Small businesses need two things to ensure long-term success. First, small businesses need working capital to cover overhead and make payroll. Second, small businesses need a way to grow and even the playing field with larger competitors. Fortunately, asset-based lending provides a solution for each problem without placing debt on the balance sheet.
Asset-Based Lending for Working Capital
When small businesses have a lack of working capital, it is typically due to sluggish cash flow. Most times, cash flow issues can be traces to unpaid receivables. Unfortunately, many small businesses have to wait on payments from customers because invoices have payment windows of 30 days or longer. Asset-based lending, such as accounts receivable financing, can correct cash flow issues and allow small businesses to build up working capital reserves. Accounts receivable financing is a way for businesses to turn their unpaid receivables into cash quickly, efficiently, and without any debt. Additionally, because the invoices are exchanged for cash as they are generated, accounts receivable financing helps to automate the accounting process. Business owners can finally focus on running and growing their operations instead of chasing after unpaid customer invoices. With a boosted cash flow, small businesses can cover expenses, make payroll, and build up capital for growth projects.
Asset-Based Lending for Business Growth
In order to stay competitive and achieve growth, small businesses need to be able to take on larger client accounts. Unfortunately, the resources necessary for a large or unexpected order can cause regular operations to grind to a halt. Asset-based lending in the form of purchase order financing changes all of that. Purchase order financing (or PO financing) is an advance in capital to cover production or inventory for large and unexpected orders. Once the order is filled, the financing is deducted from the invoice, leaving the business with profits. This allows small businesses to take on client accounts that would otherwise go to larger competitors, and it allows them to achieve rapid growth without taking on debt.
Golden Century Lending provides asset-based lending to businesses of all types. To learn more, contact our offices today.