Financing Lessons We Must All Learn

Ensure that you can always go back to the well for more capital. This means keeping very good relationship with vendors and supplier (who could offer trade credit freeing up cash flow) and your lenders. This also includes staying current on all payments - no lender will fund a company or person who is behind on current obligations. Thus, if the need arises - you have reduced all costs to their bare minimum - you can always go back to these sources for more capital. Lastly, constantly be looking for new, alternative ways in which to finance your company - including factoring, leasing, cash advances, or private investors.

Even if your business is really taking off - meaning that sales are growing at a phenomenal rate, your company could still (and usually do) face cash shortages as your bills (current expenses and the huge expense related to the growth) may be outpacing your cash inflow (actual cash into the business, not receivables - the actual amount in you checkbook).

Note: while managing costs is paramount to a successful business - so is managing revenue - ensuring that your receivables are closely matched to your payables.

I quoted the above financing tips from Business Know How blog. Well, there's a lot more to learn. Check it out on this post -> Estimating Capital Needs for a New Start-Up!

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