Online business has pushed a lot of companies to invest cash flow into marketing campaigns….
Overspending in marketing is a common cash flow problem. If we do not have marketing, we do not have sales it is that simple. Some businesses bring in enough capital through word of mouth while the rest of us have to put up capital for marketing.
Traditionally spending on marketing is always in “the budget.” But what happens when your customers take longer than the 30 day terms you extended to them. Especially in this economy where invoices are taking 2 times the time to get repaid on, covering expenses can be a real downer. Waiting up to months for capital certainly is not part of “the budget.”
Plain and simple slow paying customers equal a decrease in your capital reserve accounts. The irony is if you tighten your credit terms you could lose customers. Covering expenses is your main goal, then the focus turns to expanding operations.
In todays economy almost all businesses are experiencing a lack of cash. This blog is aimed at providing you with info on what some of the industries cash flow hero’s are doing. When business is going great, we rarely plan for a downturn. As a business owner your focus is always on covering expenses and growth. The economy is on a strong path to recovery.
At NeeBo Capital we factor invoices for companies. However we have other solutions for business owners who are not interested in factoring. First we recommend you offer incentives for your buyers to pay on time, something like a 1.5% discount rate could do the job.
Second, we recommend you delay your incoming expenses to match up with your late or overdue invoices. By matching the payment cycle with your expense cycle you can take pressure off of your reserve accounts.
Keep in mind that with factoring you will not miss payroll or taxes. It is important to pay your employees and Uncle Sam. Also you can take advantage of paying your expenses early. With factoring your invoices you have capital on had to pay your bills early.
Invoice factoring fast-tracks your revenues by using a financial intermediary such as NeeBo Capital who advances you funds against your slow paying invoices. As the middleman the factor company keeps the invoices. It is also up to the factor company to ensure the invoices are paid back in full. The factoring company does not charge you a fee until the invoice is collected in full. Factoring companies charge a fee based on volume.
Keep in mind that factoring is a tool hero’s in the cash flow world are using to gain capital on hand to grow operations. Do your research and discover what works best for your company. Keep your business involved in social groups online and you may meet business owners in similar situations to yours. The economy is on a recovery so it is best to have your company to be in a position to expand.