In a time when cash is king – you can manage your cash more efficiently with credit card float.
What does this mean? Well…if you have a business credit card – then you can take advantage of the window between charges and when the bill is due. Usually, float is used to describe the time it takes for checks to clear, but we also use it to describe the “grace period” for payments due on credit cards.
Why does this help you? When cash is tight it’s a good idea to keep it as long as you can. So why pay with a debit or check when you can defer the payments 20-30 days out? If you manage it closely and utilize online payment systems that most of the low apr credit card companies offer – you can pay on the day of by ACH direct from your computer.
If you’re running a lot of payments this can defer out thousands of dollars each month. In my case – I charge about $10,000 per month on the company AMEX card for expenses and get the skymiles so I get an added benefit to running everything on the credit card. Not to mention – if you have a money market business checking account – you could be earning interest on the money just sitting there – so it’s another benefit of pushing the payments out.
These are all good alternatives to invoice factoring when you need to manage cash. Factoring is more on the receivable side, but combined with good management of the payables – you could avoid some serious finance charges on either end.
It’s really a balancing act when you’re juggling payroll, expenses, insurance, etc. So manage your cash wisely in your business. It could end up saving you hundreds if not thousands of dollars each year…and you might get to take a trip here and there on the business credit card skymiles. Always get a card that offers some kind of rewards and look for the ones with little or no annual fee.
One last thought – when you get a credit card – look for one that offers discounts at certain merchants. For example – with my AMEX – when I spend on advertising online at Yahoo – I get 5% back. Then if I spend at Hertz and certain hotel chains I also get a credit on my statement after each spend. So it’s like using a coupon without all the clipping 
Good luck in your cash management.
