Increasing Cash Flow with Asset-Based Lending

Cash flow management is one of the most obvious but hardest to execute parts of growing your small business into a larger player in the regional or national marketplace. For companies with a complex array of services and income streams, often a complex approach to the topic is best. Many businesses manage a wide array of financing options to balance the cost of individual financial moves, and that does help your cash go further by minimizing your total overhead. It doesn’t help with your available working capital, though. That’s where asset-based lending comes in.

When you secure your short-term cash advance with your company’s on-hand assets, you’re accessing a sophisticated form of financing that balances the assets used in several single-asset cash advance products. The asset-based approach broadly considers your inventory, invoices, purchase orders, and other important factors to make a fluctuating credit line available to you. The more value you are holding in assets, the bigger the balance you can access at any time. This helps when you have to load up on inventory in the short-term and you still have outgoing cash commitments and when you have invoices yet to be paid, so you don’t have to manage multiple projects.

Asset-based lending does require a fair amount of administrative overhead on an ongoing basis, but it does not require you to repeatedly apply for single-use advances whenever you have invoices to finance or purchase orders coming in. When viewed that way, it can be a tool for simplifying your financial administration time and streamlining the process of creating a smooth flow of cash through your business. As you form a relationship with your lender and their representatives learn your business cycle, communication gets easier.

When balanced alongside long-term financing options for your equipment and facilities, this product can help to decrease your dependence on more expensive forms of accessing capital like short-term hard money loans, bridge loan products, and even credit lines. Consider your options, and look at which credit products give you access to the working capital you need without overcharging you for the privilege because the best choices tend to shift as your company grows. That’s the beautiful part of a broad approach to asset financing though. As your assets change, the program takes it into account. All it takes is an open approach to communication and timely follow-up as your circumstances change. Talk to a lender today to learn more about how this form of financing would work for your business because every company’s balance of assets and business cycle winds up being just a little bit different.


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