Ways of Getting Fast working Capital
The money used for the daily operation of a business is the working capital. More money can be required by the business than what is expected. Banks can delay processing the loans which are not guaranteed for approval. The business owner has to seek other alternatives to get loans to continue with their day to day activities.
The business owner can be caught with capital difficulties even with a firm with good returns. The business owner has to cash fast from unpaid invoices and inventories. A company will not be able to pay their bills, meet their payroll and buy stock needed for the business without enough working capital.
Other sources of getting the working capital fast save the company when in need. You can use factors to get working capital for your company quickly. The factor gives the business owner money 24 hours earlier before reviewing the invoices. The buyer of the invoices get the money directly from your client; therefore this source of fast capital does not qualify to be called a loan. The downside of factoring is the loss of a portion of your profits. Before using this type of cash flow, ensure it is not a liability. Your customers should not know you this is the source of your capital.
Purchase order financing can also get working capital for the company quickly. The promise to deliver orders is used as a security for the business to get fast working capital in purchase order financing. This type of fast working capital source is mostly used by people with large orders like the wholesalers. The purchase order financier will wait for the goods to be delivered after they have given you the fast working capital. Purchase order financing cost can be high and therefore not very appealing.
Merchant cash advance is mostly used by business people to get fast working capital. After getting the money from the merchant, you will repay with the income you get from selling credit cards. The time of returning the money is not fixed but mostly done in less than a year. The main disadvantage of merchant cash advance is the huge rates charged for the service. Compare the rates of various lenders before selecting one to finance your fast working capital.
There are internet based sources where you can get fast working capital. Peer-to-peer lending is a fast working capital source where you are linked with one of personal lenders on a website. It is structured like a loan so that you repay the money with interest. The interest rates will depend on the site and the person lending you the money.