Working Capital for 60 and 90 Day Payment Terms

A company can finish the work, raise the invoice and still wait another 60 or 90 days before the cash arrives. Meanwhile, payroll has not stopped. Suppliers have not stopped. And the next piece of work may already be underway.

Long payment terms are easy enough to live with until the business starts moving faster.

That is where growth can get slightly perverse.

A business can be profitable, winning more work and showing a healthy pipeline, while at the same time finding itself increasingly short of cash.

Say it invoices $750,000 in a month on 60-day terms. If sales stay around that level, well over $1 million can be sitting in receivables at any one time.

The money exists. It has been earned. It just is not in the bank yet.

“A profitable business can still find itself constrained if too much cash is sitting in receivables. The longer the payment terms, the more that matters as the business grows.”

Dean Rosenthal, CEO, TowerCap

Growth tends to expose the problem

This often becomes noticeable when something good happens.

A new contract lands. A larger customer comes on board. Another crew needs to be hired. More materials need to be bought before the first invoice has been settled.

The business is not suddenly weaker. It is simply being asked to fund more activity before its customers pay.

For some companies that is manageable from existing cash. For others, it starts to limit how much work they are willing to take on.

And that is really the point.

The question is not always whether the company can survive 60 or 90-day terms. It is whether those terms are beginning to determine the pace at which it can grow.

Using receivables rather than waiting for them

Invoice factoring is one way of shortening that gap.

Instead of waiting until the end of the customer’s payment cycle, the business can access most of the value of qualifying invoices earlier.

TowerCap can advance up to 90%+ of qualifying receivables, depending on the structure.

That is different from borrowing against an uncertain future sale.

The work has already been completed. The invoice has already been raised. The customer already owes the money.

Factoring brings that payment forward.

It does not have to become an all-or-nothing facility

A business may only need extra working capital around one customer, one contract or one period of faster growth.

That is why flexibility matters.

TowerCap clients can choose which customers and invoices they want to factor. There is no minimum factoring volume and no need to fund every invoice in the book.

It can also sit alongside financing already in place.

For some businesses, that makes factoring less of a permanent funding strategy and more of a tool to use when the timing of cash starts getting in the way.

When does it become worth looking at?

Usually before there is a crisis.

If a business is turning down work, delaying hiring or carrying a bigger and bigger receivables balance simply because customers pay in 60 or 90 days, it is worth asking whether waiting is still the best use of the balance sheet.

Sometimes it is.

Sometimes bringing forward cash from work already completed gives the business room to move sooner.

TowerCap works with B2B businesses across the US and Canada, helping release cash tied up in receivables without adding conventional debt.