Merchant Cash Advance: Cash Shortage Problems Solved
If you’re running a new business, being low on cash is an extremely common experience. To improve your cash flow without applying for a business loan, consider these solutions to help your business escape from financial troubles.
Grow a Savings Fund
To keep your business afloat and out of financial turmoil, it’s important to start setting aside cash as a reserve. Unforeseen circumstances can quickly tank a business if there’s not a healthy reserve of cash available, and it’s always a good idea to spend judiciously in order to preserve money whenever possible. If possible, only make purchases that are absolutely necessary when your business is first getting off the ground. The ultimate goal is to have a few months worth of expenses saved up so you’ll be prepared for unexpected circumstances. Of course, this is not always possible when the business if just starting out, which is why there are several other options for gaining access to capital when you’re in a pinch.
Expedite Client Payments
If your company relies on invoice payments from clients, one of the best ways to build up a cash reserve is to stop offering extended payment periods. While many companies offer 60 or more days for payments to be made, this can be extremely dangerous for a new and growing business. Instead of being pressed for cash while you wait for clients to make payments, offering only a short payment period will allow you to collect funds in a timely manner.
Use Invoice Factoring
If you’ve found that you’re in financial trouble due to slow-paying clients, it might be time to consider invoice financing. This option can be quite helpful to businesses that need their cash reserves to be replenished quickly without the slow approval process of a traditional business loan. When you use this method of funding, you’ll sell your unpaid invoices to a third party company in return for a lump sump of cash. In exchange for your invoices, the company will offer you a payment of about 80 percent of the value of the invoices. Unlike a loan, you won’t need to provide your credit history or tax returns from several years. With invoice factoring, you’ll simply need to show your invoice history to the factoring company and they’ll evaluate if they can work with you. If you’re approved for the sale of the invoices, then the factoring company will deposit the money in your bank within just a few business days. If you’re struggling and in need of quick cash or you’d simply like to build up your reserves, this option can be an excellent choice.