Most owners will face a cash flow gap at some point. Sales are fine, but money is going out before money comes in. Payroll lands before a big invoice is paid. Inventory has to be bought before the busy season. A gap is a timing problem, and timing problems have practical fixes.
What causes a cash flow gap
- Customers who pay in 30, 60 or 90 days
- Seasonal swings in sales
- Large inventory or equipment purchases
- Unexpected repairs or taxes
- Fast growth that outpaces your bank balance
How to see it coming
Build a simple 13 week cash forecast. List expected deposits and bills by week. Wherever the running balance dips close to zero, a gap is coming. Spotting it a month ahead gives you more choices and lower stress.
Ways to bridge the gap
Speed up the cash you are owed
Send invoices the day work is done, follow up on late payers and offer a small discount for early payment.
Slow down the cash going out
Ask suppliers for longer terms and time big purchases after deposits arrive.
Bring in outside cash
When timing is the problem, a short term product fits. A merchant cash advance can deliver cash in 24 to 48 hours from application, with offers usually in 1 to 5 hours, and a fixed daily or weekly payment you can plan around. A line of credit works well if gaps repeat, since you draw only what you need. Pick the one that matches how often and how large your gaps are.
Check the math first
Before you take any cash for your business, know what it costs. Enter the amount, factor rate and term in our cost calculator to see the total payback and daily payment, and compare it with the profit the money will help you earn. If the numbers work, go ahead. If they do not, borrow less or look at another option.
Keep the gap from coming back
- Keep a cash cushion of at least a few weeks of expenses
- Review your forecast every month
- Separate tax money into its own account
- Reorder inventory in step with your sales, not ahead of them
Getting cash for your business
To qualify with us, you need at least 1 year in business and at least $5,000 in monthly revenue. Our minimum credit score is 500, and we use a soft pull only. We fund $10,000 to $5,000,000. Read more on our business funding page and see the details on transparent terms.
See what you qualify for
Offers usually come in 1 to 5 hours on a complete file, with funding typically in 24 to 48 hours from application. We use a soft pull only, so applying does not affect your credit score. Apply now or call 1-866-737-6278 (866-Re-Smart). Prefer to start with numbers? Try the qualification estimator and the cost calculator.
All funding is subject to underwriting and approval. Amounts, factor rates, fees and timing vary by applicant and transaction. A merchant cash advance is not a loan. Smart Business Funding® is a registered trademark (U.S. Reg. No. 7,637,151).
