Cash Management and Smart Financing

Our last series addressed the burden of customer payment terms.  Specifically, how larger corporations fail to remit against your invoices in a timely manner.  Additionally, most of us who launch a business do not have the cash reserves to cover the extend period between invoice and payment – it is also known as “covering the float”.

Also, we discussed four methods of augmenting our cash reserves to cover the float.  We discussed the pros and cons of:

Getting a financial partner,

Obtaining a bank line of credit,

Securing an SBA 7A loan, and

Applying for a Factoring relationship.

I encourage you to go back and consider each alternative again.

Going forward - Admittedly, I am biased.  I believe, more often than not, factoring is the best alternative for the small business operation short on operating capital.  And in this series on cash management, I will be presenting likely conditions that challenge your cash on hand – we will see how factoring resolves those issues.

Before we proceed, I want to address another financing alternative that has metastasized within the arena of small business operations.  I’m talking about the MCA – Merchant Cash Advance.  I want to be respectful here – If you believe heroin is an easily controlled mentally enhancing narcotic – you will love MCAs.  And your prospects for personal growth and business success will run a parallel course.

We spend much of our time extracting clients from the clutches of MCA debt.  If you are caught within the weekly AND sometimes daily doom loop of interest payments to these sharks – please give us a call.

In the last series we considered a business that has customers who pay every 30 days and we determined it needed reserve capital 5 times greater than its weekly output.  We also determined that the demand for reserves could be substantially greater.  So, let’s address reality.  If you are going to provide a product to customers that will not pay you immediately – you WILL NEED RESERVE CAPITAL TO SUCCEED.  AND -  if you don’t have that reserve capital  handy – you must have a plan to acquire it.  AND SO – we are back to those four alternatives – and my suggestion is, choose factoring.

Let’s talk about Factoring Protocol. Here’s the great thing about it, you are in control and you don’t have to commit until everything is laid out in front of you.

Step One – Give us a call and tell us about your business.  

What you do –

Who your customers are and how they pay you –

Your approximate gross monthly income and major debts AND CASH FLOW CHALLENGES.  At that point we will tell you if we believe we can help, how we can help, and what it will cost.  You are not obligated in any way.

Step Two – Fill out a secure application.

You will be providing us background and financial data concerning you and your company (no tax returns, no personal checking account).  Additionally, you will provide us the names and addresses of your customers and how much you typically bill them monthly.  

We will review your information and provide a funding recommendation outlining costs and terms.  We can then follow up with a written proposal outlining all the cogent details.

Step Three – Once you receive a proposal, you choose whether to proceed.  

If you’re curious what happens next – check out the next video in this series.

We are going to discuss how a factoring relationship works and how you are going to move your 30-60-90 day customers on to a pay upon completion platform.

I’ll see you there – or if you know we should talk – give me a call.

View the corresponding video on YouTube!