Cash flow is the term used in business for the movement of cash coming into a business and being paid out. To make it more understandable, cash flow, is the amount of monies a business has on hand at any given moment during a business cycle.
Start up companies, as well as established businesses, at one point or another, can suffer f with cash flow issues. The word liquidity is often used when determining the cash flow of a company. Liquidity is a term often used when referring to a debtor's ability to pay his debts when they become due.
Often times, small business will find themselves, "invoice rich," with very little cash on hand This is a common occurrence for many smaller businesses, due to the lag time between when a company provides a service, invoices the client and receives payment for the service or the product. This can create a low or no, cash flow which may cause concerns with meeting monthly expenditures, such as rent, payroll, the purchasing of supplies, expanding the business, or even taking a small vacation to renew you energy.
For individuals not up on all the accounting phases, just know that if you need to meet your payroll and you have invoiced your clients, but they have not paid the invoices, then you have what is called a cash flow problem.
Most small business owners will turn to the bank. And for those business owners who don't qualify for a bank line of credit, there is what you call, Accounts Receivable funding, or Invoice Line of Credits, to bridge the gap between what is in the business bank account and what is owed to the business.
Fortunately, AR Lenders, usually don't require financials or a credit check on the business or the business owner. It is the credit score of your clients, which is important in making a decision to wire 80 to 90 percent of your total invoice amount, immediately, into your business account once all paper work is completed.
Accounts Receivable lenders, of course, charge a fee for this service. (1.5 to 3.5% of total invoice amount) But the good news is, the fee is 100 percent tax deductible.
The average amount of money a small company has in the bank to meet monthly obligations may seem like a small concern, especially when owed millions by the government or corporations, however this 'so called' small concern has been the reason for many business failures.
To apply for an Invoice Line of Credit, complete this short application (6 questions-secure); An Accounts Receivable Lender will contact you with details for your specific cash flow needs. Privacy policy in effect, your information is not shared sold or sent out to dozens of lenders. Government and Corporate Invoices are welcome. Placement with authorized lender occurs usually within 24 hours. It takes less a week for Corporate Invoice Lines of Credit and up to 3 weeks for Government Invoices.
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