Alternative Sources to Keep Your Cash Flow Alive
The numerous benefits invoice factoring brings make it one of the most viable alternative sources to cash flow compared to traditional financing options.
Traditional external sources of funding such as short-term loans, as well as internal sources like your own personal savings, may not necessarily be the best recourse when you need to keep your cash flow alive. If these options are not enough or simply prove to be too difficult to acquire, perhaps it’s time for you to explore alternative sources to your cash flow needs.
A variety of options are available today to provide you with financial capital to keep operations running or even allow you to start making new investments to grow your business. Some of these include:
- New business partners or owners. Cash contributions come with new business partnerships, along with new skills and ideas that can improve business and stimulate growth.
- Strategic alliances. Other companies may be interested in your business and will want to form strategic partnerships for the mutual benefit of both parties. For instance, a larger firm interested in the technology you’re developing can provide the resources you need for R&D and manufacturing in exchange for exclusive rights to your products.
- Asset leasing/rental agreements Leasing allows you to avoid purchasing equipment, such as computers, that will quickly become obsolete and will need to be replaced in only a few years or less. Many leasing companies also offer rollovers and even upgrades so that your equipment stays up-to-date.
- Your very own customers. Your customers can become a valuable source of financing as some may be interested in supplying you with funds to be able to get your products or services.
Factoring as an Alternative Source of Financing
If you’re looking for alternative sources to cash flow that can quickly provide you with a quick infusion of funding, factoring may be your best option.
Factoring is a form of financing that involves the sale of your invoices or accounts receivables to a financing company called a factor. The factor will advance about 70 to 80% of the face value of your invoices upon purchase. The remaining balance will be disbursed minus some fees once your buyer has fully paid his or her invoice, which the factor will take care of on your behalf.
Unlike other popular alternative sources of capital, you don’t have to worry about coming to an agreement with a new partner or another business entity on how you run your business. There’s also no collateral involved. Only the sale of your invoice is needed to get the funding you need. Additionally, the factoring company will not focus on your credit history to determine your eligibility. Instead, it will verify your buyer’s ability to pay on time before deciding to provide you its services.
Learn more about invoice factoring here at J&D Financial, or call us at 1-305-893-0300 for more details.