Every business needs money to keep it operating. If you do not have the money to finance your business on your own, you are going to need an outside funding source. For most people, this outside funding source comes in the form of a bank loan or a personal line of credit.
Having a line of credit available to your business at all times is important because you never know when your company may have to pay for legal research to fight a lawsuit or have to expand to meet customer’s needs. Although expanding to fill a larger order is good news for the company, it will still need money to pay for the extra space before the customer actually pays the invoice.
In some cases, your client or customer will not pay their bill in full. When this happens, you need to ensure that you have the capital to continue to pay your employees or pay rent until you are able to collect that money.
Regardless of how large or small your company is, it needs sufficient capital in reserve to operate efficiently and effectively. When there is money available to expand quickly, pay employees a larger salary or overcome clients who do not pay, it makes it much easier to run a thriving and powerful company.
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