Alternative Financing Options for Your Business
Most businesses will need some type of financing at one time or another to grow. And when it comes to business financing, most people think in terms of a business loan or line of credit. These two products are commonly offered by banks and other financial institutions. However, qualifying for this type of funding is very difficult.
Most loans and lines of credit are provided to companies that pose a small risk of default. Banks measure the risk by looking at the collateral that you can offer as security, by looking at your past financial statements and by reviewing your growth plans. Although this works well for large companies that have accumulated assets, it puts entrepreneurs and small business owners at a disadvantage. For them, getting business financing is very difficult.
However, conventional business financing is not the only way to fund a company. Actually, in many cases, alternative financing solutions may prove more helpful and flexible.
The biggest financial problem for many companies is having to offer term credit to clients. Most clients demand 30 to 60 day payment terms. However, few entrepreneurs and small businesses can afford to wait that long for payment. They just don't have the financial resources to wait - and run the business at the same time. A simple way to solve this problem is to finance your invoices. This solution immediately improves your cash flow and solves the root cause of the issue.
Conventional Invoice Factoring
A conventional factoring plan works with companies in most industries that sell products or services to creditworthy commercial customers. It solves the cash flow problem by selling your receivables to a financial intermediary, who provides you with immediate funding.The transaction concludes once your customer pays their invoices in full. As opposed to most banking solutions, qualifying for factoring is relatively easy and transactions often follow a simple structure.
Companies in the transportation industry often run into financial problems because their shippers don't offer quick pays. This creates a problem because freight companies and brokerages are cash hungry businesses that need ongoing cash flow to operate. You can solve this problem by financing your freight bills using a transportation factoring plan. These plans are specially tailored for transportation companies and offer high advances, competitive rates, access to fleet fuel cards and timely credit information.
Companies in the staffing and security industries have to deal with heavy payroll liabilities. Employees are often paid weekly, but customers pay their invoices in 30 to 60 days. Often, the staffing company is left in the middle and has to cover payroll while waiting for a client payment. A staffing finance program can help cover payroll by financing your invoices from credit worthy but slow paying clients..
Medical Receivables Finance
Most medical offices, hospitals, testing and diagnostic centers and other healthcare companies run into cash flow problems because insurance plans, PPOs, HMOs and Medicare/Medicaid tend to pay insurance claims very slowly. However, the healthcare business has a heavy expense load that must be met. You can accelerate your medical receivables by financing your medical claims, which provides your healthcare company with the resources it needs to cover operating expenses, and more importantly, with the resources it needs to grow.
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