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Cash Flow Problems - Cash Advances Versus Cash Loans

Written By adi mulias on Sunday, May 5, 2013 | 11:54 AM


The words cash flow can drive fear into even the most experienced business man. It is the most important part of any business and without it a good business can go down. Managing cash flow is a real skill and most people take years to master it. When things go well in a business we can easily bite of more than we can chew and end up with cash flow problems. When times are tough, we can grind to a halt and have the business go stagnant.

In both cases, a cash flow boost can mean the difference between success or failure. Although there are a number of options for improving our cash flow, the two that are perhaps the easiest are cash loans and cash advances. They are sometimes confusing, but are two totally different concepts with vastly different implications for your business.

Firstly, a cash loan is nothing more than a loan. The difference is that you get it without the usual trouble credit checks and months of negotiating. The downside is that its really expensive and you pay for the convenience of getting the cash quickly. It can be a great option if you need an "instant" cash injection to steer you into the clear, but be careful. Make sure you can pay it back a.s.a.p.

Cash advances are generally a much safer option simply because its based on your business' performance. A cash advance is all about "selling" a percentage of your future sales in exchange for an upfront cash amount. The size of the advance is based on your past credit sales and its basically an agreement between you and the lender to allow him to deduct a percentage from your future sales. This can work for or against you and in general its a great way to get cash to grow your business. Its not such a good idea to help you through a rough patch.

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