Growth allows businesses to create more jobs, take on more and larger client accounts, and tap into new markets. Business growth is a great goal, but too frequently things like cash flow, debt, and capital reserves keep companies from reaching their milestones. Thankfully, there is a way to overcome those challenges and achieve rapid business growth.
The Drawback of Using Loans for Business Growth
In the past, businesses used loans to achieve growth. While the function of loans hasn’t changed, the lending landscape certainly has. Banks and other business lenders have tightened their requirements. Businesses need higher credit ratings and more collateral to qualify for loans. At the same time, banks have reduced loan amounts, making it more difficult for businesses to secure the capital they need to achieve growth. Additionally, debt-based solutions limit the growth potential of businesses. Business owners need to calculate how much the monthly installments will be on bank loans and figure those into cash flow after growth. While businesses typically experience some cash flow strains under regular conditions, adding another loan payment into the mix can stretch finances beyond their limits.
Business Growth without Debt
Fortunately, loans are not the only way businesses can achieve growth. In order to ensure successful growth, businesses need to maintain strong cash flow, reduce debt, and build up their capital reserves. One of the fastest and simplest ways to overcome all three challenges without taking on extra debt is to use accounts receivable factoring. When businesses issue invoices, they usually have to wait 30, 60, or even 90 days to receive payments from customers. This staggers cash flow and often delays plans for growth. Accounts receivable factoring boosts cash flow by converting unpaid invoices into capital and making those funds available within 24 hours. The side benefit is that with an accelerated cash flow, businesses can cover expenses, build up capital reserves, and achieve rapid business growth without taking on debt or limiting their potential.
New Century Financial specializes in accounts receivable factoring for businesses that are looking to position themselves for growth. Contact our offices today to learn more.