One of the toughest issues for public-facing businesses is moving with consumer demand. Not only is the demand for any product or service cyclical, but for many companies, it is also ever-evolving. That makes regular renovations and restocking cycles a necessity, but your regular income flow does not always work with you to make the capital available. That is where a merchant cash advance can make the difference, but this form of alternative financing requires a different approach when compared to traditional loans or credit lines.

Timing Your Advance To Optimize Costs

The cost for any type of short-term financing is driven by the risk to the lender. That means smaller advances and those that lie well within your normal income range are usually the least expensive. Since MCAs are paid off with a flexible fee that is proportional to your income, timing them as close as possible to huge demand surges leads to lower costs overall by shortening the time you hold onto the debt.

This is why the merchant cash advance is often seen as the ideal way to fund a quick restaurant makeover or an inventory load-up for retailers right before a big seasonal demand day. You can also use the MCA to finance emergency repairs and other surprise costs that might close you down unexpectedly to minimize the time you spent fixing things so you can get back to business.

Calculate Your Costs To Earnings Projections

If you are buying extra inventory and you have a pretty firm expectation it will all sell, then it is easy to navigate the payoff calculation that assures you an MCA is cost-effective. For less tangible investments like rebranding an interior space for a business, you need to put a portion of the proceeds into marketing that takes advantage of the change. That means using methods with predictable returns for your business so that you can confidently project what your change in income will look like.

Like investments, financing opportunities require an exit plan and cost calculation because they are investments in your business’s ability to attract and serve customers even if they are not traditional asset investments. Make sure you understand the cost structure and your path to a payoff when you choose financing options because that lets you know they will help your business grow. When it comes to the merchant cash advance, the fact that it is just days from application to cash distribution makes it easy to put it to work fast, make a windfall fast, and pay it off efficiently.