For small businesses spanning all industries, uneven revenue cycles are not uncommon. Big gains in one quarter are not necessarily an indication of a trend that will carry into the next. Similarly, big sales do not always yield a big revenue stream, especially if invoices are generated with staggered payment schedules. Fortunately, there is a method to smooth out uneven revenue cycles and improve your cash flow in a business landscape that is moving faster than ever before.
How Staggered Payments Impact Revenue Cycles
From staffing firms to the freight industry, businesses across many sectors issue invoices to clients with staggered payment schedules. A sale is made and the client has 30, 60, or even 90 days to pay the balance on the invoice. In theory, this model creates a constant influx of revenue for a business. However, the world does business at a much faster pace these days, and waiting a month or longer for payments can impact revenue cycles for businesses that need more immediate access to capital to cover overhead, fulfill customer requests, and grow successfully in a competitive landscape. Staggered payment schedules in the traditional 30-90 day model lead to uneven revenue cycles that can threaten to reverse cash flow, or force businesses to take out short-term loans to cover gaps. In some cases, this situation is a recurring issue, and taking on debt for short-term corrections is not an ideal solution.
Smoothing Out Revenue Cycles and Speeding Up Cash Flow
Uneven revenue cycles can usually be traced to outstanding receivables and staggered payment schedules. In order to eliminate the negative impact of both, businesses use invoice factoring. Invoice factoring converts receivables to cash in short order, so businesses can speed up cash flow and stop waiting a month or longer to see revenue. Additionally, the rate of incoming capital helps to smooth out revenue cycles so business owners do not have to worry about covering overhead and other expenses, and can focus on making plans for growth. While traditional staggered payment schedules are not going to disappear, factoring provides a method of expediting the process.
Single Point Capital specializes in factoring solutions. Our same-day invoice factoring services will speed up your cash flow and help correct uneven revenue cycles. To learn more about how invoice factoring can help your business, contact the team at Single Point Capital today.