Fast Working Capital Sources
Working capital is the is used to run the day to day activities of a business. More money can be required by the business than what is expected. Banks can delay processing the loans which are not guaranteed for approval. As a business owner, you have to look for other ways of getting the working capital from other sources.
You can have problems with cash flow even with an established business. The business owner has to cash fast from unpaid invoices and inventories. Paying the bills, purchasing stock, and paying workers will be hard for the company without enough working capital.
Other sources of getting the working capital fast save the company when in need. Factoring is one of the ways to get fast working capital. In factoring, the company gets advance money from the buyer of the business invoice. The factor collects the payment from your clients after lending your firm the working capital. The fact that you do not get the full profit from the invoices is a disadvantage. It is essential to make sure that you are not running at a loss by sourcing your capital in this manner. Your customers should not know you this is the source of your capital.
Through purchase order financing, the business can also get money for running its daily activities. Unlike factoring where money the product or service has already been given and the factor has a new payee, in purchase order financing, the money is provided based on an order that has been promised. 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 wait for the goods to be delivered after they have given you the fast working capital. Purchase order financing cost can be high and therefore not very appealing.
You can get working capital from the merchant cash advance. The money you get from merchant cash advance is paid back when the business sells the 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. You should do your homework properly before sourcing your capital from any dealer.
There are sources of fast working capital on the internet. Peer-to-peer lending is a fast working capital source where you are linked with one of personal lenders on a website. The money you get from peer-to-peer lending accrues interest. The interest rates will depend on the site and the person lending you the money.