As any business can attest, consistently maintaining a positive cash flow is one of the biggest challenges you face. It is for this reason that instruments that can help you in this regard have become big business, themselves. To this end, we’ll go over the most accessible option for small to medium-size businesses: maintaining a line of credit.
The Burden of Cash Flow Issues
Depending on the kind of business you run, you could either see a consistent stream of cash daily/weekly (retailers, for example) – or you could go weeks/months before your next substantial installment of funds (consultants). Income gaps can, of course, harm cash flow. Which can affect everything from your ability to maintain overhead, to your ability to qualify for loans. If you’re in real estate, service provision, or consulting, then one way to combat this is to stagger payments and expenditures. Yet this often proves sub-optimal, since you sometimes have to take shortcuts such as closing deals early or skipping renovations to make your monthly cash flow maintenance deadline.
Remedy For Cash Flow: A Line of Credit
Gain access to short-term funding with a line of credit. A line of credit is also good for covering unexpected costs, recurring expenses, and general business expenses. Like credit cards, a business line of credit is very similar. It also allows you to borrow and pay interest on a flexible sum of money. A business should apply prior to the need arising to secure the best terms and rates.
In sum, then, a line of credit can function as though you had a second, functioning business with a positive cash flow. The funds can be especially useful in tiding you over during a waiting period for your primary business to start bringing in cash. Contact KPI Commercial Capital to learn more about our commercial finance services.