There are nearly 28 million small businesses in the U.S., and a number of them struggle regularly to have enough cash on hand to pay their bills and meet payroll requirements. This often is not a reflection of the business’s sales success, but rather its ability to get paid in a timely manner. The business may have payment terms that don’t line up with the payment terms it gives to its own customers. This can leave even profitable businesses short on funds. The good news is that there are ways to get around this dilemma.

For small businesses that need cash, there are several options available. One of the most common is a line of credit. You can get a line of credit from a bank. This is basically like a loan, except you only use it when you need it. The bank will approve you for a certain limit, and you can draw money from it as long as you haven’t reached the limit. This allows you to take out money when you need it to cover expenses and then pay it back when you have the cash on hand. The benefit to this is that you have a flexible pot of money to draw on. A big drawback is that you have to have a solid established business credit record to get approved for a line of credit.

Another way for businesses to get cash to pay bills is to work with money factoring companies. The way money factoring companies work is that they provide an invoice advance loan, which provides you with an amount of money that’s based on the outstanding invoices you have. Essentially, you are using the bills that are still due to you to get money to pay bills you owe to others. You usually get up to 90 days to pay the money back. Invoice factoring companies take a percentage of your invoices ranging anywhere from about 10%-30%. Essentially, your invoices are collateral for the loan, and if you are unable to pay it back, then business factoring companies will take over collection efforts for your invoices and keep all the money. An advantage to small business factoring is that you don’t need a good business credit record. A disadvantage is that the money is generally more expensive than other types of financing.

Whether you choose to get a line of credit or work with money factoring companies to do business invoice factoring, make sure you are in good enough financial shape to be able to pay the money back. Otherwise, you could put your business in a precarious position.