You find yourself in the same position many companies have in the past, but you have clients and active projects, but you have no cash. You have a list of successfully completed work, but all you have to show for your effort is a pile of invoices. This is of no consequence to your creditors, they expect to be paid today. Never mind the rest of your overheads that don’t just go away because you have cash flow problems. But getting a short term loan had proven difficult. But there is another solution available. Is your company in danger of failing?
Have you heard of invoice financing?
If you find yourself in the above situation all is not lost. Fortunately, some lenders are smart enough to know your pile of invoices aren’t worthless. But they certainly might be if you are forced to close your doors. They will analyze your invoices to see if they can be used as security against a loan. This will allow you to stay in operation until your debtors settle their accounts. Your business can continue to work and create additional streams of income, instead of grinding to a halt, due to circumstances outside of their control.
The lender will treat it as a collateralized loan, they might be willing to front you 80% to 90% of the cash. You will receive the balance once your customers pay their invoices. Minus the fees of course. these lenders recognize the fact that most successful businesses experience cash flow problems. This does not mean these companies will inevitably fail, most continue to grow, with the help of an invoice loan. These institutions also offer financial advice to businesses to help prevent this occurring again.
Lenders are more focused on the value of your invoices than the finances of the company. So regardless of your overall financial health, this avenue could be just the solution you need, there are other options available, but you might have a more difficult time qualifying for another type of finance.
If you are approved for cash flow finance for business, the next step is to change your business model to ensure you do not find yourself in this situation again. Gets some financial advice to ensure you have access to cash in the future. Talk to your customers about paying in a more prompt manner. Anything that prevents having to leverage invoices to keep your business afloat in the future.