How Can Businesses Reduce Debt and Gain Stronger Footing?

The economy is reopening, and businesses across all industries are ready to make their marks and generate revenue. Emerging businesses have identified viable niches, and existing businesses have had a year to rethink strategies and position themselves for growth. However, there are businesses that are carrying debt into this rejuvenated economy, and new businesses would like to avoid taking on debt if at all possible. Fortunately, there is a way to maintain operations, build up capital for growth, reduce debt, and sidestep the need for additional loans.

Financing Operations without Loans

Many businesses believe loans are the only way to finance a business, and are skeptical of anything that falls under the umbrella of “alternative financing.” To those businesses, loans are a necessary evil where debt is placed on the balance sheet in exchange for capital. Unfortunately, new and small businesses have a tough time securing loans because they do not have the collateral, credit ratings, or financial history to meet the requirements. The solution to this situation is to use factoring services. Factoring has been in existence for as long as businesses have been issuing invoices. By factoring invoices, businesses can accelerate cash flow so there is always working capital on hand. At the same time, factoring is a fast and transparent financing method that does not place debt on the books, nor does it compromise credit ratings. Factoring is used by businesses of all sizes for everything from correcting cash flow issues to maintaining operations.

Inflation Remains a Concern

In 2021, the economy has entered a period where inflation remains a major concern. While deregulation over the past four years cause the Federal Reserve to hike interest rates multiple times in 2017 and 2018, This year presents a different scenario for new and emerging businesses. Consumer confidence it increasing, but the resources needed to move past the pandemic have left new and small business owners wondering how that monumental achievement will be paid for. Many expect interest rates on traditional loans to go up over the next few years, leaving emerging entreprneurs to explore more affordable financing programs, and even discovering funding methods that do not place any debt on the balance sheet. Fortunately, there is a way for businesses to get the capital they need without taking on debt or compromising credit ratings.

Reducing Debt and Achieving Growth without Loans

While traditional lenders are still raising their requirements on loans, businesses want to avoid taking on debt, especially when they are positioning themselves for growth. Debt-based loans limit growth potential by placing a strain on cash flow. The momentum and revenue necessary for growth is slowed because loan obligations must be met. Invoice factoring changes all of this by boosting cash flow so businesses can accumulate capital reserves. Not only can they sustain operations, they can also reduce debt that exists on the books and position themselves for growth with capital they already have in their accounts, instead of heavily relying on debt-based financing.

At Single Point Capital, our invoice factoring services accelerate cash flow by making funds from unpaid invoices available within a single day. Whether you own a new business, or you want to reduce debt and position your company for growth, contact Single Point Capital today and learn how our invoice factoring services can help you reach your big milestones quickly and efficiently.