The Future of the MCA Industry

As you seek out new financial solutions for your business, you’re wondering about merchant cash advances. What is an MCA, and what can it do for your small business?As it turns out, a merchant cash advance has serious benefits for small businesses. Check out these advantages, and you might be convinced that an MCA is the right move for you.

Funding Based on Your Future, Not Your Past

One of the biggest benefits of a merchant cash advance is that your future is more important than your past. With a traditional bank loan, you must provide your business’s past income and revenue. They’ll also want to see the business’s credit score and maybe your personal credit score.A merchant cash advance, however, is extended on the basis of anticipated future sales. The lender examines your past credit card and debit card sales to make an estimate about what you’ll earn in the future. They offer the advance based on what you’re likely to bring in.That’s great news for small businesses without a lot of history under their belt. Plus, since it’s forward-looking, it takes into consideration that your business is growing. That’s much better than a traditional loan that looks at your past and doesn’t consider your future needs.

You Can Use It for What You Need

A merchant cash advance offers more flexibility to a small business. Some traditional loans will earmark your funds for particular business uses. An equipment loan, for example, needs to be used to buy equipment. A payroll loan must fund payroll.An MCA can be applied to either of these expenses. Since the funds aren’t earmarked, you could use the MCA to help with payroll. Then you could take any leftover funds and put them towards that equipment.You can even use the MCA to help with day-to-day operations. Need petty cash? The MCA’s funds could stock it up. What about keeping the lights on? The MCA could help you with the electricity bill too.This gives small business owners greater freedom and flexibility than other traditional loan products.

A Merchant Cash Advance Offers More Payment Flexibility

Perhaps the biggest benefit is that the MCA gives small businesses more flexibility when repaying the advance.With a traditional loan, you’ll have a set monthly payment. If you experience a poor sales month, then you might only be able to make a partial payment. You might default on the loan or require another loan to pay it back.The MCA is different. The lender takes a percentage of your actual credit card sales as payment. When you have a good month, you can pay your MCA back faster. If you hit rough waters, then the payment decreases accordingly. You don’t need to worry about defaulting on the payments.

Discover the Benefits of an MCA for Your Business

These benefits can make a merchant cash advance the right choice for many businesses, but they’re especially helpful for small business owners.Ready to see what an MCA could do for your business? Get in touch with the experts to get the funds you need today.

It's a strange kind of stress to run a business that looks healthy on paper while you quietly panic about cash. The numbers say you're profitable, but the bank account tells a different story.  The gap between those two things is what you need to take into account.

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Profit is a calculation. Cash is a Reality.

Your profit and loss statement records revenue when it's earned, not when it's actually received. For example, you invoice a client for $40,000 in October and that sale shows up as October revenue. But if payment terms are net 60, the cash may not land in your account until December. In the meantime you still pay your team, your suppliers and your rent with funds you only technically have. 

Accounting recognizes income on an accrual basis, your landlord does not.

The Timing Gap That Catches Businesses Off Guard

Cash flow is essentially the space between when money goes out and when money comes in. In an ideal world, those two things line up. In practice, they almost never do.

A construction company wins a big project. Materials and labour costs start immediately. The client pays in stages, or at completion. The contractor can be running a healthy margin on paper while being perpetually short on operating funds.

A retailer loads up on inventory before a peak season. Cash leaves weeks before any sales come in. If the season underperforms, that inventory sitting on shelves represents a real cash problem.

A service business bills clients at the end of the month and chases payment for 30, 45, sometimes 90 days. Every dollar in accounts receivable is a dollar that can't cover today's expenses.

None of these businesses are failing. In fact, they might actually be growing. The thing is, growth itself creates cash pressure, because growth requires spending before earning.

Five Reasons Cash Disappears in Profitable Businesses

1. Slow-paying customers: Extended payment terms are normal in many industries, but they transfer the financing burden onto the seller. When you allow net-30 or net-60 terms, you're effectively lending money to your clients interest-free.

2. Rapid growth: This one surprises people. When a business grows quickly, it has to spend more on inventory, staff, materials, and overhead before the revenue from that growth actually arrives. Fast-growing businesses are particularly vulnerable to cash shortages precisely because demand is high.

3. Seasonal revenue patterns: Businesses that peak in certain months, retail over the holidays, landscaping in summer, hospitality in tourist season, often need to spend during slow periods to be ready when things pick up. The cash timing rarely works out cleanly.

4. Large capital purchases: Buying equipment, vehicles, or making leasehold improvements hits cash immediately but shows up as depreciation slowly on the books. The profit looks fine. The bank balance looks rough.

