Can't Go With the Flow?
Simple solutions for winning the cash-flow battle
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.
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