You spent years contemplating your business and months creating your business plan. Then, you spend another year raising the initial funding to keep your business and finances going for at least six months. You figure the company will break even in six months, and you can start taking it from there.
The launch was a complete success despite your funding being a patchwork of money you contributed from your life savings and a bank loan that the bank was highly reluctant to give you.
Getting Enough Funding For The Initial Stage
In the first six months, your invoiced sales to customers who were granted credit accounts exceeded 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
New entrepreneurs rarely account for cash flow issues when they create business plans. They feel covering the first six months of operations with start-up funding should cover everything. But once the funding runs out, they find their cash flow is nowhere near what it should be. The invoiced sales are on track, but the cash flow is not.
Look For A Long-Term Solution
New entrepreneurs must understand that bank funding can be challenging 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.
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 or the bad credit you are racking 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 StartUp Planning
An intelligent 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 will always be able to pay your operating obligations.
If you start a relationship with an invoice factoring company when you first launch your start-up, you can follow your business plan and achieve your goals. When the start-up funding runs out, your company will have a solid financial foundation from the invoiced sales generated in the first six months. Instead of worrying about closing your doors, you will plan 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 your company’s growth. If your company cannot grab opportunities when they are presented, you will never be able to take that next step in your development. Invoice factoring allows you to take on large projects because you know the funding will be there. You can bring in extra staffing and expand your warehouse because you know the money will be there.
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 precisely what you need to make sure that your start-up succeeds.
Don’t Be Another Business Failure Statistic
Savvy 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, 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 needed to succeed. An invoice factoring relationship will allow your start-up to achieve all your milestone goals and find the 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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