Positive cash flow is critical to the long-term operation of your business. Most companies fail because of improper cash flow management. Monitoring available cash helps you identify if your business is facing challenges. As much as you prepare for low or negative cash situations, there may be times when your business needs a quick infusion of cash. Vendors may offer a private discount. A competitor may offer to sell their business to you. Storms may damage a facility. Here are a few ways you can get cash quickly.
A merchant cash advance helps you obtain cash based on projected credit card sales. Most merchants offer you an amount based on the value of projected credit card transactions over a short period. If you are going into a seasonal sales decline, you may not be eligible for as much cash, but you will pay back part or all of what you owe from those sales. Typically, the merchant collects a portion of each sales transaction to repay the loan. Alternatively, you may negotiate payoff terms, capping the amount the merchant can collect.
Ask customers to pay with cash rather than offering credit. Cash discounts incentivize customers to pay with cash. You avoid paying a credit card transaction fee and have an immediate influx of funds into your account.
Don’t let any outstanding invoices remain unpaid. An invoice factoring agency can help you manage payments while giving you immediate cash. Factoring agencies examine unpaid invoices and pay you an amount based on the value of the invoices – typically 80%. Then, they collect the payments from your clients. The agency forwards the remaining balance minus a service fee. Factoring agencies do not necessarily specialize in uncollectable invoices. Many businesses choose to use them to handle payment processing for all transactions.
Apply for Credit
If you don’t already have a business credit card, now may be the time to get one. Unlike a merchant cash advance, you can use a credit card to pay for some business expenses, freeing up your available cash. Credit cards can be expensive if not managed properly. Be sure to pay your balance every month to avoid interest fees.
Online lenders may provide the solution you need. Unlike traditional banks, many online lenders can approve a loan in as little as one day. In addition, loan applications are shorter, and underwriting requirements are less strict.
Look at the options available before you make your final decision. Financial decisions should be made with an open mind. Review your options and understand the long-term effects of your decision.