Too Many Expenses? Invoice Financing Can Help

Author: Caron Beesley | August 24, 2016

Cash flow is the lifeblood of small business. No matter how profitable you are or how great your sales are doing, if you can’t strike a balance between the cash coming into your business and flowing out again, then you have a cash flow problem. This is where invoice financing can help.

One of the main causes of cash flow problems is too many expenses. Whether you’re stockpiling inventory; just landed a major contract and need equipment, supplies, or more staff; or dealing with the unexpected, expenses can quickly add up.

Still, there are a number of things you can do to prevent expenses taking an unnecessary bite out of your cash flow, including invoice financing, which I’ll also explain in more detail. Here we go:

  1. Plan for Your Expenses

    Many of your expenses can be better managed and the cash flow impact mitigated by maintaining and monitoring your cash flow forecast. This key financial document can help you understand when money comes in, when it goes out, and what you’re left with to pay your expenses. It can also help you prepare for potential cash flow negative situations down the road and put measures in place to get you through it. It’s a useful exercise that forces you to track your expenses on a monthly basis and project future ones that lie ahead.

  2. Have a Financial Cushion

    Of course, emergencies such as unexpected repairs, natural disasters, or even downtime due to an illness are hard to anticipate, although you can prepare for them. Having a financial cushion is always a good idea, but it’s also worth considering third-party financing to help tide you over through a crisis.

  3. Seek Credit

    According to a survey by the Federal Reserve Bank of New York, “managing day-to-day operations expenses was…the top reason why firms sought credit.” However, searching for traditional credit can be time-consuming. The same survey found that small businesses spend 26 hours searching and applying for credit, contact three financial institutions, and submit three credit applications. There’s a better way.

  4. Fix Short-Term Cash Flow Problems with Invoice Financing

    If you have short-term cash flow issues, such as too many expenses one month or late-paying clients putting a strain on your funds, invoice financing can be a good fit. Not to be confused with invoice factoring, invoice financing services work by giving you an advance on outstanding invoices so that you can instantly access funds that you’re already owed (as early as the next business day).

    Fundbox, for example, advances 100% of your owed invoice amount, then you pay that amount back over 12 weeks, plus a small clearing fee (if you repay early, the remainder of the fee is waived). Your customers don’t have to know, and you’re not left paying a loan fee or high-interest rate to a bank.

    Like other alternative business loans, there’s no paperwork involved, and there’s no minimum revenue or credit score requirement. Once you’re signed up, Fundbox connects with your accounting system and all your outstanding invoices can be accessed via your account. Simply pick the ones you want to advance and you’re done.

Fundbox hit the nail on the head with the needs of small business entrepreneurs. I have no credit cards personally or for my business because I don’t like carrying non-amortized debt. So Fundbox is perfect. I love the scheduled predictable automatic payments and the transparency.” – Marty Bhatia, Owner digitalninja.com.

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