Fast Working Capital Sources
Working capital is the is used to run the day to day activities of a business. The need for working capital sources occurs more frequently than expected by business owners. Waiting for a loan from the bank can take longer to be processed. As a business owner, you have to look for other ways of getting the working capital from other sources.
Cash flow is often a problem even in profitable companies with enough assets. Looking for ways to get cash quickly is therefore necessary. Without enough working capital the company will not be able to meet the daily needs of the company.
Fast working capital sources provide other means of making money for the business quickly. One of fast working capital source is factoring. This is where the buyer of the invoice advances money to the company before the invoices have been reviewed. This is not a loan since the factor will collect from your customer directly. The downside of factoring is the loss of a portion of your profits. Before using this type of cash flow, ensure it is not a liability. It is safe for your clients not to be aware that you are using factors as a source of capital for the company.
Purchase order financing is another way of securing your capital. The promise to deliver orders is used as a security for the business to get fast working capital in purchase order financing. The wholesalers and distributors with large orders mostly use this source of fast working capital when they do not have enough to meet their demand. The purchase order financier will give you the money and wait to be repaid when you deliver the goods. The fact that this source of capital can be expensive in the long run is a disadvantage.
Merchant cash advance is mostly used by business people to get fast working capital. The dealer will give you the money you want quickly and then get payment from you through the sales from credit cards. The capital from merchant cash advance has no specific return period but mostly repaid in less than twelve months. It can be expensive getting capital for your business from merchant cash advance. It is therefore vital that you do proper research before you commit to this form of fast capital source and compare the rates of different lenders.
You can as well get the fast working capital online. Peer-to-peer lending is a website source of working capital where the business owner in linked with a lender from a list of other financial lenders on the site. It is structured like a loan so that you repay the money with interest. The rates vary for different lenders and site.