5 Ways to Boost Your Business Cash Flow

Managing a small business is challenging. One of the common challenges for business owners is financing. Your company might not have a lengthy credit history or collateral to apply for a bank loan. Whether you want to grow your business or cover unforeseen expenses, you have come across other financing options. Merchant cash advance and cheques factoring are some of the available options for small businesses.

What Is Merchant Cash Advance?

A merchant cash advance is an alternative financing option for small businesses. You can take the funds upfront and pay them off with a percentage of future sales. The MCA is an ideal solution for businesses that need fast funding and might not be eligible to take a bank loan. The availability of funds is another excellent advantage. If your business needs the funds fast to proceed with the operations, the cash advance will be approved within a day or two.

PROS

Fast access to funds

When timing is crucial and you can't go through the lengthy bank approval process, the MCA is your solution. Small businesses can get funds within a day or two from submission. Unlike the traditional bank process, the financial institutions that issue MCAs don't do rigorous checks. They will check the business's past sales to determine whether they qualify for a cash advance.

Ideal for businesses that work with cash and credit cards

Retail and restaurant businesses rely on a high volume of credit card sales, making them ideal for obtaining MCA. If your business depends on cash or credit cards, a cash advance is the ideal financing method. This opportunity is perfect for the ones that don't rely on invoices. Instead, they take a percentage of the credit card sales to repay the loan.

CONS

High-interest rates

Merchant cash advance comes with higher interest rates than traditional bank loans. The convenience of having the funds fast will cost more. However, the price is worth paying when you need urgent funds to proceed with the business operations.

What Is Cheques Factoring?

A post-dated cheque is a cheque that can be cashed on the indicated date on the document's face. It is a form of advance payment and can be cashed on a specific date. According to Canadian laws, a cheque can't be cleared before this date. If you still need cash to keep your business's liquidity, you can sell the cheque to a factoring company.

PROS

Fast approval

Depending on the date indicated on the check face, you might have to wait long to receive the payment. If you need to meet your business needs urgently, factoring your cheques will provide you with funds quickly. They will pay off a particular value of the face value while keeping a specific percentage as a fee.

No credit score checks

When applying for a traditional bank loan, they will do a rigorous check on your financial history. When your small business is relatively new and doesn't have a credit history, you might be restricted from obtaining such loans. Your ability for cheque factoring isn't assessed with credit history, and you aren't required to disclose collateral. This is very important, as you don't need to put your property or equipment at risk. The factoring company will check the check for authenticity.

Not deal with cheques

Having to deal with cheques is a tedious job. Passing this responsibility to a third party means less time spent sorting out cheques so that you can focus on the more important aspects of your business.

CONS

Higher cost

The factoring company will charge fees to provide you with the cash in advance. They will usually pay 80% of the amount indicated on the face. However, the high cost might pay off if you need money urgently.  

Requirements

Cheques factoring companies might have specific requirements for cashing out your document. For example, the check drawer should be a reputable entity. Also, the factoring company might have particular requirements on the cheque's active time.

Merchant Cash Advance vs. Cheques Factoring

For cheques factoring, you will pay a fee to the factoring company expressed as a percentage of the total amount. On the other hand, you will pay off your MCA as a percentage of your future sales. When choosing the suitable financing method for your company, select the one that is a better fit for your needs. We at 2M7 are dedicated to providing the needed funds to enhance your business's liquidity without restrictions on how to use them. Get in touch with us, and we will answer your specific needs!

The great majority of small businesses go under because of cash flow issues. You know the importance of cash flow for that reason. That doesn’t mean you don’t face seasonal cash crunches.Seasonal cash flow struggles are quite common, even among established businesses. You can take the strain off by employing these five effective methods of solving cash flow challenges.

Know Your Problem Seasons

The first step in combating cash flow challenges is know your problem seasons. For seasonal businesses, this may be obvious. If you run a golf course, you might find cash flow tightens up during the winter. If, by contrast, you have a ski club, then winter could be boom season for you.Knowing when you’re most likely to run into trouble can help you plan for those dry spells more effectively.

