It Takes Money to Make Money

The old saying might be trite but it’s true. The fuel of business is money.

If you’re like many businesses these days the gas gauge looks broken: you’re running on empty.

It’s the perfect storm:

•Your bank line is either maxed out, reduced or maybe even cancelled.
•New bank financing is nearly impossible to obtain.
•Your home equity line might be in the same shape as your bank line.
•To add insult to injury, your customers are taking longer and longer to pay.
•The cash on your balance sheet is near zero but the payables balance keeps growing.

And if all that’s not bad enough, you’ve had to pull back on your marketing activities because if you DID get a new client or contract you wouldn’t have the cash to get the job done.

When there is no cash and no credit what’s the fuel source? How CAN you go after that new client or contract?

The answer might be staring you in the face!

On your balance sheet, usually right under the entry for cash, is the figure for your accounts receivable. In that big number that represents what your clients owe you; the number that’s become a real thorn in your side; might well be the solution to your problem.

How can that be possible?

It’s possible because the laws that govern commercial transactions usually allow those receivables to be SOLD. You can actually sell your right to receive the money owed to you and in doing so you can convert that receivable into the cash you need to pursue that client or contract.

And the transaction is NOT a loan. It’s simply the sale of one asset—the receivable—for another asset—cash. There is no new debt on your balance sheet.

The process is known as factoring. It can be used for one invoice; for the invoices of one or more specified customers or, in some cases, to an entire accounts receivable portfolio

How that’s done, why it’s been a well-known practice in many industries for decades, and how it can help businesses keep moving forward when other funding sources disappear,is the topic we’ll be writing about in this blog!

The Interface Financial Group has been helping businesses with their cash flow needs since 1971. Solving cash flow problems is what we do.