If you’re a small business owner, you probably know what it’s like to struggle with net cash flow – especially if you’re a small business owner selling to large businesses. It’s exciting to land a well-known client who makes a big purchase. However, that excitement can be dampened quickly when those large clients negotiate Net 45 terms, Net 60 terms, or even longer terms to pay their invoice. It varies across industries, too. For construction companies and oil and gas service businesses, Net 60 terms (or even Net 90) are common¹. Add in the fact that you’ve still got to pay suppliers to get the job done, and it’s easy to see the cash flow gap.

But, that scenario isn’t always the case. Plenty of small businesses aren’t as reliant on net cash flow due to the nature of their businesses. Or their customers’ payment terms are only 15 days, giving business owners steady cash flow to pay their suppliers and maintain operations without worry.

The ideal cash flow situation for a small business owner is having enough cash to pay your bills and for growth. If you only have enough cash to pay your bills but have nothing left for growth, you could be missing out on maximizing your business’ success.

The Cash Flow Challenges Blocking Small Business Growth

Consider this common scenario small business owners face: you receive an RFP from a major player in your industry who has a big project coming up. If they choose your bid, it would result in a significant influx of cash you could use to reinvest in your business. You’d establish an important relationship that would connect you to future work. But being able to do the job means buying extra materials, hiring contractors, or investing in new equipment. If the reality is that you only have enough cash to pay today’s bills, that dream job is out of reach.

Or how about this situation: your business is taking off and you start getting inquiries from more customers whose projects all require up-front investment. It’s a shame when small companies have to turn down business opportunities like this because they don’t have the cash on hand to handle them all at the same time.

Whatever the case, COVID-19 has brought on additional challenges to growth that often require cash to solve. Cost of goods is the leading concern of 47% of Canadian small business owners, followed by supplier product availability (39% ) and staffing (33%).

Small Business Funding Challenges and Solutions

So where do you find the cash to grow in the wake of the pandemic? That’s a tough question for many small business owners. The most obvious answer is to work with your bank, however that’s where the issues often start. Small businesses are chronically underbanked, meaning that they often can’t get financing this way. This could be because:

• They’re too new to have the years of financial documentation to prove their track record
• They don’t have the revenue banks want to see
• They can’t wait the 3 months it often takes to get approved
• They taken on unexpected debt to get through lockdowns and can’t take on any more

Consequently, small business owners have been left with a gap in financing that’s been filled with a variety of solutions that they’ve had to piecemeal together where they can get them: government grants and loans, and alternative forms of lending like peer-to-peer lending or merchant cash advances, which you can only use if your business accepts credit cards. (Most B2B companies don’t.)

Equity is another option that’s often out of reach for these business owners, and isn’t favourable anyway. It can be hard to find investors, and many owners are understandably concerned about getting forced out of leading the very companies they started.

How Getting Invoices Paid Early Drives Growth

One approach to getting cash to grow your small business is to not get any additional funding at all and instead get paid faster for work you’ve already done. This is possible with invoice funding an alternative financing method where you get your invoice paid quickly, less a fee, and your customer pays the factoring company who gave you the advance according to the original terms. It’s obvious how that would solve the growth scenarios discussed above. But how can it drive continued growth beyond one-time situations? Let’s do some math.

Let’s say you’re owed an invoice for $100,000 with Net 30 terms, and you have an opportunity to take on a major project. You could simply wait for your customer to pay that invoice and skip the project, or scramble to find financing (and add to your debt). Instead, let’s say you get the invoice funded. You get your cash less a 2.5% fee, giving you $97,500, and use most of it to pay upfront expenses for your project. For the project you get paid $200,000. Even though you paid a fee to get an invoice funded, doing so enabled you to make another $100,000 in the same time you would’ve spent waiting to get paid. By repeating this process, your success can start to snowball.

How 3 Entrepreneurs Grew with Fast Cash Flow

That’s exactly what three business owners just like you have done. They recently told their stories of how getting invoices paid in advance helped them take on new customers, invest in research and development, and even avoid bankruptcy. See their stories in their own words.

Nurses at Heart Spreads the Love with More Contracts

Meet LeQuitha Simmons, registered nurse and CEO-owner of nurse staffing agency Nurses at Heart. As demand for nursing staff ramped up during the pandemic, and with one facility six to eight months behind on payments, she knew she needed fast cash flow. LeQuitha unlocked the ability to make hires and take on all the clients and contracts she wanted by unlocking cash stuck in unpaid invoices. Watch her story.

Bow Valley BBQ Discovers Their Secret Ingredients for Success

James Ayles tells the story of how Bow Valley BBQ, Inc., has rapidly grown and shares an exciting accomplishment: their high-quality sauces and condiments are now listed with major retailers. With the need to maintain the current business and invest in R&D for new products, cash flow has been a constant challenge along the way. Data and fast cash flow became their secret sauce in their recipe for success. Watch his story.

5Fort Contractors Builds Their Business Without Delays

Long payment terms and a lack of funding are common in the construction industry. No one knows that better than Dax Castro, CEO of 5Fort Contractors. If he had to rely on the bank, the wait for funding would’ve made him go bankrupt. Faster cash flow means he can pay his crews quickly, continue daily operations with peace of mind, and take on new jobs for custom home construction. Watch his story.

FundThrough is a leading player in the fintech small business working capital space. Based in Toronto, the company accelerates cash flow and enables growth. Its AI-powered invoice funding platform re-imagines invoicing so that small- and medium-sized businesses can get paid instantly and eliminate “the wait” associated with customer payment terms. To learn about FundThrough’s partnership with Intuit QuickBooks and how you can fund an invoice, click here.