My Cash is on Back Order

Factoring companies hear the most amazing stories. Today I received a phone call from a small company that’s been in business for 14 years and experiencing some real opportunity for growth. The family business was just handed down to the second generation—to a young man with lots of energy and plans to grow.

The new business owner began contacting factoring companies and stumbled on Interstate Capital during an internet search. The business owner started telling me about the history of his business-how his father had started the company and was satisfied staying small. When the son took over the business, he saw lots of opportunities his father overlooked or simply was not interested in pursuing due to his advanced age.

This company sells and services fire extinguishers. While everything was on an even keel, cash flow was not so much of a problem. They collect their accounts receivable in about 60 days. When the son took over the business, he began marketing their services more aggressively and before he knew it, he had customers lined up, but no ability to obtain fire extinguishers from his supplier, because he was constantly waiting to collect his receivables. Factoring those accounts receivable, he figured, would allow him to buy more fire extinguishers for resale and increase both his revenues and gross profit.

This business owner informed me that when ever he’d get a new customer, he would have to keep contacting the customer to inform him that the fire extinguishers were on back order. In reality, his cash was on back order. Factoring companies can assist small businesses free up that cash to acquire inventory and increase sales. If your cash is on back order (tied up in accounts receivable), you may consider contacting a factoring company like Interstate Capital to get a factoring quote.

Author: Tony Furman
Copyright 2009
Interstate Capital Corp.

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