These days, you hear a lot about individuals and businesses leveraging debt in order to expand or meet obligations, be it payroll, inventory, utilities, or equipment purchases. While this has become a popular method of business financing, it’s not always the right choice, or even an option for new or cash-strapped companies. When traditional loans or lines of credit are not an option for you, how do you gain the necessary cash flow to sustain or expand your business?
Member Contribution or Take On Investors
Whether you’re an individual or in a partnership, a quick way to raise cash is through member contributions. In a public company, this can be through selling additional shares, but with a privately held business, this is generally handled one of two ways: all members contribute cash in the business equally to maintain a balance in equity, or in partnerships, partners who contribute acquire more equity in the business from non-contributing members. The last option in this category is shopping around for investors and selling shares in the business for the necessary capital. Noteworthy consideration, the more investors and partners taken on, the more diluted the ownership stake is for the primary business members, so carefully consider the longterm ramifications of such an action.
Sell Unused Equipment
Over time, all businesses retain assets that are no longer of value to the current business trajectory or are considered excess from current operating needs. This might include heavy machinery & tooling, raw materials, office equipment, or trucks and trailers. Depending on your goals, selling these unused assets may generate the one-time capital necessary to meet your near-term goals. The downside is this is a one-time capital-raising strategy, and depending on the direction and growth of your business, some assets may need to be re-purchased down the line.
Often called Factoring, invoice finance is an excellent alternative to traditional lending or an equipment sell-off, because in essence you’re borrowing against work or products you’ve already sold, but not waiting the customary 30 or 60 days (if the customer pays on time), you may receive payment the same day you send in the invoices. Factoring companies such as ENGS have begun offering a wide range of products and services to better support the back office operations of businesses of all sizes, including fuel cards, payroll and accounting services, even human resources. The rates for invoice financing have remained rather competitive with other forms of business financing, however the speed of funding and flexibility now available have made it a clear leader for businesses looking for smarter ways to fund growth.
Interested in taking the next step to see if Invoice Finance is right for your business? Give ENGS Commercial Capital a call to learn more about our products and rates.