In the B2B arena, cash flow slowdowns are becoming more prevalent. Last year the private and public sectors combined reported waiting more than 90 days to receive payments. The result, according to banks, is that these organizations were forced to either dip into their own profit margins or take out short-term loans to smooth out uneven revenue cycles. The data also points to businesses entering negative cash flow after 40 days due to gaps in revenue from outstanding invoices, leading to a slowdown in productivity, as well as a strain on finances leading to debt and impacted credit ratings. B2B organizations need to find a way to eliminate cash flow slowdowns so they can continue operations.

The Standard Payment Model Is Outmoded

Contractors, construction companies, trucking companies, tech firms, and more work almost exclusively in the B2B space, where the standard model is to issue invoices with staggered payment windows of 30, 60, or even 90 days. Many years ago, this model worked because it would establish a constant stream of revenue while giving customers time to evaluate services rendered and come up with the capital for large payments. However, commerce moves faster these days. Time, labor, and materials cost more. Businesses still find themselves tied to the standard model, and the longer customers sit on invoices, the more likely it is that businesses will experience gaps in revenue. When cash flow slows down to a trickle, businesses can no longer operate at optimal capacity. Overhead costs cannot be met, payroll does not get made, and growth plans go on the back burner.

Loans Are Not an Option

While many businesses turn to short-term loans to temporarily correct cash flow issues, experts warn against using this strategy. Currently, banks are tightening their credit and collateral requirements while simultaneously lowering the amounts they lend to businesses. At the same time, businesses should not take on unnecessary debt, because even if cash flow corrects itself, revenue will be split between regular costs and paying off the loan balance. Going one step further, if customers continue to sit on invoices, then cash flow slowdowns will become a recurring problem, and taking on debt through consecutive loans is a fast road to larger financial issues. So how do businesses avoid loans while maintaining strong cash flow?

Preventing Cash Flow Slowdowns

If businesses cannot force customers to pay their invoices faster, and they cannot take out loans to correct cash flow, it may seem impossible to break out of the cycle. Invoice factoring prevents cash flow slowdowns without placing debt on the books, allowing businesses to unlock capital that is tied up in unpaid receivables. When an invoice is issued to a customer, a business can submit it for factoring. Instead of waiting 30, 60, or 90 days, and risking a negative cash flow, the invoice is converted into cash, and the funds are made available much faster. This means businesses can stop playing the waiting game and accelerate their cash flow. Invoice factoring allows businesses to get more revenue faster, cover expenses, make payroll, and build up capital for future projects or growth.

Maximize Your Cash Flow Today

Single Point Capital is a national leader in factoring services. We have the capacity to convert your unpaid invoices into cash and make those funds accessible to you within a single day. No more waiting around for a month or more to receive payments for your work. Additionally, we give our clients the ability to run credit checks on their customers, so they can have better insight before making big business decisions. On top of it all, you will receive a personal account manager. Our executive professionals will help you with all of your questions and take you through the factoring process so you can get your cash flow back on track. Stop sinking time and resources into trying to run your business while chasing after customers for payments. Invoice factoring from Single Point Capital is fast, streamlined, and affordable. If you want to improve your cash flow, contact Single Point Capital today.