Cash flow is the lifeblood of any small business. The better a company is able to manage its working capital, the less the company needs to borrow.
For many business owners, however, managing cash flow can be a challenge. When vendors take their time paying you and unexpected expenses crop up, it affects your ability to fund operations, make payroll, reinvest, and meet capital requirements.
Sometimes the need for working capital is expected. Many businesses, like those that are seasonal or manufacture heavy equipment, don’t have reliable and consistent daily inventory turnover. These business owners know that cash flow will often be short, and they must plan for it in advance.
More often, companies run into unexpected situations where they suddenly have too little cash on hand. This can happen no matter what the industry or how healthy the business. Since you never know when opportunities or costs will occur, it’s always wise to have funds available to protect your business against unforeseen circumstances.
What is Working Capital?
Working Capital is the day-to-day driver of your business, and it is also essential for business growth. In order to enlarge your operation or to sustain a current expansion, you may need to make larger investments in inventory, personnel, or perhaps even new facilities and equipment.
Summit Financial Resources sees working capital as a hard-working asset that helps businesses get the job done. When you have enough cash on hand, you can hire more, produce more, take on more jobs, and pay less for supplies. If your cash is falling short, we can get you more of it.
Summit Financial Resources’ Working Capital loans involve using your accounts receivable and other assets as collateral. We can mix and match from a variety of product options to suit your exact financing needs, including:
- Invoice Factoring
- Asset-Based Loans
- Inventory Lending
- Term Loans
For many small businesses, our core product – Invoice Factoring – is key to their ongoing cash flow strategy. Invoice Factoring uses your receivables as collateral, letting you harness the latent cash in your unpaid invoices.
How Does it Work?
The working capital cycle measures the time between paying for goods supplied to you and the final receipt of cash to you from their sale. For example: A machine shop uses $100 to build up its inventory of steel, aluminum, titanium, etc. A week later, the company assembles the ingredients into parts and ships them out. A week after that, the checks arrive from customers. That $100, which has been tied up for two weeks, is the company’s working capital.
It is desirable to keep the working capital cycle as short as possible since this increases the effectiveness of working capital. The more quickly the machining company sells its parts to other manufacturers, the sooner the company can go out and buy new ingredients to make more parts. If the ingredients sit in inventory for a month, the company’s cash is tied up and can’t be used when it needs to pay its bills and make investments – much less to grow the business. Working capital also gets trapped when customers do not pay their invoices on time or suppliers get paid too quickly or not fast enough.
Summit Financial Resources helps to shorten the cycle by bridging the gap between when you purchase goods or services and receive payment from your customers. We provide up to 90% advance rates on outstanding invoices, so when working capital is tight, this is a simple way to secure funding. Because we are a nimble company, we can assess your business information quickly – so you won’t have to wait weeks for an approval.
If you’ve had some trouble paying your bills in the past, invoice factoring and asset-based lending are ideal sources of funding. Because we base funding decisions on your cash flow and customer creditworthiness, your previous financial issues are not as critical. Once you secure the loan, your customers pay us directly.
At Summit Financial Resources we understand that whether you are a manufacturer or a professional services provider, having adequate working capital on hand is critical to ensuring sufficient cash flow. We have delivered hundreds of millions of dollars to our customers who use these loans for everything from paying suppliers, repairing equipment, and managing payroll to advertising, purchasing inventory, and taking advantage of new opportunities.
Whether you are just starting out or expanding for the future, you can count on Summit Financial Resources as a partner invested in your success. We provide quick decisions, fast funding, and unique solutions to your business challenges. That’s how we make working capital work for you.
Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.