Business planning is a very specific kind of activity for the business owner who wants his business to succeed. Very few companies find success by mistake, which is why a business plan is so important. Too many entrepreneurs hurry the business planning stages of a company because they are anxious to get started. You cannot create success unless you have a blueprint for it and that is exactly what the business plan is.
One of the most important elements of a business plan is staffing. The plan starts out with the staffing needs to get the company started and then moves on to planning out the personnel growth of the organization. It is an invaluable guide to determining just how much cash will be needed to fund payroll and keep the company going. There are several elements that figure into funding payroll at the business planning stages and an entrepreneur needs to be aware of how each element affects the company's ability to meet payroll obligations.
It is very common for business owners to fund payroll using the company's start-up funds at the earliest stages of the business. In most cases, there is a segment of the start-up funding that is set aside specifically for the purpose of making sure that the company can have the staff it needs to grow and develop.
During the business planning stages, a portion of the start-up funding is set aside to meet payroll needs. Once that initial financing runs out, the company moves on to the next stage of its development to fund its payroll needs. Unfortunately, the next stages can be unpredictable, which makes business planning extremely difficult.
Most new business professionals transition their company from start-up financing to outstanding invoices as a source of payroll funding by the fourth or fifth month of the company's existence. There is a portion of the initial cash left behind to cover part of payroll, but the company relies heavily on invoiced sales to start picking up the slack.
When you are in the planning stages of a business and you are trying to project financial needs that are months away, you have idealistic expectations for your business results. You create a percentage of your invoiced sales that will result in past due invoices, and then rely on the rest to pay for ongoing operations. As most new entrepreneurs learn quickly, the ratio of past due invoices to invoices that get paid on time is usually much different in reality than it is in the business plan projections. This is where the problems usually begin.
When a business starts to experience the kind of weak cash flow that comes from an over-abundance of past due invoices, it has to automatically switch to its payroll funding contingency plans. In almost every case, the contingency plans include some sort of bank lending; either in the form of a bank loan or a bank line of credit.
A contingency plan needs to be as comprehensively thought out as the original plan in order for the contingency to be effective. Relying on bank lending to sustain payroll funding when the cash flow cannot keep pace is a safe plan, but it is not a reliable or profitable plan at all. Bank lending can be unpredictable and it also creates debt that will eat away at the company's bottom line. Before the company even reaches its first anniversary, it is behind the financial eight-ball with bank loans to pay for that funded a single payroll payment.
In an ideal world, your company can rely on its cash flow to pay ongoing obligations such as payroll and vendor payments without fail. As long as your company is generating invoiced sales, you should be able to rely on that revenue to sustain operations. You do not live or work in an ideal world, but accounts receivable funding from Capital Credit can make it seem as though you do.
Capital Credit is a company that funds accounts receivables by using its years of experience and financial resources. No matter if your company needs to fund payroll or any other cash flow obligations, we are there to help.
Imagine a situation where your company is able to benefit from its outstanding invoices on or before their due dates each and every time you generate a sale. Your company will see revenue coming in from invoiced sales before the first month of operations is even over and you can sustain that cash flow for as long as you are invoicing creditworthy clients for your products and services.
You don't have to imagine that scenario when you use accounts receivables funding from Capital Credit. From the very beginning of your company's history, you will enjoy all of the benefits of a reliable cash flow as we advance you the face values of your invoices, minus our lending fees. When you have a reliable and steady cash flow, there is no need for contingency plans for payroll funding. You will always have the cash you need and you will not have to rely on bank lending to keep your company going.
When you sign up for an account with Capital Credit, we do not ask you for your company's credit score. As a start-up, you do not have much of a credit history to begin with, and that is why most banks will not lend you the funds you need to meet your payroll obligations. Since we base our decisions on the credit scores of your clients, we can go ahead and advance you funds from all of your verifiable invoices with creditworthy clients.
Capital Credit is not a bank, which is why we are able to help start-ups get the business line of credit they need through accounts receivable funding. As your invoiced sales increase, we will increase your available funding to make sure that you meet all of your ongoing obligations. Capital Credit's accounts receivable funding program is something that should be part of your company's business plans right from the very beginning because we offer financial stability without the cost of expensive bank loans.
If you are in the business planning stages of your company, then contact Capital Credit and become familiar with our accounts receivable financing programs. We offer the flexibility and speed you need to make sure that you are always meeting your payroll obligations. Once your start-up funding dries up, your company could be in trouble if you do not have a solid cash flow. Capital Credit is the financial business partner you need to create that cash flow using the invoiced sales that your start-up has worked so hard to generate.