As a business owner, you understand the power of financial leverage. It is especially important for companies that require significant investment in equipment, raw materials and inventory before they can begin generating revenue. A key to success is to spend as little out of pocket as possible on these necessities in order to preserve cash flow for operations. When used properly, financial leverage helps companies grow faster.

Two particular kinds of leverage can be especially beneficial: Leasing and Factoring. When used together, leasing and factoring provide a powerful one-two commercial financing punch.

All businesses are built on cash flow and leverage. It does not make sense to use all your cash to pay upfront for something that’s going to generate income at a future date. Also, if you spend all your cash on equipment, there’s nothing left for materials, inventory, payroll, overhead, etc. Leasing helps preserve cash and manage it more effectively.

Like leasing, factoring can be an important cash flow management tool. In the same way that it’s usually not smart to lay out cash to buy equipment, it often doesn’t make sense to carry accounts receivable, especially for slow-paying customers that may not pay for 60 to 90 days or more. By factoring your AR, you can accelerate cash flow in order to take on even more business.

The bottom line is it can be much easier to manage your business financially by using leasing and factoring together. As a business owner, you can now focus on sales and margin. The cost to lease and operate equipment is fixed each month as is the cost to factor, so it’s easier to set prices that ensure the level of profitability desired. Meanwhile, you’ve created a scenario where you can keep growing as fast as you can sell products. Need a new machine? No problem, Lease it. Need to accelerate cash flow? No problem, factor.

In today’s fast-paced business environment, where conditions change on a dime and opportunities often arise with little or no warning, companies must be nimble and flexible. Using factoring and leasing together can provide a powerful one-two commercial punch needed to succeed. By using leasing and factoring together, you can turn a profitable opportunity into reality.

For information on how you can grow your business through leasing and factoring, please contact your locate Dominion Lending Centres office.

Courtesy of Jennifer Okkerse, DLC Director of Operations, Leasing Division