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Fast Working Capital Sources
Working capital of a business is the capital of a business used in running daily operations. The need for working capital sources occurs more frequently than expected by business owners. 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.
You can have problems with cash flow even with an established business. It is important to cash quickly assets like unpaid invoices and inventory to make fast working capital. Without enough working capital the company will not be able to meet the daily needs of the company.
Fast working capital sources provide other means of making money for the business quickly. 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. Consider the cost of sacrifice you will make before using factors to get fast working capital. 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. The wholesalers and distributors with large orders mostly use this source of fast working capital when they do not have enough to meet their demand. The lender gives you the capital while waiting for the order to be delivered. This source of capital is limited and there is a risk of the cost of the purchase finance being higher.
Merchant cash advance is mostly used by business people to get fast working capital. The money you get from merchant cash advance is paid back when the business sells the credit cards. The capital from merchant cash advance has no specific return period but mostly repaid in less than twelve months. The main disadvantage of merchant cash advance is the huge rates charged for the service. You should do your homework properly before sourcing your capital from any dealer.
There are sources of fast working capital on the internet. Peer-to-peer lending is a website source of working capital where the business owner in linked with a lender from a list of other financial lenders on the site. 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.
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