Small businesses have been the biggest victims of the global financial recession, with many seeing revenues and profits rapidly declining. Due to the current economic situation, many large, midsize and small businesses are also suffering from cash flow problems. In the past, customers who used to pay debts or bills in 15 days now pay in 30, 45 or even 60 days. The net effect of this weakens cash flow, and also the ability of the company to operate efficiently.

While larger companies generally have reserve funding for payments, some small companies do not enjoy that benefit. Therefore, due to limited credit, small companies generally need to pay their own bills sooner. An unsustainable situation is created, where the end result will be the downsizing of the company.

However, there is one solution at hand – business loans. Although these are the best way to alleviate cash flow problems; being eligible for a business loan is extremely difficult. Many institutions are now being cautious because of their own capital problems, and are only offering business financing to their major customers. Generally, these customers have a solid income statement, seasoned management teams and a strong balance sheet.

Invoice factoring is one alternative that is often overlooked. It is a solution particularly designed to deal with slow payments from commercial customers. It greatly helps businesses by offering advances for their slow paying invoices, thus accelerating cash flow and enabling them to meet their obligations. So if you are facing similar problems with a lack of cash flow, opting for invoice factoring is the right decision.