As cities across the United States begin to come out from a state of quarantine, businesses are reopening. Due to businesses restricting or halting commerce during the COVID-19 pandemic, catching up on revenue is a top priority. However, business recovery will be challenging without a way to ensure strong cash flow and fast access to capital.
Lenders Are Tightening Requirements
As the economy contracted during the pandemic, lenders started tightening their requirements for loans. The minimums for both collateral and credit ratings increased, while the amount offered for loans decreased. This trend is expected to continue through the business recovery period, as lenders attempt to minimize their own risk and place most of the burden on the borrowers. At the same time, businesses need access to working capital to get back up and running, but taking on extra debt to accomplish is not a desired course of action.
Business Recovery and Sales
Those first few sales will be crucial to the recovery of businesses across every industry. The big obstacle facing businesses is the ability to hold out while waiting for payments from customers. Staggered payment schedule on invoices of 30, 60, or 90 days can place businesses in a tight spot, especially now. Businesses are relying on fast payments from clients, but that may not happen in the first month or so. If loans are out of the picture and staggered payment scheduled are causing gaps in revenue, how can businesses maintain cash flow and cover operational costs?
Speeding Up Cash Flow
Accounts receivable factoring offers a solution to all of the issues detailed above. When businesses use accounts receivable factoring, they can turn unpaid customer invoices into cash that can be accessed within 24 hours. This provides a healthy cash flow right from the start while eliminating the long waiting periods between sales and payments. Additionally, accounts receivable factoring does not place any debt on the books, so businesses can preserve their credit ratings.
Get a Competitive Edge
New Century Financial is a leader in accounts receivable factoring. We provide financing for unpaid invoices within 24 hours, and allow businesses to choose which receivables or parts of receivables get factored. To get a head start on business recovery, contact the team at New Century Financial today.