How do you use a business operating line of credit?
We have a business line of credit where I work and only use it when necessary. After our cash flow gets back to normal, we pay it back in small chunks over a month or so. Ours is $75,000 total, but the most we've used is $60,000 total. The idea is to use it to fill in when customers aren't paying quickly and you're short on cash for weekly payroll or other expenses. Stay on your Accounts Receivable collections and your line of credit need will be less. Don't got to the line unless it's absolutely necessary. Remember you're paying interest on what you borrow, and interest rates are rising. If you can borrow and pay it back quickly, that's a good thing....save yourself interest.
Good luck! |
