New Charter Capital paper shows that cashflow problems, not necessarily profit, are behind eight-in-ten business failures.
HOUSTON, December 15, 2021 – Leading invoice funding company Charter Capital says difficulties surrounding cash flow continue to dominate the list of reasons small businesses fail. The company’s recent publication, “6 Common Challenges Startup Businesses Face,” explores this and other root causes of business closures as well as actionable solutions in each area. The complete piece is live on charcap.com now.
Gregory Brown, co-founder and executive manager of Charter Capital, says small-business owners often focus on profitability, but that’s only one indicator of a company’s financial health. Effective cash flow management is vital, particularly for businesses experiencing rapid growth.
“Growth and profit are a double-edged sword that can lull business owners into a false sense of security,” Brown explains. “A business can be busier than ever, but founders will almost always come up short when their operational expenses make a jump before incoming payments do.”
Brown contends that this is why growth, not necessarily lack of profit, is the culprit behind diminished working capital reserves and is what causes many startups to falter.
“It’s normal to see this kind of cash flow gap in high-performing startups,” continues Brown. “But, when founders aren’t prepared for the strain of growth, and can’t get funding through traditional sources, they start racking up late fees and get tied into expensive long-term contracts with lenders, which damages their growth in the long run.”
According to Brown, entrepreneurs can ramp up without getting tied into expensive funding solutions by leveraging invoice factoring. With factoring, the business receives a cash advance on its outstanding B2B invoices, so payments are accelerated and there’s no debt to pay back. This addresses current cashflow issues without harming the long-term viability of the company, thus fortifying businesses against the leading cause of startup failure on multiple fronts.
Additional tips outlined in the Charter Capital release include bringing on a co-founder to boost performance and valuations as well as devising creative benefits packages to attract top talent.
Those interested in learning more about invoice factoring are encouraged to request a free rate quote by calling 1-877-960-1818 or visiting charcap.com.
About Charter Capital
Headquartered in Houston, Texas, Charter Capital has been a leading provider of flexible funding solutions for the B2B sector for more than 20 years. Competitive rates, a fast approval process, and same-day funding help businesses across various industries secure the working capital necessary to manage daily needs and grow. To learn more, visit charcap.com or call 1-877-960-1818.
