For growing businesses, having access to working capital and keeping a healthy cash flow is critical. However, it can often feel like funding your business is a constant challenge. Don’t despair – the following truths will help you maintain the upper hand.
Maybe you’re an entrepreneur or start-up, and your money is tied up in outstanding invoices. Maybe your business has seasonal buying cycles, and finding cash flow during slow months is challenging. Maybe you’ve completed work or shipped products, but you’re still waiting to get paid—and in the meantime you have bills to pay.
No matter what your situation is, working capital is the lifeblood of your business. However, finding the funding that’s right for your needs isn’t always easy.
You need to stop losing sleep worrying about covering your operating expenses, growing your business or overcoming cash flow hurdles.
Here are eight brutally honest things a BDO would tell you about funding your business and achieving your goals.
1. The bank can’t always have your back.
Thinking that the bank will be there when you have an exciting new opportunity? Or that they’ll be understanding if you are a relatively new business and can’t provide years of financial reports? As much as your banking representative wants to help you, it doesn’t necessarily mean that they can help you.
In the current economic landscape, many banks have revised their lending criteria and are tightening the purse strings, leaving business owners looking for alternatives to traditional funding. Meanwhile, business needs to keep moving forward.
2. You may think you’re ready for funding, but are you really?
We get it. Running a business (especially if you’re running it on your own or with a small team) is a lot of work – and keeping up on your books may not always be a top priority.
But if your financial files aren’t in order, if your invoices aren’t properly written, or if you don’t have the right documentation – then securing funding can be even harder.
Start with three items: your budget (planned vs. actual), your income statement and your balance sheet.
Depending on the lender requirements and type of financing, you might need to prepare a cash flow budget or projections – though it’s always good practice to have this in order anyway. You’ll also want to perform a UCC or PPSA search to ensure your record is clean. Even if you think there are no security registrations filed against your company, it’s worth double-checking the official records. Also, pull a credit report on your business (and on yourself). Sometimes these reports have incorrect information, and it’s important to be aware of mistakes so you can fix them.
3. Not everyone understands your vision.
Chances are when you started your business you had big dreams and plans to grow your company into something great.
So you dedicated yourself to building your business. But have you surrounded yourself with partners and a team that sees the same potential as you do?
When looking for a funding partner, you need to find someone who not only understands your funding needs, but also understands the intricacies of your industry, and what makes your business special.
Traditional funding sources may not always take the time to get to know and understand the ins and outs of your business. When you work with the right alternative funding partner, they’ll take the time to get to know you and your business. That can make all the difference in being able to capitalize on new opportunities.
4. Cash flow is the key to agility.
Unless you have a crystal ball, you’ll never be able to accurately predict what will happen to your business and the market in general. If you want to achieve long-term success, then you need to be agile and prepared to make quick course corrections.
Preemptively building a funding toolkit to overcome whatever opportunities or challenges you may face is critical. And that toolkit should include alternative funding sources.
Even if you don’t need to factor your invoices right now, being prepared and having a reliable source you can turn to will help you respond quickly to whatever may come your way.
5. Question what you are told.
Not all factoring companies are the same—so it pays to do your homework. Many are not transparent, with unexpected or hidden fees or contracts that make it hard to move away from their funding solution.
For example, the upfront rate may be low, but there could be add-ons that ultimately drive the price much higher, like ‘same-day’ funding. Make sure their terms are straightforward. Still unsure? See if the factoring company has customer case studies or testimonials.
At the end of the day, it’s your business, your livelihood, and it’s on you to thoroughly investigate your funding options and develop a robust working capital strategy with partners you trust.
6. Generic solutions aren’t enough.
While it’s tempting to assume that you can gain access to a funding facility and easily solve your problems, the truth is that your business is unique and requires a careful look at your operations to design the right approach.
At Liquid Capital, we’re business owners too, so we understand one size doesn’t fit all. We’ll take the time to get to know who you are, what your goals are, and the intricacies of your business that make it unique.
7. Values matter.
It might sound corny, but aligning yourself with a funding partner who shares your values matters. They will have access to your company and your clients’ information, and you’ll be working with them closely throughout the funding process.
If you can’t be sure that your partner shares your values, then you can’t be sure they will have your back when you need it.
8. Invoice factoring is mainstream.
Though you may not be familiar with invoice factoring, this powerful alternative funding solution has been – and is being – used by many businesses, just like yours.
At Liquid Capital we’ve helped businesses across a variety of industries unlock the power of their invoices, and accelerate their cash flow. But why not hear from business owners that we’ve worked with before?
Discover how we’ve helped businesses just like yours access the working capital they need, when they need it.
What sets Liquid Capital apart?
We’re North America’s leading invoice factoring specialists, with the largest network of offices across North America. In fact, we’ve deployed over $3 billion in working capital to help businesses grow.
Our Liquid Capital Principals are growth strategy and funding experts who make sure you understand available options so you can pick the right solution for your business.
We offer immediate financing upon approval—up to $10 million, often within 24 hours—along with personalized strategic guidance. Funding isn’t dependent on your balance sheet or time in business, and there are no long-term contracts, hidden fees or debt.