If you’re a business owner, you need cash in order to grow, bring on new employees, buy equipment, pay your bills…
That’s why it’s ever important to have healthy receivables and good cash flow in order to pay for everything.
This divide between outgoing and incoming cash has been growing wider as time continues and makes it mandatory for companies to have significant cash reserves in hand in order to complete projects on time and to take on multiple projects.
But if you’re a start-up or are having collection issues, cash isn’t so easy to come by. You’ll need financing and access to credit.
Prior to the recent recession, credit was easier to access and it was possible to obtain a line of credit without having to personally guarantee the liability. In the new economy, though, credit of almost any type for a business will require some form of personal guarantee by the owners. In addition, banks are also piling up additional paperwork requirements for businesses to prove their credit worthiness including restrictive covenants, audits and long term contracts. And these requirements aren’t just for banks. I took out a loan through a small-business organization and I felt like I was signing my life away with every signature on each page. Talk about killing trees! And, if you think you can slide under the radar by using credit cards, think again--there are many companies that are also requiring personal guarantees and lots of paperwork.
Bottom line: financing is tricky and personal guarantees can be dangerous. You’ve already put so much of your own money in to the business and now that bank loan officer makes it seem like no big deal for you to personally guarantee the loan with your house, your car, insurances, personal savings… And with that first bump in the road or rough patch with your company, you’re putting nothing less than your very life at risk…
There’s another way. An alternative to financing with less restrictions: Trade Credit Insurance, or Accounts Receivable Insurance.
You know from previous posts that credit insurance protects your cash flow by ensuring you get paid from an insurance policy in case of a client’s non-payment. Taking that one step further, having that safety net in place for your receivables helps strengthen your financial position by insuring cash flow and balance sheet stability. That in turn looks attractive to bankers and loan officers you’ve approached for financing because they know your cash flow is protected. Which would make them more likely to lend to you. You’d be considered an eligible borrower with less risk attached to you, negating the need for any personal guarantees.
Access to credit with less restrictions: just one advantage of Credit Insurance.
To find out the other ways Trade Credit Insurance can benefit your business, download our FREE Report, “Trade Credit Insurance: How To Harness the Power of This Secret Solution To Enhance Profits, Strengthen Assets, and Skyrocket Company Growth.”