Marketing & Growth

How to Boost Your Business with Invoice Financing

By Justin Reynolds

Invoice financing could help you get through the winter slowdown. Here’s why.

The winter season is a tough time of the year for many small business owners. As the ground freezes, construction work dries up or grinds to a halt altogether. Retail shops in certain beach towns can remain mostly vacant for weeks or even months. Winter storms and cold weather can also wreak havoc on the restaurant industry, as customers either opt to dine at home or blizzards make roads impassable for several days.

According to a recent news report, small business owners can miss out on as much as half of their average sales during the first few months of the year. Running a small business is hard enough to begin with. Remove half of your customers from the equation for any extended period of time, and it becomes that much more complicated.

How exactly can you keep your business open when your sales dip so spectacularly during the slow winter season?

Imagine you own a restaurant in a town that was recently blanketed with snow, forcing you to shut the doors of your establishment for two full days until plow trucks finally clear the roads off in your neighborhood. Your finances were already tight during the winter months, and two fewer revenue-producing days makes cash flow management that much trickier.

Luckily, to generate extra revenue during the slower times of the year, you decided to launch a catering side business a few years back. Before the storm hit, you catered a few big events. Unfortunately, your customers are taking their time to settle those bills. While your accounts receivables may look nice on your financial statements, you can’t exactly cover your expenses with unpaid invoices.

The good news is that, by taking advantage of an invoice financing service like Fundbox, you’re able to get the cash you need to keep your restaurant chugging along during the quieter times of the year. Invoice financing gives you the power you need to reclaim control over your cash situation by enabling you to choose which unpaid invoices you’re owed that you want to advance payments on.

Even if your customers are taking forever to settle their catering bills, invoice financing allows you to receive 100% of the value of the outstanding invoices you wish to collect on. Compare that to other financing options which generally skim at least a few percentage points off the top.

How Invoice Financing Works

Create a free account and seamlessly connect your bookkeeping app to it. Once approved, outstanding invoices are automatically loaded into the system. With the push of a button (on your laptop) or the tap of a finger (on your mobile device), choose which unpaid invoices you want advanced. Money is then deposited into your company’s bank account in as soon as one business day. You then have anywhere from 12 to 24 weeks to repay the advances, plus a small fee. Should you repay the advance in full ahead of schedule, all remaining fees are waived.

You have full control over which invoices you choose to clear, so you won’t have to worry about advancing more money than you need (you won’t be overextended) and incurring larger fees as a result.

As an added bonus, invoice financing exists completely in the background, meaning your customers won’t be privy to any cash flow struggles you may have. Compared that to other funding options like invoice discounting, like invoice factoring, which your customers will find out about even if you don’t want them to.

The winter months can be challenging for many small businesses—there’s no doubt about it. By getting creative, figuring out how to stretch your cash, and becoming familiar with the various financial tools that are available, you put your company in a much better position to not only survive the slowest time of the year but to also thrive when the weather improves and business returns to normal.

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