I am having cash-flow problems. Should I obtain a line of credit to cover expenses? A few years ago I started a janitorial company. Originally, I kept my previous job, but last year I began working on my business full-time, and now I’m running into a cash flow issues. Do you think I should get a line of credit to cover expenses and then pay it off each month?
Keeping the cash flowing is a major challenge for all small businesses. When your clients don’t pay on time, a commercial credit line is a great way to keep on top of your bills. A line of credit allows you to pay your debts without falling behind. There is a catch though: you must try to pay it off monthly to avoid incurring late fees or interest charges.
It’s best to apply for a modest credit line, maybe $5,000 at first. After you’ve paid it off in full several months in a row, ask your banker for an increase.
Big and small banks are aggressively pursuing small business owners—offering us all kinds of services and discounted fees. If you aren’t happy with the way your bank treats you, spend some time meeting with competitors. Bankers appreciate and reward loyalty, so plan to move both your personal and business accounts to one bank. Consolidating your accounts also helps you qualify for a variety of free services and perks including safe deposit boxes and free travelers checks.
While you update your banking services, check out all the new online banking options. Banking online can save you time, money, and gasoline.