Cash flow management is the key to successfully keeping your business growing and adapting to changing market forces. Without a good management strategy for your money, you can have a world-revolutionizing new product and never get the manufacturing off the ground, even if you’ve got orders. Let’s talk about how lines of credit can help.
The reason it’s so challenging is that you have a constant flow of outgoing expenses to keep paid on time if you want your business to be able to keep working, but at the same time, you don’t get your cash immediately when you make a sale. Even if you are running a retail business, you’ve got a window between taking a check or credit card and getting the money, and for cash sales you can only use the money as it comes in if you have a management plan that keeps it on your books and accounts for it properly.
The simple solution is to find a credit instrument that will give you the spending power you need during those crunch times, allowing you to make the payment to the credit line when you get your money. There are a few ways to access this kind of credit, and depending on your business type and structure, they are more or less useful. The only type of credit financing that is available to all kinds of businesses and universally useful, though, is the credit line. Lines of credit allow you to draw cash when you need it, so you don’t have to worry about whether a vendor will take it like you do with a credit card.
Credit lines also give you a revolving source of money, because as you pay the balance down, it becomes available to draw upon again when needed. This prevents you from needing to apply for credit over and over like you would if you were using many other types of short-term financing. Once you get approved for a credit line, it’s yours to use as long as you keep it in good standing.
The best part is, when you need more credit because your business has expanded, a line increase is easier to get approved than a new line. All you need to do is confirm the increased volume of receipts and annual income and your credit can be re-evaluated to suit your new needs. You might want to combine this type of instrument with another cash management resource or credit type to get the most out of your cash flow plan, but you definitely want to check it out because you won’t find very many credit opportunities this versatile.