People show a great deal of imagination when it comes to financing their business but everyone has to pay the piper sometime. By getting quick loans, you receive short-term relief; however resulting in more debt that has to be repaid and in effect, creating more stress. Just like a credit card, the loan or credit line can go up and up without ever getting paid down. A credit line is meant to revolve but sometimes the only option is term out the line and work toward paying off the loan over time.
Some companies use tax remittances as a short term cash flow solution and in doing so, pay penalties in addition to high interest charges. Employee tax remittances are collected in trust and the company’s owner will be personally liable for that debt not just the corporation. This can become a large problem very quickly!
Factoring can be a short term or long term solution and help a company get back in control of their debt and the interest they pay. Factoring is a reliable and trustworthy solution to financing instead of getting behind in taxes or taking loans that are insufficient to really help your cash flow. Companies have been factoring for hundreds of years all over the world and it solves many problems. Basically you receive cash against your receivables and when the receivables are paid you can start all over again. The factoring credit lines are based on the invoices outstanding not the equity or credit of your business so you have the opportunity to grow your company at your own pace. The additional services including invoice collection, credit management and possibly credit insurance which make it a great way to outsource some or all of the accounts receivable management function. A great way to free up time for the entrepreneur to chase down new business and manage the company not fires. Planning your financial strategies will be the key to planting your garden of success.
By planning your needs, you will sow the seeds.