5. Debt repayment obligations: Loan payments, lines of credit, and lease obligations come out of cash, not profit. A business can report solid earnings while being genuinely stretched by its repayment schedule.

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The Statement Nobody Reads Closely Enough

Every business has three core financial statements: the income statement (profit and loss), the balance sheet, and the cash flow statement. Most owners pay close attention to the first one. The cash flow statement is where the real story lives.

It shows the actual movement of money through operations, investing activities, and financing. A business can show positive net income while burning through cash every month. The two statements can tell completely opposite stories at the same time.

If you're not reviewing your cash flow statement regularly, you're missing a significant part of the picture.

How to Spot a Problem Before It Becomes a Crisis

A few practical things worth tracking:

Your cash conversion cycle measures how long it takes to turn inventory or work-in-progress into collected cash. The longer that cycle runs, the more working capital you need just to sustain normal operations.

Your accounts receivable aging report shows who owes you money and how long they've owed it. Receivables piling up past 60 days are cash sitting in limbo.

A 13-week cash forecast sounds like something only larger companies bother with, but it's useful at any size. Knowing what's coming in and going out over the next quarter gives you time to act before a shortfall actually hits.

What Business Owners Actually Do About It

Some of it is operational: tighten up invoicing, follow up on receivables more consistently, negotiate better terms with suppliers, watch inventory levels. Those things help and are worth doing.

But sometimes the timing gap is structural. It's not a sign that anything is broken. It's a sign that the business operates in a model where cash collection lags behind cash spending. In those cases, external working capital is a legitimate and practical tool, not a last resort.

Lines of credit, invoice financing, and merchant cash advances exist for exactly this reason: to bridge the gap between when you earn and when you collect, so operations don't have to stall in the meantime.

Worth keeping in mind: a business that needs outside capital because it's struggling is a very different situation from one that needs it because it's growing faster than its cash cycle can keep up with. Those two things can look similar from the outside, but they're not the same problem at all.

What Actually Matters Here 

Profit tells you whether your business model works. Cash flow tells you whether the business can survive long enough to prove it.

Running a profitable business that's tight on cash isn't necessarily a sign that something's wrong. It may just be the reality of operating in the space between earned and received, which is one of the oldest tensions in commerce. The owners who handle it best tend to be the ones who understand it clearly enough to plan around it.

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Looking to get a loan? Perhaps you would like to lease an apartment? If you have issues with your credit card, getting these types of approvals can be an issue. However, there are a number of ways that you can get your credit back on track. Here are five steps that you can take to help improve your credit.

1) Cut up your old credit cards and only use one for emergencies

One of the biggest reasons why people have issues with their credit is due to the overuse of credit cards. Therefore, if you have a number of credit cards in your wallet, it's time to get rid of most of them. Try to have only one credit card in your wallet.With that one credit card, be careful how you use it. You should not use that credit card for regular purchases. Instead, you should reserve it for emergency spending. This will cut down on your credit card limits which can boost your credit score.

2) Pay with cash as much as you can

Now that you are cutting down on your credit card, you should start paying with cash. This will allow you to only spend the money that you have. The last thing that you want to do is spend money that you don’t have. By only using cash for regular purchases, you can be sure to maintain your budget.If you don’t feel comfortable with holding cash in your wallet or purse, then consider using a debit card.

3) Deal with high-interest rate debt first

Interest rates can be a killer when it comes to your finances. Be sure to pay off your high-interest rate debts first. This will help pare down the overall money that you owe. Typically, you high-interest rate debt will come from credit cards or payday loans.When you pay down a high-interest rate loan, be sure that you avoid any sort of high-interest rate loans or credit cards in the future. This will lower your chances of getting into any debt trouble.

4) Start an automated bill payment plan

Paying your bills on time will go a long way to boosting your credit. One of the best ways to pay your bills on time is to simply set up automatic payments. Most banks offer an automatic payment plan that will handle your bill payment duties.

5) Monitor your credit score

It’s a good idea to monitor your credit score on a daily basis. You can check your credit score for free on CreditKarma.com. Also, you are entitled to one free credit report from the two major credit reporting agencies:

• Trans Union - to include a different link https://www.transunion.ca/
• Equifax - to include a different link https://www.consumer.equifax.ca/

Getting your credit card under control

We believe that low a credit score shouldn’t stop you from growing your business. That is why 2M7 Financial Solutions offers merchant cash advance for small and medium-sized businesses regardless of their credit score. Our team is ready to help your business get the funding it needs. Contact us today.