Cash flow can be the thorn in the side of many small businesses.

Be vigilant in selecting the right financing choice at every stage of your business cycle. You can help yourself immeasurably by remembering that the financing option you picked when you started your business may not be the right choice as you grow.

Small business owners basically have three choices for working capital finance: Banks, credit cards and factoring.

Credit cards are the most convenient — if you can find a company these days that wants to increase your limit. You pay for the goods when they’re ordered, cash flow is predictable. If your customers pay promptly, you pay off the balance each month and your cash position is solid, a credit card works for you.

But as your business grows, inevitably, not every customer pays on time, and credit card limits can be reduced without notice.  A bank loan becomes your affordable choice, if your cash flow is predictable and you can easily cover the costs of doing business. Bank loans are becoming like panning for gold as many banks apply stricter criteria than previously.

But what if you hit a bigger bump in the road? This is when the flexibility of factoring can work for you. It addresses the cash gap directly and affordably. It can also help companies respond quickly as the economy improves.

Remember, factoring is based on the value of the receivables and not on your own or your business’s credit score, so it can be an especially important form of financing for new or growing companies. Factors can also take responsibility for collections and other nuisance administrative chores.