Texas Accounts Receivable Financing

Written by Patricia Tunstall
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The more successful a business becomes, the more cash it needs for working capital and a healthy cash flow. Cash is reinvested in the business in the form of inventory and fixed assets, yet these essential parts of a business eat up the cash that is needed for operations and expenditures. This is the balancing act that prosperous business owners must continually pull off if they are to maintain an expanding enterprise.

Creative Ways to Finance Your Business

There comes a time in the life of almost every business when cash flow is either dwindling or in a negative position. In certain industries, such as trucking, this variability is built in to the business, and so uncertain cash flow becomes a way of life for owner/operators. There are, however, several methods that can be employed to finance your business, not the least of which is accounts receivable financing.

If you can reduce the amount of money that is tied up in inventory, or increase sales without increasing inventory, you have contributed to better cash flow. This accomplishment may also reduce bank interest because fewer loans need to be obtained. Along the same lines, negotiating better terms from suppliers (payables) will reduce the money that must be paid out.

Leasing equipment instead of buying it outright is a logical way to finance your business if your most important need for cash is to buy equipment. You only make a monthly payment, you do not burden your balance sheet because leases don't show up, and you improve your credit by making payments on time. If tried-and-true business methods fail, accounts receivable financing (factoring) is available for immediate cash advances without any new debt.

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