There is no doubt that we are in an economic upswing. Employment is low, businesses are producing more, and people have the excess income to purchase the goods and services they want. No one can predict how long this economic cycle will last, which is why it is important to plan ahead and create a reliable source of working capital.
Leveraging Sales for Working Capital
Businesses that are experiencing an increase in sales should be building up capital reserves. Having an internal source of working capital means businesses can roll out new products and services, launch new marketing campaigns, or deploy growth strategies to reach new markets. However, having a lot of sales does not always translate to an improved cash flow. If a business makes a large number of sales, but the invoices issued are on a staggered payment schedule of 30 days or longer, they might not have a chance to accumulate working capital. As payments come in at a slow trickle, the revenue goes to cover overhead costs instead of being put toward growth projects.
Fast Access to Working Capital
Business owners should not have to put plans on the back burner because working capital is tied up in unpaid receivables. In the current economic climate, it is essential to have a source of working capital to not only plan for growth but also to have a financial buffer in case there is a downturn in the economy later on. Waiting on staggered payments from customers will not provide that source. Taking out loans may provide temporary capital, but with the added drawback of debt and impacted credit ratings. Instead of waiting to see what happens and putting off stretch goals, businesses are using factoring services to get immediate access to working capital without debt. Factoring takes unsettled customer accounts and unpaid receivables and turns them into working capital within 24 hours. This greatly accelerates cash flow for businesses instead of waiting 30 days or longer to receive payment from customers. Factoring allows businesses to build up reserves and take action on growth opportunities.
FSW Funding specializes in working capital solutions for businesses by offering the most comprehensive program for accounts receivable financing. Whether you are just starting out or trying to position your company for growth, contact FSW Funding and learn how we can help you reach your goals.