Accounting

When is Cash for Invoices a Good Idea?

By Rieva Lesonsky

As a small business owner, there’ll inevitably be times you’re short on cash. When that happens, there are several financing options you could use—one of which is getting cash for invoices. But when is getting cash for invoices a good idea for your business?

5 Situations Cash for Invoices is a Good Idea

  1. You need to buy materials or inventory to fill a big order

    You know the drill: You finally got that big order from a customer you’ve been trying to land for months. There’s only one problem: You need to buy materials to fill the order, but you don’t have the money on hand—and it will be months until the order is completed, shipped, and the customer pays you. In this situation, cash for invoices can be exactly what you need. Use outstanding invoices to finance the purchase and keep your business running smoothly.

  2. You have unexpected expenses due to an emergency

    Even if you have a financial cushion, sometimes emergencies lead to unforeseen expenses that need to be paid quickly. For instance, you might need to repair damage from a fire or flood in your location before your insurance company is ready to pay your claim. When you obtain cash for invoices through a solution such as Fundbox, there’s no lengthy application process or waiting period. Just create a free account, and once your invoice is funded, you can get the money in as little as one day—and get your business back up and running right away.

  3. One of your clients is a chronically slow payer

    This happens a lot with large corporations or government entities: These organizations typically have so much red tape that getting paid can be as slow as molasses. You know they’re good for it—you just don’t know when exactly the payment will arrive. Getting cash for invoices can give you peace of mind (and positive cash flow). By using this financing method, you can get paid for what you’ve invoiced and not worry about how quickly the client pays.

  4. You have a seasonal business

    For seasonal operations, cash flow ups and downs are just part of doing business. You can smooth out the roller coaster ride by using invoice financing to ensure you can meet your expenses even during your slow seasons. For example, if your company does most of its business during the summer and you’ve sent out lots of invoices in August, getting cash for invoices can help you ride out the fall sales slump.

  5. You’ve spotted an opportunity and need financing in a hurry

    Business opportunities don’t always wait until your business bank account is flush. Perhaps you’ve been looking to purchase a major piece of equipment, and you have the chance to buy it at a substantial discount—but you don’t have the cash on hand. Invoice financing can enable you to take advantage of this and other opportunities when they present themselves instead of missing out.

    To make the most of invoice financing, look for a solution that offers more than partial cash for invoices. Unlike factoring companies, Fundbox pays you 100 percent of the value of your outstanding invoices, maximizing your cash flow.

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