From invoice financing to using your credit card to cover traditionally cash-only expenses, learn about four ways to access capital quickly.
Nothing undermines a business’ ability to operate efficiently and grow like cash flow problems.
Struggling to buy essential supplies, meet payroll on time, manage surprise costs and even cover routine expenses can be paralyzing. It prevents you from seizing opportunities to expand your business.
The reality is, most small and mid-size businesses run into cash flow emergencies from time to time. You have more options than ever for tackling your financing needs. Whether this is an occasional challenge or a chronic financial juggling act.
Gone are the days when your community bank was the only recourse for getting credit. A technology-driven evolution in financial services is changing everything from the way businesses invoice customers to how they make payments.
Here are four options to consider when you need to quickly come up with more ways to cover your business costs and access capital quickly:
Credit as Cash
Companies and individuals have been using credit to buy goods and services for nearly 100 years. The modern credit card that allows you to carry a balance and pay it off over time, plus interest, has been around for about half that time. The idea, championed by merchants, was to create more flexibility for borrowers to spend money.
But until now, the use of credit cards has been limited to transactions with merchants who carried the card transaction processing systems popularized by Visa and MasterCard. That means that even if you enjoy a generous credit line, you may have some bills you can’t pay with credit.
What if you were able to tap all of your available credit and use it to pay any kind of bill. Even if the recipient doesn’t have a merchant account?
FINSYNC Pay makes this possible. With this approach, payments are set up via email. There is no need for credit card account numbers or other information changing hands, which minimizes identity fraud risk.
Moreover, it’s another way for you to maintain control over your business’ cash flow. By allowing you to use a credit card to cover cash-only expenses, like rent, your cash will be freed up for other needs.
Another way to drum up cash quickly is to use invoice financing, or borrowing against the amount your customers owe you. In other words, you can finance your unpaid invoices to get the cash you’re due now. Without having to wait for your customer to make the payment.
This short-term cash solution can help you patch over cash flow hiccups now. Rather than waiting for 30, 60 or even 90 days for your customers to pay you. This is a scenario that happens all too often, with one in every 10 invoices paid late.
With invoice financing, also known as accounts receivable financing, you’ll pay the lender a percentage of the invoice in return for the loan. Lenders generally advance around 85% of your invoice right away. You’re paid the remaining 15% once your customer pays their invoice.
You’ll also typically pay for processing, plus other fees. Still, this financing option can be a convenient solution. Especially if your business faces long payment cycles or seasonal business swings.
Accounts receivable loans are typically processed in less than a day. With FINSYNC you can turn your invoices into cash in just one click and access capital you need more quickly.
Small businesses, especially newly formed, often struggle to get approved for financing from banks and credit unions. Enter alternative lending companies, which use technology to streamline the loan application process and rely on a broader scope of data to assess a borrower’s credit risk. This combination often means that small businesses can get approved for financing when they’ve been turned down by traditional lenders.
In fact, online lenders have approved more small business loans than banks for the past two years, according to the Federal Reserve’s Small Business Credit Survey.
That’s partly because online lending companies can often look beyond collateral when sizing up their creditworthiness and instead focus on the company’s monthly cash flow. In addition, they may only need to look over as little as three months’ worth of bank transactions. A traditional lender generally weighs at least one or two years of a company’s cash flow history.
Traditional Financial Institutions
Yes, alternative lenders generally offer a quicker and more accepting path to financing than traditional lenders, so you can access capital easier. Forward-thinking banks and credit unions have begun to take notice. They are taking steps to partner with online lenders in order to provide solutions to their business clients who have not been in business long enough to satisfy history requirements.
This is helping banks clear some of the obstacles that they’ve faced when extending small business loans. Including documentation, compliance, cost, and underwriting.
Alternative lenders can crunch large amounts of data drawn from small businesses that are using their integrated accounting and cash flow management services. They quickly generate a more comprehensive and informed credit risk profile.
In addition to friendlier underwriting, it means more traditional banks are providing streamlined online applications and a faster response time.
These partnerships free brick-and-mortar banks from having to play catchup with their online rivals. Typically which would require them to invest in costly software development. Partnering with alternative lenders through networks such as FINSYNC, traditional banks and credit unions can solve more business problems. While providing greater value to their business customers.
If your business is in need of financing, consider applying through the FINSYNC Network. No matter where your business is on the growth curve. Your application will be matched with a lender who has the best options for you. It might be your bank or credit union. If not, FINSYNC’s all-in-one platform allows you to access funding quickly in all four ways discussed above.
No matter what direction you decide to go with financing, with FINSYNC you’ll be able to forecast cash flow, make payments, and handle payroll and other transactions in one place automatically for ultimate control over your cash flow.