Cash flow is something we talk an awful lot about here at Thales Financial. Why? Because one of the biggest advantages to factoring accounts receivable is having access to cash when companies need it most. Given how important cash is, it’s surprising to know that so many small businesses don’t truly understand how critical maintaining cash flow is.
We have been in this industry long enough to know that cash flow is critical to any business. It doesn’t matter what industry a company is involved in. Company size does not matter, nor does staff size, revenue volume, or even geographic location. A company without cash has no means to run its business.
By offering account receivable financing, we give companies access to cash on an as-needed basis. That is key. Our services don’t lock customers into a long-term loan product they do not really need. Rather, we offer on-demand cash by purchasing outstanding invoices.
Cash Is a Safety Net
Modern business runs on credit. No secrets there. Companies pay other companies based on terms that could be anywhere from 10 to 60 days. But if credit is so prevalent, why is cash so critical? Because it is a safety net. Cash pays the bills when customers are slow to pay their invoices.
A 2019 survey from QuickBooks reveals that insufficient cash flow can be devastating to small business. Among the many negative consequences of not having enough cash, here are the top three from that survey:
- Loan Default – Not having enough cash to make monthly loan payments is a serious issue. Defaulting on a loan harms a company’s finances. It could jeopardize a company’s very existence.
- Inability to Pay Vendors – Insufficient cash flow can inhibit paying vendors. You might be experiencing this yourself. Some of your customers are consistently slow to pay because they do not manage their cash well.
- Inability to Pay Employees – A lack of cash can leave a company struggling to pay employees. But paychecks cannot be written on credit. A company needs cash in the bank to make good on those paychecks.
Interestingly enough, one-third of the companies surveyed by QuickBooks admitted to experiencing at least one of the above consequences due to poor cash flow. That’s an amazing number. It suggests that more than 30% of U.S. small businesses are struggling because of cash problems.
How Factoring Helps Small Businesses
It’s clear that maintaining positive cash flow equals having a valuable safety net to make up for slow payers. The principle is easily understood. As for practical implementation, not so much. That is where companies like Thales Financial come in. We offer companies a cash lifeline when they need it.
Our service is essentially accounts receivable financing. Your accounts receivable are represented by unpaid invoices. We would offer to buy some of those invoices from you. In return, you get a certain percentage of their value as an initial payment. When the invoices are ultimately paid, we forward you the remaining balance minus our service fees.
Accounts receivable financing gives you the ability to raise cash when you need it. When you don’t need it, you don’t utilize our service. The advantage accounts receivable finance has over traditional loans is two-fold: accounts receivable finance is flexible enough to meet virtually any need and it is fast enough to ensure you have cash when you need it most.
Cash flow is critical to any business. It is critical to yours. Our service makes managing cash easier and more consistent. That is exactly what you need at a time when so many businesses are struggling.