Within a gym workout is a hidden lesson in business finance. So, let’s get this workout started.
Let’s say you pick up a free weight that weighs 25 pounds. Simply put, you are using the necessary force to lift 25 pounds. Then, you go over to a weight machine that uses a cable and a pully to lift the weight. This time, if you want to lift 25 pounds, you will actually use less force because the pully redirects and increases the force that you are using. Thus, the pully allows you to lift more weight.
A pully on a weight machine is just like leveraging your accounts receivable in the business world. Leveraging is simply using something to maximize an advantage.
Say you have $10,000 in operating cash on hand to pay your suppliers, utilities, and employees. Although you have more potential customers who want to purchase your product, you can’t sell your product to more of them until you’re finished with a current customer. You just don’t have the operating cash on hand to purchase more supplies and hire more workers.
Although you only have $10,000 in operating cash, you still have $50,000 in accounts receivable as you’ve given your customers 45 days to pay you. That $50,000 in accounts receivable is what we like to call leverage, and just like the pully at the gym, this leverage can help you sell more of your product. Rather than wait for your customers to pay you in 45 days, you sell your accounts receivable to Alpha Capital Finance. Alpha then pays you immediately and you now have increased your operating cash significantly so that you can purchase more supplies, hire more employees, and sell more of your product.
So, if you were selling 1,000 units each month and profiting $10,000, you can now sell 2,000 units each month and profit $20,000. Thus, whether it’s a pully in the gym allowing you to lift more weight, or leveraging your accounts receivable to earn more profit for your business, the results are the same – you can maximize an advantage to achieve better results.
Alpha Capital Finance is not just another invoice factoring company. We strive for creative solutions to not-so-everyday challenges. Alpha Capital Finance is made up of successful business owners from a wide range of industries. We meet with our clients face-to-face because it’s the relationships that we develop that make us different. Located a pebble skip from the great Lake Pend Oreille in Sandpoint, ID. We love to talk with business owners who need capital ranging from $100,000 to $6,000,000 each month. Be assured that you will always refer to us with confidence. Connect with us on Facebook and LinkedIn.
Dan Jacobson, Owner
Alpha Capital Finance
Business Finance Tips
Below are a couple of helpful business finance articles to learn more about how leveraging your invoices can improve cashflow problems. As well as business finance tips on how to find the best factoring commpany that fits your needs.