When businesses experience short-term gaps in finances, the effects can be felt for a long time. Gaps in business finances can take a number of forms. Productivity slows because the capital is not available to cover materials and supplies needed to fill customer orders. Payroll may get delayed. Existing loan payments and other liability may not be covered because the capital necessary is locked up in receivables that clients have yet to pay. Strong cash flow is the key to preventing gaps in business finances, regardless of the economic climate.
Receivables and Business Finances
Outside of point-of-sale operations, businesses issue invoices with payment schedules of 30 days or longer. Payment schedules are a standard business practice, but they create gaps in business finances. A business that makes a sale on any given day will have to wait up to a month or more before seeing revenue from that particular transaction. During that month, businesses still need to make payroll, cover production and delivery of client requests, run advertisements, and pay regular expenses. During the waiting period on receivables, businesses can experience more money going out than coming in, which can place any organization in dire straits.
Closing the Gap
One way to remove gaps in business finances is to use factoring services. Instead of waiting a month or more for payments from clients, factoring can turn unpaid invoices into cash and make funds available within 24 hours. Factoring services are debt-free, and allow businesses to not only cover expenses and make payroll, but to also build up capital for growth during economic upswings or to thrive during downturns. Factoring is a perfect fit for any business that issues invoices with staggered payment schedules so they can maintain a strong cash flow.
Eliminate Gaps in Business Finances Today
New Century Financial is a leader in factoring services. We convert unpaid receivables to cash quickly, and let businesses choose which invoices or parts of invoices we factor. We do not lock clients into long-term contracts, and there are no hidden fees. If you want to eliminate gaps in business finances, contact the team at New Century Financial today.