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How to Leverage Different Types of Capital to Handle Unexpected Company Growth

It may seem counter-intuitive, but growing too fast can be just as bad—or even worse—for a small business as not growing enough. After all, when you start a business, you want it to grow, and steady growth is the dream of just about every business owner. But the crucial word there is “steady.”

Steady growth allows you to adjust your inventory, production, staffing, and shipping gradually to keep up with the increased workload. A sudden spurt of growth—too big or too fast—can lead to major problems with your supply chain, payroll, staffing, and every other aspect of your business. In fact, rapid growth can sometimes lead unwary businesses to bankruptcy!

Rapid growth can have a major impact on your financial stability, the performance of your workforce, the capacity of your infrastructure, and your relationships with your clients. While sudden growth means that you’ve got more capital, more opportunities, and wider recognition, it also means that you’ve got a lot more demands being placed upon your time, your resources, and your business, and the consequences of not meeting those demands can be disastrous.

Cash flow can become especially problematic for businesses that experience rapid, unexpected growth, especially if a lot of your customers pay on credit. You may have to supply goods or services well in excess of your usual amounts right away, and not get the influx of increased money for 30 or 60 days (or longer) past the date of the invoice. Hence, a sudden tide of new business can leave you high and dry when it comes to trying to pay for additional inventory, make payroll for added work hours or additional manpower, or otherwise keep up with the increased demand.

That’s the kind of situation where receivables factoring can really help. When most business-to-business companies think of funding business growth, they’re thinking of ways to get the money they need to help their business take the next step. But you may also need funding options when your business has already taken the next step, and your workforce, processes, facilities, or other resources are still running to catch up.

Because receivables factoring isn’t a loan, getting the cash you need isn’t going to increase your company’s debt, and it isn’t going to require collateral or other financing hurdles. Instead, you sell your current invoices to a receivables factoring company such as QC Capital Solutions, and we advance you the cash you need within 1-2 days. Basically, it’s getting your client invoices paid, just faster.

So you can see why receivables factoring is often the perfect solution to funding business growth for companies that experience sudden, unexpected growth. It’s not that you don’t have the money to pay for what you need, it’s just that you don’t have the cash in hand when you need it. Receivables factoring can get you the cash flow that you need to help your business grow, whether it’s steady growth over time, or sudden growth all at once.