Finance

Can't Go With the Flow?

Simple solutions for winning the cash-flow battle
Magazine Contributor
1 min read

This story appears in the August 2001 . Subscribe »

Q: We own a 5-year-old temporary placement service, and I'm constantly fighting the cash-flow battle of collecting my receivables long after I've paid my payables. Do you have any suggestions?

A: I would suggest using a line of credit or factoring to keep up with payroll and payables, using your receivables as collateral. Accounts receivable lenders normally advance 75 to 90 percent of the amount of money your clients owe you. You can also sell your receivables via factoring, in which the lender buys receivables from you on a discounted basis of 50 to 90 percent of the receivables' face value. Both methods can be expensive but will allow you to turn receivables into cash in days rather than weeks.

Several national lenders, such as The Commercial Finance Group, can do both accounts receivable lending and factoring. Or try contacting The Commercial Finance Association, which can assist you in finding a lender. Good luck.


Write to Doug Hood, founder and president of Rainmaker Capital Corp., at doughood@rainmakercapital.com.

More from Entrepreneur

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Deciphering the Key Financial Metrics of a Business's Value