Can Factoring Help to Correct Cash Flow Issues?

Cash flow issues are not that uncommon. Businesses of all sizes often find that expenses exceed the amount of revenue coming in, which can lead to business owners depleting cash reserves or taking on debt to make payroll and cover internal expenses. To sidestep the restrictions of debt-based loans and correct cash flow issues, businesses turn to invoice factoring.

Using loans to correct cash flow issues – it’s a trap!

For a long time, loans were the only answer to correcting cash flow issues. However, using loans for rightsized finances can be a trap with diminishing returns on one end and exacerbated problems on the other. Taking out a small short-term loan to fix cash flow issues can seem harmless. Sure, it slightly impacts credit ratings and puts a small amount of debt on the books, but the loan will work out in the end because cash flow will be corrected. But what is the same issue occurs a second time? Or a third? Or a fifth? Suddenly, those loans stack up and lenders don’t want to hear that expenses overshadowed revenue. Payments need to be made. Lenders, other creditors, and employees are suddenly wondering where their money is. In short, loans can quickly make a bad situation worse.

Taking a new approach without debt

The number of new, small, and growing businesses has been on the rise. While cash flow issues still arise, business owners are opting for invoice factoring as a more viable solution. One of the biggest causes for cash flow issues can be traced to unpaid receivables. Invoices with payment schedules of a month or longer can turn cash flow into an intermittent trickle. Invoice factoring converts unpaid invoices to cash which is immediately accessible for use to correct any cash flow issues. By continuing to take advantage of the fast turnaround of invoice factoring, businesses can rightsized finances and quickly build up reserves to safeguard themselves against any issues that may arise in the future. Invoice factoring is a very powerful solution for businesses of all sizes and a debt-free alternative to short-term loans.

New Century Financial provides factoring solutions for businesses to help them overcome cash flow issues and gain more stable financial footing for long-term success. Contact our team today to get started!