Please ensure Javascript is enabled for purposes of website accessibility Can Businesses Find Adequate Financing with Looming Inflation?

Can Businesses Find Adequate Financing with Looming Inflation?

By January 20, 2022Factoring

Inflation has been overtaking headlines for months now. Concerns about the cost of living, rising prices, and more are being felt not just in the United States, but around the world. While consumers – those who are at the very end of supply chains are worried about having to pay more for the products and services that were less expensive only a year ago, businesses also have tremendous concerns. Inflation not only increases the cost of production and the risks associated with passing that added cost onto their customers, but it also makes the process of securing adequate financing more challenging.

invoices and bills with paid stamp

Debt-Based Financing and Inflation

Since the Great Recession of 2007, traditional lending channels have raised their requirements on business loans. Even after the economic uptick from 2012-2015, loans were still difficult to secure. At the same time, businesses were (and still are) hesitant to take on additional debt. Starting in 2017, inflation was on the rise again, only a decade out from the last economic crash. This forced the Federal Reserve to raise interest rates on traditional loans five times that year, with more over the following years. Once the pandemic hit in early-2020, and PPP loans were being handed out with forgiveness, the question at the back of everyone’s minds was how this would impact inflation further down the road. Now, in 2022, even though unemployment is down and jobs are up, inflation is looming large over the economy, and banks are once again back to offering loans with prohibitively high requirements.

Businesses Are Poised for Growth

Despite the adversity of the pandemic and supply chain issues, businesses are poised for growth in 2022 and beyond. Yet with headwinds from traditional lending channels, an adversity to debt, and looming inflation, businesses are struggling to find adequate financing to reach their growth potential. Fortunately, there is a solution. Instead of risking collateral, taking on debt, lowering credit ratings, and subjecting themselves to interest rate hikes due to inflation, businesses are finding sources of growth financing from within. By leveraging unpaid receivables, businesses can accelerate cash flow and build up cash reserves to act on growth opportunities without the restrictions or drawbacks of business loans.

Businesses Use Factoring to Mitigate Inflation

Factoring is a method whereby unpaid customer invoices are converted into cash. Instead of waiting 30, 60, or 90 days for customers to pay their invoices, factoring eliminates staggered payment schedules by unlocking the revenue immediately so businesses can access the funds they need. This process accelerates cash flow and prevents invoices from aging out to collections. Additionally, factoring does not place debt on the books, so businesses can preserve their credit ratings and avoid arbitrary interest rate hikes from the Federal Reserve or lending institutions. The improved cash flow allows businesses to stay on top of accounts receivable, cover overhead, make payroll, and build up capital reserves to act on growth opportunities with dealing with red tape, delays, or loan turndowns from traditional lenders. Because factoring is a simple transaction where unpaid customer invoices are “sold” for cash, the process is fast, efficient, and direct.

Helping Businesses Grow without Debt

Single Point Capital is a national leader in invoice factoring services for businesses. We are able to convert unpaid receivables into cash and make funds available within a single day. We offer fast approvals, setup, and a suite of tools so our clients can keep track of funds 24/7/365. Additionally, we provide personalized account management to our clients. In a world of automated menus and robotic voices, we believe that nothing beats human interaction. For these reasons and more, when you have questions or need support, you will be put in touch with a live human account manager who can provide the answers and service you need. If you own a business and issue invoices to your customer with staggered payment schedules of 30 days or longer, contact the team at Single Point Capital. From improving cash flow to building up capital reserves for business growth, our factoring services can help you achieve your goals and mitigate inflation concerns.

To start factoring your unpaid customer invoices, contact Single Point Capital today.

Leave a Reply