Small Business

Working Capital

With A Recession Looming, Do This to Boost Your Cash Flow

Small business owners looking at the stock market and their financing options

We are in the first inning of what could be the defining economic event of our lifetimes.

That is a powerful thing to say for anyone who owned a business in 2008. 

The coming weeks and months could slow commerce to a snail’s pace due to a perfect storm of events ranging from Coronavirus to falling oil prices and headwinds for the economy.

The UCLA Anderson School of Management said Monday that the United States is already in a recession. Meanwhile, Royal Bank of Canada (RBC), CIBC and Bank of America have forecasted a recession for Canada in 2020 (starting with a 0.3% contraction in the first quarter).

In Canada, falling oil prices, rail blockades, severe weather and a teachers’ strike in Ontario have compounded with the economic shock of COVID-19. Canada also plans to shut its borders to anyone who is not a citizen as it deals with the fallout of Coronavirus.

On top of this ongoing development, crude oil prices are likely to remain subdued for an extended period. Oil has plunged due to a failed agreement by OPEC and Russia to cap production. Saudi Arabia, the largest member of the oil cartel, elected to eliminate its production efforts and cut prices to secure greater market share.

It feels like we’re being hit from all sides, and there could be more bond downgrades, closures of businesses, and concerns about all forms of credit.

This perfect storm has created an incredible amount of strain on business owners, who are most vulnerable to the pressures of balancing expenses with longer payment times from big customers.

If you’re a business owner dealing with cash flow challenges, let’s discuss alternative finance options to boost your working capital so you can meet payroll, pay expenses, and take on new projects.

 

Options for Small Business Funding and Coronavirus

Despite all of these concerns, small business owners still need to manage their cash flow

 

Some large companies have already extended their payment periods. This means that payments once promised at Net 30 could range out to 45 days, 60 days, or even longer. This trend should continue as everyone looks to keep as much capital on the balance sheet as possible.

 

How do I boost cash flow?” is a common question that many small business owners ask when they’re experiencing a cash crunch. When it comes to small business cash flow management, many options exist. Identifying the best option is the goal.

 

One of the first things they might do is explore small business loans. Right now, the U.S. and Canadian governments are taking steps to pump capital into the financial system to help banks lend money. In the United States, the White House has requested upwards of $50 billion in loans from the Small Business Administration. This is unprecedented given that the average annual disaster loan relief from that agency floats around just $1 billion.

 

The challenge for small business owners waiting for relief is that it could take weeks (or even months) for the government to authorize the loans. By that point, cash flow challenges could worsen.

 

While it’s a positive sign to see governments support businesses in times of need, these loans do make companies entirely dependent on the government and its process.

 

Firms that are looking for a bit more control should consider alternative finance options for small business funding, particularly invoice factoring.

Wait for Help or Take Control Yourself?

Invoice factoring provides small business funding within 24 hours using unpaid client invoices.

 

You see, every time that you create and send an invoice, you have created a financial asset that can be used as financial collateral for funding. Companies get the full value of their invoice paid less a small fee. This gives companies the immediate boost of working capital they need to get back to work and stop fretting about client payments. 

 

Best of all, it puts business owners in complete control of their finances – paying invoices on their terms – and gives them the peace of mind that money will arrive in their accounts by the next day.

 

If you are experiencing longer payment terms, slow-paying customers, or simply want an alternative to the delays of traditional financing, this is a fast, easy alternative to other forms of lending during this ongoing uncertainty.

At FundThrough, we have helped thousands of customers transform their businesses through strong economic times and their most difficult times. It is the reason why we are a trusted partner of QuickBooks Online and hundreds of small businesses across North America.

 

If you are looking for the funding you need today or in the weeks ahead, consider FundThrough as a practical alternative. You can get started, right here