Achieving Business Growth With Working Capital

Working capital is important for businesses for several reasons. For one thing, it helps finance everyday operations, from payroll and taxes to inventory purchases and marketing campaigns. In addition, companies need capital for growth. How can you get sufficient capital for business needs?

Small Business Administration Financing Options

SBA loans are an attractive solution for small businesses looking for financing. Excellent terms and low-interest rates make them an ideal choice when you’re seeking capital for large or long-term projects. For example, if you need to purchase business equipment such as forklifts, skid loaders or restaurant prep surfaces, SBA loans are one of the best avenues to take. This type of financing can also help you build additions to your commercial property, including storage warehouses or office space.

Invoice Factoring and Merchant Cash Advances

Sometimes you need capital quickly. In this case, term loans aren’t the best option because they tend to take a while for approval. Fast working capital is key if you want to buy inventory at special discount prices or weather business emergencies successfully. Seasonal companies can also use alternative lending sources such as invoice factoring to adapt to slow periods in sales.

Invoice factoring works by extending your business cash upfront in exchange for a portion of unpaid invoices. This option has higher total costs than traditional loans, but it’s more flexible and allows companies with poor credit to get the financing required. With merchant cash advances, the result is similar, but instead of invoices, the cash advance is based on credit card sales.

Business Lines of Credit

For flexibility and comfortable interest rates, it’s hard to beat lines of credit for your business. You can utilize business credit for inventory purchases, payroll, emergency payments and anything else needed to drive solid cash flow. Best of all, you don’t have to request authorization for spending the capital on what you need.

Accounts Receivables

Another way to improve the amount of capital your business has on hand is to speed up the collections process for customer payments. If you’re used to giving all of your clients 60 days to pay, you may consider changing many of them to 30-day payment periods. It also pays to perform credit checks before extending credit so you know clients have the resources to pay you. For big-ticket items, you may want to consider offering equipment financing through a third-party lender or accepting credit cards. That way you always get paid.

Whether you’re planning on expanding your sphere of influence or increasing manufacturing potential through literal expansion, business projects require a significant amount of money. Working capital from financing is a big help.

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