As cities across the country start to lift COVID-19 restrictions, businesses are gearing up to resume operations. Starting back up may be challenging but sustaining cash flow the country reopens may be a bigger obstacle. Fortunately, there is a way to ensure a smooth transition so you can ensure success.
Obstacles to Relaunching Businesses
If your business is ready to start taking customer orders, there are a few things to think about before relaunching. After the first round of sales are made, how will you sustain operations? If your business issues invoices with payment schedules of 30 days or longer, then you could be waiting upwards of a month to see revenue. During that time, overhead expenses still need to be met, employees need to get paid, inventory and materials for production must be purchase, and much more. If sales are high, but the revenue is tied up in unpaid receivables, a business can run into serious financial issues right out of the starting gate.
The Business Landscape Is Not Loan-Friendly
Currently, lenders are tightening their requirements more than they did during the Great Recession in 2008. COVID-19 relief loans offer some ease to business finances, but not all businesses were able to obtain them. Besides, relief and recovery loans were a one-time offer that posed no risk to lenders because they were part of a government stimulus package. Banks and similar lenders have tightened requirements within their organizations, because until the economy is in full swing, a lack of steady cash flow will be seen as a risk.
Maintaining Cash Flow When Relaunching Your Business
For businesses that are relaunching, loans should not be a necessary evil. Banks may be tightening their requirements, but businesses do not want to take on unnecessary debt and place a further strain on cash flow. To overcome cash flow concerns, businesses are pivoting away from loans and using accounts receivable factoring instead. Factoring eliminates lags in cash flow by converting unpaid receivables into cash without placing debt on the balance sheet.
At New Century Financial, we provide comprehensive factoring services to businesses nationwide. We can turn unpaid invoices to cash and make funds available within 24 hours so you can maintain cash flow, cover financial obligations, and sustain your business through the economic recovery. Contact our offices today to get started.