Congratulations on launching your own business! You probably have your sights set on making lots of sales and growing your operations. But before you turn on the “open for business” sign, you need to make sure your financial logistics are in order.
This is an integral part of any business, and the one that can cause the most headaches. Most small business owners wear multiple hats, often playing the roles of salesperson, marketer, and in-house accountant. To make things easier, spend the extra money on either hiring the services of a CPA or at the very least, getting a subscription to cloud-based accounting software to handle everything from budgeting to forecasting, payroll, and taxes. It will give you time to focus on running your business and save you countless late nights balancing the books.
You sell things and your clients give you money. It can’t get more complicated than that, right? The truth is that most non-retail businesses issue invoices as a standard business procedure, and those invoices have payments schedules of at least 30 days before payments is received. This creates a staggered revenue cycle, and is common in most industries.
Accounting manages cash flow, which is impacted by sales and expenses. There are common expenses, such as utilities, payroll, supplies, and other overhead costs, and then there are other liabilities, such as loans and equipment leases. With invoices on a staggered payment schedule, small business owners need to strike a delicate balance with their cash flow to ensure that more money is coming in than going out at any given time. Many businesses approach bankruptcy because expenses outpace the rate at which revenue is coming into the business.
Factoring for Small Business Owners
Factoring helps small business owners stay flush with cash, even if they issue invoices with staggered payment schedules. Factoring is a process by which receivables are converted to cash so businesses get access to revenue faster than they would by waiting 30, 60, or even 90 days. By using factoring, small business owners can easily cover expenses, take care of accounting easier, and build up growth capital.
At New Century Financial, we specialize in factoring solutions for small business owners. We help reduce the wait by turning your invoices to cash within 24 hours. Contact our offices today and let us help you streamline your financial logistics today with our accounts receivable factoring services.