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Debt servicing is a constant thing for businesses to be able to make payroll and acquire inventory for later resale or processing. Based on your thoughts here
by JPKab 4y ago
Debt servicing is a constant thing for businesses to be able to make payroll and acquire inventory for later resale or processing.
Based on your thoughts here I'm going to assume you haven't worked at a small business before. If you have it must have been awesome to work at a place that didn't have to borrow money constantly.
- trentgreene 4y agoI've worked in small start ups before, but all boot strapped out of pocket / revenue. Wouldn't having to borrow money constantly be a red flag that the business is bad / not profitable?
- disgruntledphd2 4y agoDepends. If your income comes in 90 days post invoice, but you pay monthly then borrowing some money to smooth over cash flow makes loads of sense. If you need to buy loads of stuff to sell, it also makes sense. Software businesses are pretty weird in the lack of capital costs.
- nly 4y agoAn alternative to borrowing to achieve that smooth cash flow is treasury savings.
- Kye 4y agoBeing able to is actually a green flag. Banks wouldn't keep lending it if the companies didn't pay it back. This isn't VC we're talking about here.
- trentgreene 4y agoInteresting, I can see this as lending implies some due diligence into a companies financials. At the same time, at the personal level, I know I can get lines of credit that would be very tough for me to pay back. Is corporate borrowing much more stringent?
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