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Business financing decisions critical to business success

On Behalf of | Feb 1, 2018 | Business Formation & Planning |

Available funds are a critical part of most Ohio small businesses. Without available funds, the business will be unable to make payroll, purchase needed supplies or deliver the promised product. As the saying goes, “it takes money to make money.” This premise is often the catalyst behind many business financing decisions.

Many businesses allow customers to establish accounts. Work is delivered and the customer is invoiced for the work. Typically, these invoices are to be paid within 30 days. While this practice often means an increase in business for the company, it can also mean an increase in funds needed to operate the business. In essence, the business is paying for the manpower and supplies upfront and expecting the customer to pay the invoice at a later date.

In order to meet operating expenses, the business may need to take a look at various business financing options such as invoice financing, lines of credit and/or term loans. With invoice financing, a percentage of accounts receivable is typically available to borrow against; as invoices are paid, the loan can be repaid. There are typically fees involved with this type of financing. A line of credit allows the business to borrow only what is needed and leave the rest available for future borrowing if needed.

Business financing decisions are a critical part of most Ohio businesses. As the business grows, numerous financing decisions will need to be made. Many of these decisions require the use of contracts with customers, suppliers and financiers. Experienced legal counsel can review these contracts, along with other aspects of financial decisions, and make appropriate recommendations.

Source: Forbes, “4 Business Loans That Work Well With Invoice Financing“, Jared Hecht, Jan. 29, 2018

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