All businesses experience uneven revenue cycles, which can greatly impact cash flow and prevent companies from thriving and growing. While many businesses use short-term loans to overcome these recurring obstacles, the debt and impacted credit ratings can create an even larger problem. Fortunately, there is a way to smooth out uneven revenue cycles without negatively impacting finances.
What Causes Uneven Revenue Cycles?
Uneven revenue cycles can be caused by many things. Unexpected business expenses, unpredictable economic downturns, unconsolidated debt – any and all of these things can disrupt cash flow. Even during high sales periods, the total payments received from customers can be well below the calculated revenue due to staggered payment schedules. The most common cause of uneven revenue cycles occurs when revenue is tied up in unpaid receivables with staggered payment schedules of 30, 60, or 90 days. The disruption to finances often forces businesses to take out short-term loans to smooth things over. However, if these cash flow issues are recurring, then loans will only make things worse. The debt incurred means monthly expenses are higher, in order to repay the balance. This can lead to even greater cash flow issues every month, and businesses can quickly reach their lending limits with banks.
Correcting Revenue Cycles
The simplest and most effective way to smooth out uneven revenue cycles is by using factoring services. At its most basic, factoring services are an exchange of unpaid receivables for immediate cash. Unlike traditional loans, factoring does not place debt on the book or impact credit ratings. This allows businesses to correct uneven revenue cycles, boost cash flow, and build up capital to weather obstacles and make plans for growth.
New Century Financial is a national leader in factoring services for businesses across all industries. We can turn unpaid invoices into cash within 24 hours. Our team is committed to giving businesses the flexibility they demand, which is why we do not lock clients into long-term contracts, and we let you choose which invoices or parts of invoices get factored. To get the fastest, most transparent, and most flexible factoring services, contact the experts at New Century Financial today.