Finding the Right Working Capital for Your Business’s Best Year


By Bibby Financial Services

19 Jan 2018

Business plans and growth strategies are not just for the big guys. Even small and medium-sized business (SMB) owners should have a strategy for each year’s growth and a plan to finance it. If you haven’t figured out yet how you’re going to finance your plans for 2018, don’t panic – there’s still time to get your ducks in a row for a great start to the new year.

First Things First: You Need a Plan.

Success in business, with few exceptions, does not just happen. It requires a plan. The business owner who creates an annual business plan is better able to identify areas for change and capitalize on opportunities for growth.  A basic annual business plan includes components for sales and marketing, operations, and financial management, though you may have additional elements to consider based on your specific business or industry.  Tip: If you don’t want to engage a consultant or business planner, there are many online resources to help you design a plan that makes sense for your business.

How Does Your Cash Flow Look?

In addition to your budget for the year, the financial management component of your annual plan should include a cash flow strategy. Even a business with high margins, low overhead and year-round consistent sales can benefit from a steady and reliable outside source of working capital. And since most businesses fall short of that trifecta, it’s no surprise that an increasing number of SMBs in the U.S.  make use of external finance every year.

You may not have to look far to find the cash you need – it might be in your accounts receivable.  Generally less restrictive and easier to obtain than traditional bank loans, the factoring of receivables is a popular method of finance among businesses that sell to other businesses on terms.  Through factoring, you can receive an advance payment on your invoices right away - in some cases, even on the same day the invoice is generated.  

Where Are Those Ducks, Anyway?

Regardless of the type of finance you select, your finance company will require several items for their due diligence process, so it’s best to make sure you have these items together in advance to help move things along:

  • Articles of incorporation/organization
  • Amendments related to the structure of your business
  • Proof of recent tax payments

Depending on the type and amount of finance you’re looking for, additional documentation such as balance sheets, income/cash flow statements and debtor reports may be requested. Work with your contact at the finance company to answer any questions or provide additional documentation as needed to keep things moving along.  Tip: It’s a good idea to keep original documents in a fireproof safe and keep multiple copies on file both on and off the premises.

Now for the Fun Part!

As they say, plan your work and work your plan.  Once you’ve evaluated what has and hasn’t worked in the past and made changes to fix problem areas, you’ve already set the stage for improvement.  Schedule regular business reviews throughout the year to assess the effectiveness of the changes you’ve implemented.  That way you can address any issues and tweak processes as needed to ensure your business stays on track for its best year yet.

Bibby Financial Services will customize a financial solution to help your business reach its full potential.  Call us today at 877.882.4229 and tell us about your plans for 2018.  


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