factris invoice financing factoring

Healthy cash flow is essential to the success of any business. It allows you to pay bills, make investments and grow. But cash flow problems can occur quickly and, if not addressed in time, can have serious consequences for your business operations. In this blog, we take a closer look at how to recognize and solve cash flow problems, and we also discuss how factoring can be a valuable solution to keep your business financially sound.

What is cash flow?

Let’s start by understanding what cash flow actually is. Cash flow refers to the money that comes in and goes out of your business during a certain period of time, usually a month. Positive cash flow means more money coming in than going out, while negative cash flow means more money being spent than coming in. Positive cash flow is the lifeblood of your business, while negative cash flow can cause serious problems.

Recognize the signs of cash flow problems

Cash flow problems can be insidious, but there are clear signs that may indicate something is wrong. Here are some common symptoms:

1. Late payments from customers

When customers consistently pay late or ignore invoices, it can jeopardize your cash flow. You need money to cover your ongoing expenses, and delayed payments can lead to liquidity problems.

2. Seasonal fluctuations

Some businesses experience seasonal fluctuations in their cash flow. If you don’t plan properly for periods of lower income, you could be in trouble.

3. High spending

Excessive spending, such as large investments in equipment or inventory, can affect your cash flow if not managed carefully.

4. Too much debt

Having too much debt can put pressure on your cash flow because you have to pay interest and principal payments, which take away from your available funds.

5. Unexpected expenses

Unexpected expenses, such as repairs or legal disputes, can quickly worsen your financial situation if you are not prepared for them.

Solutions to cash flow problems

Once you recognize the signs of cash flow problems, it’s important to take action quickly. Here are some steps you can consider:

1. Establish a detailed budget

Creating a budget is essential to managing your finances. It helps you plan your income and expenses and identify any shortfalls before they become problematic.

2. Improve debtor management

Make sure you have effective accounts receivable management to ensure customers pay their invoices on time. This can include establishing clear payment terms and regularly following up on outstanding invoices. Optionally, you can outsource debtor management.

3. Reduce costs

Examine your expenses and look for ways to reduce costs without compromising the quality of your products or services.

4. Short-term financing

Consider using short-term financing options, such as a business loan or line of credit, to solve temporary cash flow problems.

5. Factoring as a solution

A particularly effective and flexible solution to cash flow problems is factoring. Factoring involves selling your outstanding invoices to a specialized company, such as Factris, in exchange for immediate payment. This allows you to get quick access to the money you owe, without having to wait for your customers to pay.

How does factoring work?

Let’s take a closer look at how factoring works and why it can be a valuable cash flow management option:

Step 1: Send your invoices

As usual, you send your invoices to your customers for the products or services provided.

Step 2: Submit your invoices to Factris

Instead of waiting for payment from your customers, submit your invoices to Factris. This is quick and easy to do online.

Step 3: Receive payment immediately

Factris immediately pays you a large portion of the invoice amount. You now have immediate access to that money, which you can use to keep your business running, pay bills or invest in growth.

Step 4: Factris manages the debtors

Factris takes over the responsibility of collecting payments from your customers. This reduces the administrative burden for you.

Step 5: Receive the balance

Once your customers pay their invoices to Factris, you receive the remaining amount, minus the fee from Factris for their services.

This article has been revised by

Edmundas Volskis

Edmundas Volskis

Chief Risk Officer

Edmundas Volkis is a vital organization member responsible for identifying, assessing, and mitigating risks that could impact the company’s goals. In 2015, he was the first employee at Factris, besides the managing director.
Edmundas previously worked in data analysis and business consulting. The CRO deeply understands the organization’s business model, operations, risk appetite, and current and emerging risks that could affect the company.
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