Factoring for internal growth

One of the most important factors if you're planning for internal growth is successful cash flow management.

Without a steady cash flow, not only is your ability to invest in growth and expansion hampered, but managing working capital becomes time consuming, tying up valuable resources.

This is a common problem for businesses, large and small, as many customers wait until the limits of agreed credit terms have been reached before settling invoices.

The importance of cash flow

Managing debtors is not only time-consuming, but when invoices remain unpaid until the last possible moment, it can have a serious impact on your cash flow and your ability to operate smoothly.
If outstanding amounts build up significantly, you may be unable to meet financial commitments, damaging relationships with both suppliers and staff.

Beating the balancing act

In the time between delivering goods or services and receiving payment, working capital management can call for some serious financial juggling in order to cover internal costs, pay suppliers and keep the business running.

Factoring, where a third party finance provider advances funds up to a percentage of your outstanding and future invoices, can help maintain the necessary cash flow.

Management of day-to-day finances becomes far simpler as funds can be made available within as little as 24 hours of issuing a new invoice, for up to 90% of the invoice value.

Free up valuable resources

Without your funds tied up in outstanding invoices, cash flow management requires fewer resources. What´s more, most factor companies offer the option of managing credit on your behalf, so they'll even chase the invoices for you.

Rather than dedicating valuable staff resources to chasing debtors and managing credit, your staff's time can be invested elsewhere in the business, to meet your growth objectives.

Create more working capital

By engaging a factor company, you no longer need to wait up to 90 days to receive payment from customers, which makes settling your own debts much less of a problem.

With funds coming into the business almost immediately, managing working capital is no longer a matter of deciding who to pay and who can wait, you're able to satisfy suppliers immediately, start fulfilling more orders and growing sales.

Invest in staff and growth

With increased sales come improved profit and cash flow providing you with the finances you need to expand your business.

Recruiting more staff, investing in new machinery or buying property - whatever your priorities are, factoring your debts provides more readily available funds with which to achieve them.

Reaching the next level

Achieving growth without successful cash flow management creating sufficient working capital can be an impossible task.

Factoring is a flexible financing solution that not only provides the necessary funds, but reduces the time you have to spend managing your working capital, leaving you to concentrate on taking your business to that next level.

Could your business benefit from improved cash flow management?
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Lloyds TSB Commercial Finance Factoring Guide