Small Businesses: Keeping Finances Healthy for Growth

For many small businesses, maintaining healthy finances is a careful balancing act between revenue, expenses, and liabilities. There are a few key guidelines small businesses can use to keep healthy finances and achieve successful growth.

Avoid Unnecessary Debt

Small businesses need capital for everything from overhead to payroll, and the cost of production for client orders. Using loans and other debt-based financing programs as an answer to smooth out financial turbulence is a slippery slope. Loans place debt on the balance sheet, lower business credit ratings, and place a further strain on finances. Yes, loans can temporarily provide a “fix,” but businesses have to set aside a portion of their revenue to make payments on the balance owed, which can create even larger cash flow issues.

Stay on Top of Liabilities

Small businesses need to pay their quarterly IRS liabilities to avoid fines and other penalties. If there are already existing loans, the balance owed can eat into finances and prevent businesses from making those quarterly IRS payments on time. Small businesses need to build up capital to keep their federal obligations covered to prevent liens and worse.

Optimize Cash Flow

Cash flow is crucial to all companies, but it has the biggest impact on small businesses. Sales are great, but if the lag between payments from clients is a month or longer due to staggered schedules, productivity and finances can grind to a halt. Even an unexpected or large order can be both a blessing and a curse. A large order will definitely yield more revenue, but covering the cost of filling that order can hold up regular operations, especially if revenue is coming in at a staggered pace. To optimize cash flow, small businesses use accounts receivable factoring. Accounts receivable factoring boosts cash flow by providing immediate funds for unpaid client invoices. This allows small businesses to build up capital to cover overhead, pay down liabilities, become less reliant on debt-based financing, and take on larger client accounts.

New Century Financial provides comprehensive accounts receivable factoring with a turnaround on receivables within 24 hours. We give small businesses more control by letting them choose which invoices or parts of invoices get factored, with no long-term contracts or hidden fees. Contact New Century Financial today, and keep your business finances healthy.