Get Your Start-Up Off The Ground With The Help Of Invoice Factoring

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BFF Manager
02/06
2014

You spent years contemplating your own business and months putting together your business plan. Then you spent another year raising the initial funding that would keep your business, and your personal finances, going for at least six months. You figure, at six months, the business will be breaking even and you can start to take it from there.

The launch is a complete success despite the fact that your funding is a patchwork of money you contributed yourself from your life savings and a bank loan that the bank was extremely reluctant to give you.

invoice factoring for startups

In the first six months, your invoiced sales to customers that were granted credit accounts exceed your projections and you couldn't be happier. But when the initial funding runs out, you find that your start-up is in danger of going under. What happened? How could your successful start-up be on the verge of bankruptcy?


Aging Reports Are Never Part Of A Business Plan

When new entrepreneurs create business plans, they rarely account for cash flow issues. They feel that covering the first six months of operations with start-up funding should cover everything. But once the funding runs out, they find that their cash flow is nowhere near what it should be. The invoiced sales are on track, but the cash flow is not.

accounts receivable aging report

Forbes Magazine published an article in September 2013 that stated that 80 percent of all businesses fail in the first 18 months. The big reason for all of these failing businesses is bad planning. Your start-up's cash flow is being severely hampered by outstanding receivables and now your business could close its doors because of it.


Look For A Long-Term Solution

New entrepreneurs have to understand that bank funding can be difficult to get when you have no credit history. Banks are usually not in the business of offering open-ended lines of credit to start-ups and that is a reality you will have to deal with.

entrepreneurs factoring solution

Your solution lies in finding a way to stabilize your cash flow and turn more of your invoices into cash. You could develop harsher accounts receivables techniques, but that will only help to push customers away. The answer to your problems is invoice factoring.


Invoice Factoring Is The Ideal Solution For Start-Ups

With an invoice factoring arrangement, it does not matter if your company has been in business for six months or six years. An invoice factoring company does not care about your company's lack of credit history, nor does it care about the bad credit you are currently racking up by not paying your bills.

An invoice factoring company analyzes the credit profiles of your clients and then helps you get the funds you need based on your invoiced sales. When you look at your aging report, you see nothing but potential for the future of your new company. With the help of a factoring organization, you can unlock that potential and use it to your advantage.


Include Invoice Factoring In Your Start-Up Planning

A smart entrepreneur includes invoice factoring services in their business plan. An ongoing relationship with a factoring company means that your organization will have a reliable source of funding it needs to grow. You will always have a sustained cash flow, and you will always be able to pay your operating obligations.

cash flow for startups

If you start a relationship with an invoice factoring company when you first launch your start-up, then you will be able to follow your business plan and achieve your goals. When the start-up funding runs out, your company will have a solid financial foundation made up of the invoiced sales generated in the first six months. Instead of worrying about closing your doors, you will be planning your next growth project.


Invoice Factoring Can Also Help Your Company To Take The Next Steps

Solid cash flow planning is a significant part of the growth of your company. If your company cannot grab at opportunities when they are presented, then you will never be able to take that next step in your development. With invoice factoring, you can take on large projects because you know that the funding will be there. You can bring in extra staffing and expand your warehouse because you know the money will be there.

integration of factoring and accounting

A good invoice factoring company can create a customized program for your start-up that integrates seamlessly with your other accounting functions. You will have access to a receivables management system that will allow you to chart your growth and plan for the future. As your company grows, your factoring funding will increase along with your increased sales. It is exactly what you need to make sure that your start-up succeeds.


Don't Be Another Business Failure Statistic

Smart entrepreneurs cover all of their bases and prepare for every contingency. At some point, your start-up will suffer thanks to outstanding receivables. Your cash flow will be slowed and the growth of your business will be stopped. If you do not take action quickly, then it could mean the end of your business and the end of your dream.

Instead of waiting for the cash to run out, you can establish a relationship with an invoice factoring company and enjoy the steady cash flow you will need to succeed. An invoice factoring relationship will allow your start-up to achieve all of your milestone goals and find the kind of success that so few start-ups find. Instead of waiting to be part of the 80 percent of start-ups that fail in the first 18 months, you can take action now and beat the odds. Utilize invoice factoring and watch your business grow beyond your wildest dreams.

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