In an ideal world, your revenue would far exceed your expenses and you would take home a great chunk of your total sales. However, a reality check could quite possible display a different scenario, especially when you are a start-up trying to find its place in the market. It is very likely that in this stage you will find yourself behind payments, running after clients, and trying make ends meet.
Most businesses, if not all, operate for profit. But, in a business cycle, there is one thing more important than profit – cash flow. You need cash for just about everything, from paying for raw materials to hiring and retaining people that work for you. So, if you are a business owner in need of a little relief from a constrained cash flow situation, we are going to tell you exactly how you can do so.
1) Credit Cards: Being perhaps the most obvious one on the list, credit cards need no introduction. However, it is worth mentioning that it is essential to get a business card, rather than a personal one, as it accompanies much favorable rates, while also giving you a higher credit limit.
2) Invoice Financing: This method requires you to present your sales invoices to an invoice financing company, which would treat your invoices as collateral and extend to you a cash sum that is a percentage of those invoices. This is usually 80%-90%, while the difference is what the invoice financing company earns. Your customers can, in most cases, pay directly to that company then. It is a way of selling debt when you are unable to recover it as fast as you can without damaging your relations with the customer.
3) Purchase Financing: Similar to invoice financing, purchase financing basically allows you to buy inventory and equipment and have the purchase financing company pay the amount for you. You can then take a good couple of months before you have to make the payment. Purchase financing also releases you from the task of negotiating terms with vendors, something start-ups and other small businesses are hardly ever able to truly accomplish.
4) Merchant Cash Advance: Imagine surrendering a percentage of your daily sales in return for one large lump-sum payment – this is what a merchant cash advance is all about. The APR of these cash advances tend to be higher than all the other alternatives and is a source of finance that must only be considered when you have ended up empty-handed from all the other sources.
As a small business, it is hardly ever a good choice to push your customers too hard for payments as doing so would compromise your relations. As a new kid on the block, these relations are what you really need at this point. In such a situation, these means of getting an advance on your sales come in extremely handy.
Yet, despite their apparently simple nature, you need a reliable company to get your start up business cash advance. What you need is a company that not only tells you want you want to hear, but also understand your business. Very few companies have truly accomplished this. One such company you should definitely consider is First American Merchant. With a team experienced in dealing with start-ups and allowing them cash advances, First American Merchant has the ability and determination to help your business go an extra mile in dealing with its cash flow problems.