Your small business can avoid endless paperwork required by big business banks with these tips.
We’ve seen this play out before.
The project is completed, you’ve delivered as promised, and the client is happy. But for whatever reason, they haven’t settled your receivable. Even large corporations occasionally miss payments or are late.
With funds not there to cover the payroll obligation a few days from now, what strategies will you use to handle it?
The health of your business is directly linked to the availability of credit. Owners know the best time to arrange for financing is before you need it.
According to the National Federation of Independent Businesses, 23% of business owners borrow regularly. Those who dislike borrowing may not want debt on their balance sheet or may struggle monitoring loan covenant provisions.
One way to prepare for unexpected events is to keep a large cash reserve. While this may help, opportunity costs exist when owners cannot redeploy funds for higher return projects.
We should be mindful about making financial mistakes when under pressure. For example:
Loan applications at the big banks are likely to be denied if your history includes:
There are fees to pay, forms to complete, and time-consuming meetings with your banker, even with a good history. You are presented with mind-numbing terms and conditions to read and understand. Once funded, your loan must stay in compliance with all covenants and payment due dates, or risk being recalled.
There are alternatives to high-cost bank loans and crazy paperwork. Many business owners are not yet familiar with an emerging industry called “payroll financing”. It is likely available through their existing outsourced payroll provider.
While it is important to consider all financing options that will meet your needs, imagine the value of having a pre-approved line of credit just for payroll that can be requested and funded the same day. Now imagine incurring no cost for the credit until used.
Business owners run their companies with agility and expect the same from banking institutions. They want win-win relationships, fewer barriers to obtaining financing, and more options for covering unforeseen events that allow them to sleep well at night.
For owners with occasional issues around funding payroll, this new option might help reduce the stress involved.
Morris Reichman is the founder and CEO of Payro Finance. Former Vice President at Infinity Capital Funding an alternative finance company, Morris possesses a versatile background in the finance industry. Having spent 7+ years working across global macro operations and start up corporate finance Morris's expertise is in business accounting, risk management and investment analysis. Morris founded Payro Finance to support business owners and ensure their business continuity.