In the world of finance, we know looking at the big picture that capital equals business growth for our clients. But what does that really look like day to day? How does the financial services sector actually SERVE customers? What are some real life examples of the impact on businesses and people that are made possible by our products?
We surveyed the client team to discover some real stories from clients on just how some extra, timely, funding made a difference in these businesses. What we found is that time is truly of the essence when it comes to running a successful business. Factoring, or accounts receivable financing, can be the perfect solution when your cash flow timing just isn't working. Here are some specific examples:
saving money through volume discounts
One of our clients who is in the manufacturing industry runs a profitable business, but cash flow was still tight month to month. He had a vendor who offered him a discount on his supplies, but only if he bought in bulk, and he struggled to find the cash to front for the order. By Factoring some of his largest invoices, he was able to receive cash quickly and take advantage of the volume discounts, saving the business thousands.
riding out the waves of income
We have several clients in the medical services field, and one in particular has a set payroll each month. While they have enough revenue to cover their payroll, their contracts tend to come in waves, with one month being very low and the next month high. Without a lot of cash reserves in their bank account, bi-weekly payroll would become quite difficult in those low months. By establishing a consistent Asset Based Lending line of credit, they have been able to ride out the waves of income and keep all their people on the payroll.
investing in growing the business
A small beverage company that we work with was finding early success with their few main product lines. Things were running smoothly, but the owners were anxious to work on new products to bring to market. While the main products were successful, there wasn't a lot of extra funds to set aside for research and development of new beverage flavors. As they grow, financing has allowed this business to receive their funds faster, and they have been able to dedicate a portion of that money to finding the next right product for their market.
keeping the right people around
Several of our clients in the childcare and mental health industries rely on state contracts for their main sources of work. Unfortunately, the state can be slow to pay and it causes cash flow crunches often for these clients. For our childcare facilities, even having funds 7-14 days earlier can make all the difference when meeting payroll each week. For one of our clients in the mental health field, having consistency of income, whether or not her customers pay on a consistent timeline, allowed her to be able to move from hiring contract employees to hiring full time salaried employees, which created security for her employees and allowed her to keep higher caliber talent.
Managing a small business, especially if it is new to the market, has plenty of challenges. Without large cash reserves you may find in established businesses, even a seemingly small expense can cause a lot of stress for the owner who is already trying to manage new jobs and collect on previous ones. By partnering with a company like 12five, some of the burden of collections and cash flow can be eliminated. This allows a business to buy the supplies it needs and pay it's people - moving them closer to their ultimate goals.