Small Business, General Finance, Cash Flow

Growing Your Security Guard Service Business with Factoring

Posted by Factor Funding Co. on September 15, 2015

Growing Your Security Guard Service Business with Factoring

Is your security guard business growing? The need for security guards continues to grow with increased threats from all sectors. On top of that, more and more businesses are switching from in-house security personnel to contract guard firms. This has spurred steady growth in the security guard service business. If your security guard business is growing, but you are facing growing pains, especially with cash flow, factoring can help.

Cash Flow and Growth in the Security Guard Business

One of the realities of a security guard service business is that expenses go ahead of revenue.

  • The security guards have to be paid every week or two.
  • The clients pay the invoices on net-30 or net-60 day terms.
  • It could be up to eight weeks before the money comes in from the client, but you have to make payroll next week.

That time lapse can cause serious cash flow issues for even the most successful security guard firm.

In addition to guard salaries, firms have other expenses that can put strain on the flow of cash. Many guard contracts require the firm to bear the expense of security vehicles and related equipment. If a car breaks down, or a key piece of equipment needs to be replaced, that means more cash going out the door.

When the guard agency is growing, there is even more strain. Your firm might have a cash buffer to handle the salaries for 20 guards. But, when you add another 20 to your staff, that buffer is gone and you are scrambling to make payroll. You may also need to outlay cash for new equipment and additional security vehicles on top of those salaries.

Talk about a cash crunch.

Factoring Offers a Viable Solution

If you are facing a cash flow crisis, due to growth or other circumstances, you need to consider the benefits of factoring.

  • It frees up cash trapped in your accounts receivable. You have cash trapped in every invoice that you have open and it remains trapped until the client pays the invoice. With factoring, you can get a good portion of that cash free to use for anything you need.
  • It makes it possible for your company to take on your next big client. Many firms hesitate to take on new contracts due to fears about cash flows, meeting payroll, and keeping everything else afloat while waiting on the first payment from the new client. With factoring available, you can feel confident that taking on that new client is not going to put your firm in financial stress.
  • It helps you meet ongoing expenses when cash is tight. Your agency may be going through a growth spurt and you need cash to make payroll. Factoring can give you the cash to pay your guards and to buy their equipment, while awaiting the invoice payment.
  • It gives you the capital you need to grow without taking on more debt. Most businesses have to use debt at some point to grow the business. But, too much debt can be a problem. Debt tends to linger and bog down the financials. Plus, investors do not like to see too much debt, taking away from the firm's bottom line.
  • It offers you access to cash, even if your agency is new or has a spotty credit history. One of the challenges of starting up a security guard firm is getting the cash needed upfront. Getting cash is even harder for firms that have had ups and downs with credit use. With invoice factoring, that is not a problem. As long as you have active accounts, from credit-worthy clients, you can use factoring to improve your cash flow.

Don't let your chance to grow your security guard service business pass you by. Get the cash you need to jump start that growth. Contact Factor Funding today and get your invoice factoring started today.

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