When a recession hits, everything gets more difficult for small and medium sized businesses. Customers spend less, which means there is less cash to go around. But if a company utilizes its finances properly, then it still has enough invoiced sales to meet its ongoing obligations. The company may not make a huge profit, but at least it won’t have to lay off any workers or close down the company for good. The delicate nature of a company’s financial foundation is never as exposed as it is when a recession hits. It is at this time that the notion of cash flow suddenly gets a lot of attention from business owners.
Keeping the company going without any changes to the staff, or degrading the ability for the company to grow, is a priority for every business owner. But sometimes things have to be done in a recession that go against the company’s normal way of doing business. Cash flow is slowed due to a drop in invoiced sales and a rise in past due invoices, so the business owner must come up with options that he can use to keep operations going. Sometimes the choices that have to be made now are not the best choices for the future of the company. That is why it is important that the business owner find alternatives to help compensate for the lack of cash flow.
One of the options a company has to solve its cash flow problems during a recession is to put pressure on clients to pay their bills on time. But the problem here is that your clients are experiencing the same slowdown in cash flow that you are, which means that they are trying to manage their finances as well. If you put pressure on your clients, you could lose those clients to a firm that has more patience and time to wait. Instead of looking at your clients as sources of a solution, you should think of other funding sources you can use during a recession.
Bank lending, in the form of a loan or a bank line of credit, is one of the first places that small to medium sized businesses turn when a recession takes a toll on their cash flow. But relying on bank lending has several drawbacks that company owners need to understand before they get involved in these long-term, interest-bearing commitments. A closer look at bank lending during a recession may show that it is not the best alternative and that other options need to be explored. Luckily for your business, there are other options you can use which are more effective than bank lending.
Interest rates on loans are most commonly a reflection of the bank’s sense of risk, as opposed to being the bank’s source of income from the loan. When a bank feels that it is taking a large risk with a loan, it will usually raise the interest rate and that raises the overall cost of the loan to the borrower. In a recession, banks will routinely raise interest rates on loans to small and medium sized businesses because of the very real possibility that the business could close, or default on the loan, thanks to the recession.
The other issue with bank lending that is specific to a recession is that banks are less inclined to lend money to small and medium sized business when the economy slows down. Large corporations are more apt to get the funding they need, but even the larger corporations may have to put some of their assets up as collateral to get the loan they need. Small to medium sized businesses have assets that can be used as collateral as well, they just need the right company to show them how to use those assets and improve cash flow.
Instead of a bank, you need to utilize the services of a factoring company such as Commerce Commercial Credit. We have spent years establishing ourselves as the premier factoring company for small to medium sized businesses all over the country. Your outstanding invoices with creditworthy clients are assets that we can use as collateral for advances into your bank account. The difference is that you are not risking critical company equipment when you utilize these assets to improve your cash flow.
The best part about Commerce Commercial Credit is that we are not a bank and these are not loans. We are utilizing the invoiced sales you have generated to create the cash flow you need to pay your bills. During a recession, every invoice becomes critically important to the survival of your company. With our flexible factoring plans, we will be able to get you the cash you need on or before your invoice due dates and make sure that you have cash at all times.
We have a 2 page application that you can fill out and submit to us whenever you want. We work hard to approve every application the day we receive them and have your account fully functional in five business days or less. A functioning account can receive funds within 24 hours of receipt of a qualified invoice. We will get you the face value of your invoices, minus our small lending fee, on or before each invoice due date. You will never have to allow the economic hardships created by a recession to affect your business again.
We do not charge you any set-up or facility fees, and we have no per month or per invoice minimums. We also do not need to see your company’s credit score when we approve your account. All of the approvals we do are based on the credit status of your clients. That is how we are able to help companies with bad credit, or start-ups with no credit history, to meet their financial obligations.
An experienced financial expert is waiting right not to show you how the factoring services of Commerce Commercial Credit can help you avoid the trials and tribulations of bank lending in a recession. We have years of experience in creating customized and flexible factoring programs for companies just like yours.