Businesses often face significant financial challenges. Startup costs, hiring employees, use of contractors, and expenses with growth can quickly mount. As a result, companies often have a lower than expected credit rating. They may find it challenging accessing new lines of credit, despite meeting all of their financial obligations. Did you know you can use client credit to improve cash flow?
The lack of ability of a business owner to secure new lines of credit can cripple a company. Not only will it face obstacles to growth. It can often mean they will be unable to bid on more lucrative contracts. They simply lack the financial backing to fulfill the initial terms of the agreement. Additionally, businesses with little savings and staggered cash flow often miss out on opportunities presented by vendors to take advantage of lower costs of credit by paying their outstanding invoices at a discount with early payment.
A business with poor cash flow may not even be able to complete the projects or contracts they have taken on. When this occurs, it destroys the reputation of the business and future business opportunities diminish quickly.
Each of these circumstances can lead to additional cash flow problems and can keep a business from growing. They create situations where a company is only meeting its current financial obligations to employees, vendors, and clients. This is the time when business owners should consider the potential of leveraging their clients’ creditworthiness.
Maximize Cash Flow Without Negative Credit Implications
Leverage matters in business. Whether you are negotiating a contract, working with a contractor, or finding a consultant, the more information you have at your disposal, the better your opportunities for successful negotiations. Leverage also works when you are considering your financing options.
Some company owners fail to realize they can leverage their clients’ credit standing to help improve their own credit. This maximizes their cash flow and avoids incurring additional debt. Specifically, a company has the option to take their client invoices and turn those invoices into immediate cash. However, it is also possible to use the creditworthiness of a client to help improve other forms of financing. This includes obtaining lines of credit.
Lines of Credit and Strength of Leverage
Larger contracts that are not supported by your balance sheet may necessitate a line of credit. Bringing on additional investors can dilute your portion of ownership. Rather, you can apply for a line of credit based on the creditworthiness of the contract which you agree to. This means the stronger your client, the more likely you are to gain approval. For example, some small and disadvantaged businesses may have access to lucrative government contracts. However, because of the size of the business, they may not have a balance sheet that proves they can meet the terms of the agreement. Leveraging the strength of the contract of the U.S. government can provide access to lines of credit or other financing options.
This type of leverage does not just apply to those who are eligible for government financing. Staffing agencies, construction companies, and other firms that have contracts with top companies have an opportunity to use those contracts to increase their cash flow immediately. This is where Capstone comes in.
At Capstone Corporate Funding, LLC we understand the struggles company owners can face when trying to grow their business. A vicious circle begins nearly immediately. You need capital to meet your day-to-day obligations, but you also need access to capital to help facilitate that growth.
Capstone takes your growth seriously. Our representatives are well-versed in various markets, and we take the time to understand your company goals. Once we have a complete understanding of your goals, we can help put a custom financing package together. One which fully leverages the creditworthiness of your clients and helps put you on a path to continued company growth. To learn more about Capstone and the programs we offer, contact us at (212) 755-3636.
You can also email . Let us help you find the right financing program to meet your needs, including improving your cash flow.