Shift the Timing of Financial Commitments

Once you know when your cash crunches are most likely to happen, you can work on scheduling around them. Try to shift any major financial commitments to other times of the year.This might include adjusting when you order stock or how you organize your tax year. A golf course may not want to make a major tax payment at the end of April, because funds are already tight.You may not be able to move every financial commitment, and that’s fine. By shifting some earlier or later in the year, though, you can make all your obligations easier to manage.

Offer Incentives for Customers to Pay Early

Another tip for meeting seasonal cash flow challenges is to entice customers to pay early. If you invoice your customers, you could offer them a discount if they pay before the indicated due date.You may encourage prepayment or even down payments. For example, if you run a mattress shop, then you could ask people to put a down payment on their purchase.You can make this a seasonal offer and encourage customers to “buy ahead.” With more money flowing in, you’ll have an easier time managing your cash flow.

Get a Merchant Cash Advance

Sometimes, the answer to cash flow challenges is credit. That’s particularly true of seasonal cash crunches since they’re usually temporary in nature.A merchant cash advance is one of the better choices you have to manage seasonal cash flow. With one, you get the cash you need against expected future sales. As sales take place, you’ll pay back the advance.

Diversify Your Business

One of the best ways to solve seasonal cash flow issues is to diversify the business. If you run a golf course, you might also operate a banquet hall. Acting as a wedding venue can keep cash flowing, even during the winter season.If you face seasonal challenges, think about the ways in which you can diversify and offer more to your clients all year long.

Get a Helping Hand with an MCA

If you’re feeling pinched, it might be time to get a merchant cash advance. Get in touch with the experts and discover what the right financing option can do for your business.

Funding is the only way to turn startups into successful businesses. Getting funding is easier said than done. However, it’s a fact that you need sufficient money to get your business to the next level. Investment and funding are required to raise the necessary capital to either initiate or run a business. The working capital is the option on which companies rely for the smooth running of affairs and uncalled crisis. Funding coupled with motivation, determination, and brilliant ideas can kick start the business off the ground. Lack of proper and timely funding can collapse business strategies and decrease capital, which ultimately causes failure. If you’re wondering why businesses consider looking for funding, you’re at the right place. Following are some reasons due to which funding becomes essential for companies.

Development

Growth and development are the foremost motives of a business before seeking funding. Acquiring new clients, local businesses, and marketing to improve outreach are all the prospects of growth. Establishing additional branches and expanding services is also the result of the funding sought for the sake of growth.

Working Capital

Another significant reason for obtaining fundings is working capital. Working capital is the monetary assets that provide the companies with sustainability. Managing regular affairs and retaining the quality of services are done through the working capital. It can be used to stock the inventory and carry out successful purchases by efficient expenditure. Insufficient working capital can cause detrimental effects to the business in the longer run. The current affairs and prospects depend on the working capital, which is provided through funding.

Acquiring Assets

To hold a firm position in the market and among the competitors, businesses need to purchase assets. Eliminating the competitors in the market is the feature of having more assets. Businesses can emerge out as a winner when they become the sole provider of a service. Companies can either buy shares or completely acquire other businesses. Assets not only strengthen the company but also enhance its market value.

Initiating New Ventures

Companies use funding to plant new ventures. These endeavours can promote the business and increase its progress. To conduct these strategic ventures companies, need ambition and funding. They can articulate ambition in their employees, but for funding, they need help.

Boosting Startups

Funding is vital to support startups in the fierce market. Startups usually have scant resources that can soon become insufficient, leading to a business catastrophe. Startups need financial help and investments to accomplish their goals and thrive among the competitors.

Getting an MCA

Companies can find investors that either work independently or with an organization to gain the required funding. They can also opt for loans from banks. However, the much better alternative is a merchant cash advance that focuses on the growth of a business. Companies prefer MCA as the conditions of the loan are appropriate to their predicament. The best part about getting an MCA is that paying it back is extremely convenient. You’ll only be paying back a specific percentage of your monthly earning. And, if there’s a month where you don’t generate revenue due to whatever reason, you won’t need to pay the finance company back anything. Receiving timely fundings can save companies from derailments. If you’re looking for a financial organization that can get you the resources you need to boost your business, 2M7 is just the company you should work with. We’ve helped hundreds of companies like yours in the past with our incredible 97% approval rating. We offer merchant cash advances to businesses in all industries and of all sizes. Gain an edge over your competition and contact us today.