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Rethinking the Cash Flow Model in a Faster Economy

The rate at which the world does business is much faster than it was only a few years ago. However, we still operate on receivables with staggered payment schedules of 30, 60, and even 90 days. While the standard practice of staggered payment schedules is not going to disappear anytime soon, there is a way to speed up cash flow and get faster access to revenue.

Cash Flow Issues

One of the biggest hang-ups with the traditional model is that businesses regularly experience cash flow issues. When invoices are on staggered payment schedules, businesses have more money going out from their accounts than coming in, at any given point. An unbalances cash flow can lead to uneven revenue cycles, trouble making payroll, the inability to purchase supplies and materials, and much more. Waiting while revenue is tied up in unpaid receivables can create a negative cash flow for businesses, which can lead to even worse problems.

Loans Don’t Solve Cash Flow Issues

Businesses used to turn to short-term loans to temporarily correct cash flow issues. However, taking on debt may exacerbate cash flow issues, especially if they are recurring. Uneven revenue cycles are compounded by loans, and many businesses find themselves in a financial hole as revenue trickles in and then immediately gets used to pay off debt every month. There has to be a better method.

Accounts Receivable Factoring

Accounts receivable factoring is a much more efficient approach to the traditional cash flow model. Factoring allows businesses to get access to revenue by converting unpaid receivables to cash within 24 hours. Factoring speeds up cash flow and eliminates the need to use short-term loans to correct issues. Factoring is used by businesses to ensure a constant flow of revenue to cover overhead expenses, make payroll, and take advantage of growth opportunities.

New Century Financial is a national leader in accounts receivable factoring and cash flow solutions for businesses. We offer the most comprehensive program for factoring, which we can tailor to your needs by letting you choose which invoices, or parts of invoices, get factored. Contact our offices to speed up your cash flow today.