The Benefits of Having Access to Short Term Working Capital Funding

 In Invoice Factoring, Merchant Cash Advance, Small Business Financing

While there are many factors to building a successful business, having sufficient working capital is key. Defined simply as the difference between a business’s current assets and its current liabilities, working capital is what keeps a business running. It covers payroll and daily operating expenses so it’s important for a business to maintain a positive flow of working capital. For small businesses experiencing growing pains, this can be a challenge. It is not uncommon for them to sometimes need an influx of short term working capital.

business finance working capital

There are a variety of reasons a small business might find themselves in need of additional capital. For some seasonal businesses, cash flow will fluctuate throughout the year. In the offseason, they can find themselves on the verge of depleting their working capital. Business owners experiencing unexpected growth or taking on expansion can find themselves in a similar situation. Significantly reducing or depleting working capital can leave a business vulnerable, resulting in the inability to properly provide products or services to their customers. In some cases, a lack of sufficient working capital can cause a business to shut down permanently.

Advantages of Short Term Working Capital Funding

In addition to facilitating business growth and allowing business owners to cover their daily operating expenses, access to short term working capital funding can provide many other advantages.

Business Solvency – Consistently having sufficient working capital allows a business to operate uninterrupted. It will allow them to replenish the inventory and raw materials needed to maintain a proper inventory. This enables them to provide quality products and services on schedule, creating a positive customer experience. 

Maintain Daily Operations – Nothing will bring a business to a grinding halt faster than being unable to meet payroll. This will deflate morale and cause some of your best employees to seek employment elsewhere. In addition to the added expense of hiring and training new employees, existing employees could end up working for one of your competitors.

Reputation of reliability – Access to short term working capital funding allows a business to make prompt payments and keep their accounts current. This will create goodwill with suppliers and vendors while building mutually beneficial relationships.

Secure Discounts – Cash is still king!  Many suppliers and vendors will offer discounts for cash payment. Even if it is a small percentage, over time with multiple vendors, the savings can add up. 

Take Advantage of Favorable Market Conditions – Market prices on raw materials can fluctuate. It‘s to a business’s advantage to purchase supplies in bulk when the prices are low. Having access to short term working capital funding allows businesses to take advantage of these lower prices without depleting their existing working capital.

Survive the Unexpected –  Even if a business has a sufficient level of working capital to maintain daily operations, it probably won’t be enough to handle a crisis. Broken equipment, a sudden downturn in business and various other unexpected emergencies can cripple a business. Having access to short term working capital funding can allow a business to ride out a crisis and keep it moving forward.

Cultivate New Business – Taking on bigger accounts and filling larger orders can initially be a drain on a business’s existing working capital.  However, being able to handle this increase in business without missing a beat is essential to business growth. Short term working capital funding can make that happen.

financing of working capital needs

Working Capital Solutions

CapFlow Funding Group offers working capital solutions to quickly provide the funding you need to grow your business. We work with business owners across various industries to find the best working capital solutions to their businesses on track. CapFlow specializes in invoice factoring and offers merchant cash advances. We also partner with other funding providers to secure the funding option that best fits your business needs. Our team will work tirelessly to see you through to success. Contact us today!

 

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