When Every Entrepreneur Finds Themselves Needing Cash Fast

This post is contributed by Jason Dirkham

There are three things every entrepreneur can expect to happen: they’ll die, they’ll pay taxes and they’ll hit the kind of slump where they find themselves short on cash. That tells you just how common it is so if you find yourself struggling to fulfill your financial obligations or unable to make the payroll, don’t think you are alone and don’t think there is nothing you can do. Sure, finding cash ain’t as simple as munching your way through a tub of pistachio ice cream, but there are more ways to get hold of funds than you may realize.

So, without further ado, let’s look at the most celebrated ways you can raise money fast:

  1. Merchant Cash Advance

There are a growing number of merchant account companies that offer advances against future credit card sales receipts. Now, we should probably note that this was once known as an expensive way to raise money, but these days they have a lot more attractive terms on offer. The way it works is, you get an advance and then repay it from a proportion of your future sales. Simple.

  1. Find Hidden Equity

You may find this hard to believe, but there could be equity hidden in your company that you never thought about, and this is because you may not have thought about the equity tied up in your equipment. Essentially, this is known as asset based lending and what it does is allow you to take out a loan based on the equity in your equipment by tailoring a financial plan to your needs.

  1. Factor Your Invoices

This is one of the more popular methods of getting cash for businesses that have large outstanding invoices or receivables where a customer pays extremely slowly, and that’s because it really speeds up the process. How? You get a factor to hand the invoice over to. You then get the full amount of the invoice, minus whatever the factor’s fee is, which can be as much as 10%. Sure, this is quite a big chunk, but if you have the monthly payroll coming up fast, then it can be better to take 90% of your invoice than waiting another 90 days and risking a lawsuit.

  1. Vendors Offer Credit

There is nothing to say this will be offered, but some vendors are willing to extend their repayment terms, especially for their most loyal customers. Of course, the terms of these will depend on their financing terms, or they might offer a pay-on-scan program that sees them get paid for their inventory when you sell it. The important thing is to know what the actual terms of any agreement are and that you are happy with them. Don’t be nervous, though, as there are so many benefits to going down this route, such as reducing the carrying costs, lowering the operational costs and producing higher sales. What’s more, you might be able to negotiate a deal whereby your repayment terms are dealt with on a case-by-case basis.

This post is contributed by Jason Dirkham.


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