Texas Working Capital Loan Companies

Written by Patricia Tunstall
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Working capital and cash flow are not synonymous, but they have an immediate impact on one another, for better or worse. Every business, regardless of size, must have sufficient working capital to pay its expenses and sufficient cash flow to grow its business. When either ingredient in the mix of business is unavailable, the business suffers and may not recover without outside financing.

Factoring Companies Offer Immediate Cash

Working capital consists of all your assets minus all your liabilities (debts). By looking at your working capital, you know how much in liquid assets you have to pay off your short-term obligations. If you have a considerable amount of liquid assets--those assets that can raise immediate cash--your business is probably able to pay down its debts and pay for improvements and new equipment.

On the other hand, if working capital is low or actually negative, growth may not be possible because there simply isn't the cash to finance it. This means turning down new business, which leads to a downward turn in sales, which leads to serious financial problems. If this is coupled with high debt, credit will be adversely affected if payments are late or missed.

Texas factoring banks and companies assist businesses that are in this predicament by purchasing their eligible accounts receivable. This has several positive effects. First, it brings instant cash to the business, which can now pay its bills in a timely manner and preserve its good credit. Second, it immediately increases working capital and cash flow so improvements can be made and growth encouraged.

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