpaid receivables into cash quickly and efficiently.
2. Invoice Factoring for Startups is Not A Loan
Many startups think loans are a necessary evil, and to get anywhere, they need to take on debt from square one. Invoice factoring does not place debt on the books. In fact, businesses that use invoice factoring for startups are able to build up capital to pay down existing debt, if not pivot away from traditional loans.
3. Invoice Factoring Prevents Cash Flow Issues
Startups are typically very expense-heavy in the beginning. SBA loans, marketing expenses, hiring costs, utilities, equipment, and more can keep startups from becoming profitable for at least the first year. Unless cash flow can be managed or improved, finances can spiral out of control, leading to bankruptcy. Because invoice factoring turns receivables into cash so quickly, startups can maximize their cash flow instead of waiting 30, 60, or 90 days for customers to make payments. The accelerated cash flow helps startups to keep the capital reserves necessary to thrive and grow after they launch.
New Century Financial is an invoice factoring company that works with startups of all types. We will turn your invoices into cash within 24 hours. There are no hidden fees and no long-term contracts. Contact New Century Financial today to learn more.