“I had to make a choice: close my business or not.”
This quote comes from a business owner who makes money, employs people and has a steady client base. In fact, the business just secured a contract with a large company that will help the business hire more people and grow.
So why would the business owner wrestle with the idea of shutting down?
Because there was a big problem.
The large company pays its invoices on the 15th of every month but the small business must pay its employees on the first and 15th each month.
That means the small business will need to pay its employees before it receives payment from the large company. This small business doesn’t have the cash available to buy all of the necessary supplies for the new client and pay its employees on time.
What options does the business have? Delay paying the employees? Apply for short-term credit with a bank? Let its new client go? Close up shop all together?
Paying employees late isn’t a real option. They’ll take it as a sign of trouble and bolt at the first opportunity. Seeking credit from a traditional bank would never be finished in time because of the rigorous approval process.
Closing a profitable business would be an absolute shame, but if the money’s not there, closing remains an option.
But there’s a solution. Solving this business’ cash flow problem is as easy as accounts receivable financing. This type of financing would allow the business to access the cash tied up in its receivables, purchase supplies, pay vendors, meet payroll and stay in business.
That’s the business of factoring: helping companies grow and succeed.
Even profitable companies experience cash flow problems; it’s a part of doing business. It’s important to know that if your business is experiencing difficulty meeting payroll, paying vendors or buying necessary supplies to fill orders, there are solutions available to you. Even if cash flow isn’t a problem today, it could be tomorrow. When the problem arises, know that Universal Funding has your back and will get you through it.