To sustain and grow any business, you need consistent cash flow. Some industries, due to the nature of their business, struggle with this more than others. When these industries experience a shortfall in their working capital, typically all they need is a quick influx of revenue. The long process of applying for a traditional bank loan to get the cash they need would only put the business further behind when all that’s really needed is short term funding. For those industries that rely on the payment of invoices with terms of 30, 60, or 90 days to maintain a steady cash, leveraging their own invoices with invoice factoring can be the perfect short term funding solution. These are some of the industries that can benefit greatly from invoice factoring services.
In the staffing industry, payment terms can vary. In many cases, the staffing agency must pay the contracted employee and then wait for the employer to pay them. In the case of temporary staffing, the agency may not get paid until the term of temporary employment has been fulfilled. For example, if the temporary staff is contracted for one month, the staffing agency won’t get paid until the contract term has been completed. Agencies often spend money upfront to find and vet potential candidates and then have to wait to get paid. Unless there is a substantial reserve of working capital, a staffing agency is bound to experience a shortage of cash flow from time to time.
Healthcare is another industry that frequently struggles to maintain a steady cash flow. A big reason for this is the pace at which the insurance companies process claims. This has a significant impact on large medical facilities down to the smallest family practice. These healthcare providers also face rising medication prices along with the expense of keeping up with ever-changing compliance regulations. All of this combined can easily create a gap in working capital.
Manufacturing companies can also find themselves in need of a quick influx of cash. This can be due to an increase in orders as well as slow-paying customers. In addition to these issues, manufacturers also have to deal with increased production costs, tariffs, transportation expenses, and fluctuating currency values.
In order to keep their business moving forward, manufacturers need to be able to purchase enough inventory to fill every order on time. Turning away orders or delivering them late is not only a loss of revenue but it can also damage a company’s reputation, making them appear unreliable and unprofessional.
There are a variety of reasons construction companies may experience a shortage of working capital. Along with slow-paying customers, rising material costs, increased demand, and seasonal slowdowns can all contribute to poor cash flow. Also, many construction companies only receive 50% of the project cost upfront. If material prices go up or the project takes longer than expected, funds can be depleted before the project is finished. Despite the gap in revenue, supplies will still have to be purchased and payroll will still have to be met in order to complete the project and be paid the remaining balance.
Invoice Factoring with CFG Merchant Solutions
The risks these industries and others face often can’t be predicted or controlled, leaving them in need of immediate cash. Invoice factoring can provide the funding necessary to purchase inventory, fill orders, meet payroll and more. CFG Merchant Solutions provides invoice factoring and other alternative financing options to keep your business moving forward.
We are a privately owned and operated specialty finance and alternative funding platform. Our focus is on providing capital access to small and mid-sized businesses (merchants) in the U.S. that have historically been underserved by traditional financial institutions and may have experienced challenges obtaining timely financing. The CFGMS team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets. Contact us to find out if invoice factoring is right for your business.