Everyone seems to be talking about inflation these days. But what is inflation, exactly, and what are its effects on your business? Can you use Factoring of Accounts Receivable to deal with the effects of inflation? Keep reading to discover the answers.
What Is Inflation? How Does It Affect Your Business?
Simply put, inflation is a general increase in prices.
As you may have heard in the news, the U.S. (and the world in general) is experiencing unusually high levels of inflation.
While inflation can happen for a variety of reasons, the current inflation rate is due to the effects of the pandemic. Some of the factors that come into play include a supply chain crisis along with increased demand for products.
Inflation has a noticeable impact on households. After all, when prices rise people get fewer products and services for their money.
But Inflation also hits businesses by causing a wide range of issues that include:
- Cash flow problems
- Increased overhead costs
- Lower sales
- Demand for higher wages from employees
- Decreased profits
How Factoring Can Help Your Business Deal With the Effects of Inflation
Factoring is a process where you sell your unpaid receivables to a company called Factor. The Factor pays you upfront so you don’t have to wait 30 to 90 days for your clients to pay you and takes care of collecting the invoices in exchange for a small fee.
One of the main advantages of Receivables Factoring is that it allows companies to maintain a positive cash flow.
The term cash flow refers to the amount of money that goes into and out of your business. If your clients take a long time to pay you, you have less cash available, which prevents you from settling bills or making important payments such as repairs or insurance.
Combine this with the effects of inflation we talked about earlier, and the results can be devastating for any business.
By providing easy and fast access to cash, Factoring can help you limit the impact of inflation, ensuring that your cash flow stays positive and your business can achieve its goals.
ACS Factors: We Turn Your Invoices Into Immediate Cash
ACS Factors helps you get the capital you need to move your business forward.
We are located in Upland, California, and have many clients nationwide in the distribution and logistics corridor which includes Ontario, Riverside, Fontana, Jurupa Valley, and Moreno Valley.
Reach out today by email (email@example.com) telephone (909-946-5599), or through our social media accounts on Facebook, Twitter, and YouTube, and start converting your accounts receivable into cash today!