The real problem behind growth
A company can have record orders and still go bankrupt. The most common reason: money goes out before it comes in. You pay payroll, suppliers, and materials today, but you collect in 30, 60, or 90 days. That gap is called the liquidity gap.
What drains cash during periods of growth?
- Increased inventory to fulfill more orders
- Long collection terms with corporate or government clients
- Advance payments to suppliers to secure raw materials
- Accelerated hiring before revenue arrives
Strategies to scale with healthy cash flow
1. Financial factoring
Turns your accounts receivable into immediate cash. Instead of waiting 60 days to collect from your client, an institution like Pixxo advances that money in exchange for a small fee.
2. Revolving credit line
An available credit facility you use only when you need it. You pay interest solely on what you draw, not on the total approved amount.
3. Structured working capital
A term loan designed specifically to finance your company's operating cycle: purchasing, production, sales, collection.
The golden rule
Never use long-term resources (mortgage financing, equity capital) to cover short-term needs. And never use short-term resources to finance long-term assets.
When to act?
Don't wait until you're in a crisis. The best decision is to structure your financing before you need it, when you have time to negotiate terms and present your company at its best.