Keeping your company’s bills paid up on time is one of the biggest challenges you’ll face as a small business owner, but it’s also one of the keys to growth. The issue for most businesses winds up being the lag between invoicing and payment. Even companies that don’t use invoicing sometimes face this issue while waiting for bank deposits and merchant account payments to clear. In those cases, the right financing tool can be the secret to keeping your outgoing payments on an even keel even when you don’t have a lot off cash in your business checking account. For many companies, the key is asset-based lending, which can take many forms.

How Do Asset-Based Loans Work?

One-time asset-based loans are basically fast cash advances against the value of various business assets at the time of the loan. They can be based on practically any of your assets, from equipment equity to inventory value, invoice values, or even your merchant account’s monthly activity. When you need as much working capital as possible, you can even get combined asset loans that use all your assets together as collateral. Typically, payments for these forms of financing come in a variety of structures, from amortizing fixed-rate payments to fee-based systems that take into account the time it takes to receive payment without using a direct compound interest format. Finding the right one for your company’s assets is the first step to making them work.

How Do These Loans Help Manage Cash Flow?

If you have upcoming payment dates and your capital is tied up in business assets, the right cash advance or short-term loan can help you by making it possible to make those payments. Then, when inventory is sold or invoices are paid, you can pay back the loan with ease. The key is to find the structure that’s most cost-effective for your current situation, whether it’s invoice financing, inventory loans, or even a merchant cash advance.

What About Recurring Cash Flow Needs?

Once you’ve paid back asset-based loans, it’s fairly easy to get approved again, especially if you work with the same lender. If you have ongoing credit needs, you may also find you can use your business assets to open an asset-based credit line. That’s just another way asset-based lending works flexibly to help companies manage cash. Keep in mind, though, that asset-based credit requires regular updates about the values of various company assets, so it can be a labor intensive as a financial tool you rely on regularly.