When your company needs to make a large purchase of raw materials immediately, you require quick access to a considerable amount of cash. Sometimes you may lack the funds to cover the cost, but your business cannot move forward without the necessary supplies. If you are unable to purchase materials on account, don’t have time to wait for a traditional loan, and do not have cash to cover an immediate need, invoice factoring can be the perfect solution for your business.
How Companies Manage Available Funds and Materials Requirements
In order to generate income you must convert raw materials into their final purpose, transport, distribute, sell and then receive payment from a customer. Companies traditionally use cash reserves, purchase on account, or use credit. However, not every company has those options available. If your business cannot buy necessary supplies using any of those methods, you have two other options: bank loans and invoice factoring.
Why Bank Loans May Not Work for Urgent Purchases
Bank loans often are a source of funds for a business. They are good option for companies that plan to expand and need the cash to fund new facilities or pay new employees. The company will be able to pay back the loan using income generated by the increased number of goods sold. Loans can be used to purchase raw materials, but are usually not the best option when the supplies must be obtained quickly. The lending process often takes several weeks or even months. That’s why loans are ideal when a company is planning for a future need, such as funding an expansion, and not for an immediate need, such as purchasing the materials necessary to keep your business moving forward.
Why Invoice Factoring Is a Solution for Urgent Purchases
Accounts receivable funding allows you to sell your invoices to generate quick cash. The approval process usually only takes a few days, so your company will be able to purchase the raw materials needed without a break in production for weeks or months.
If you need immediate cash to purchase raw materials, call Universal Funding at 1-800-405-6035 or submit a rate form today.