Cash Flow Lending for Business

corporate people talking

Share This Post

How to keep doing business until your customer pays

In business, we all know having access to working capital and strong cash flow are critical to success.

However some customers don’t pay on time, and there can be disputes and bad debt as others go out of business.

All of these issues can have a dramatic impact on keeping your own business surviving and thriving during tough times.

The Importance of Revenue Recognition

Knowing your numbers in business is a strong asset.

Part of knowing your numbers is knowing your expenses and your business revenue.  Almost as is important is when you recognize revenue because the sooner you’re paid the sooner you can pay expenses and invest back into your business and staff.

The cash flow in your business can make a big difference to your ability to meet your obligations as well as help or hinder your ability to grow.

How to keep doing business until your customer pays

If you’re billing on invoice a way to bring your revenue recognition forward is with invoice finance.

Invoice finance, also known as debtor finance or factoring, is a line of credit secured by your accounts receivable with the amount of credit available tied to the amount of invoices you have issued.

How does invoice finance work?

If you write an invoice for work completed for say $10,000, you could have approximately $8500 in available credit the day you issue the invoice.

When your customer makes their payment this clears any amount you might have drawn up to $8500 and the balance comes through to you that day.

In this way up to 85% of your invoice value could be recognized the day you issued the invoice.

If you had $1,000,000 in invoices issued you could have up to $850,000 in credit available to you.

Final Tips

The benefit of an invoice finance facility is that it smooths out the cash flow peaks and troughs. By being able to bring revenue recognition forward you can pay wages and other expenses when dealing with seasonal differences and natural cash flow cycles.

Related Links

Bringing Revenue Recognition Forward in a Commercial Construction Business

Case Study: A Line of Credit Without Property Security

Case Study: 2 Businesses, 2 Lines of Credit

Case Study: How to use Invoice for Growth

Cash Flow Lending for a New Agribusiness

More Posts

Send Us A Message

More To Explore

couple happily discusses mortgage refinance with mortgage broker, brightly lit photo, happy mood
Home and Investment Lending

Choosing the Best Refinance Lender

Key Takeaways   Refinancing your mortgage can provide access to better rates, terms and features. Choosing the right refinance lender

Learn more about business financing!

drop us a line and keep in touch

Two men discuss the Types of Loans for Businesses with Bad Credit, Conceptual Photo
Scroll to Top