HOUSTON - Among the stories of small businesses struggling to survive the pandemic's 'economic slowdown', are a few that are surviving with a unique partnership that keeps their cash flowing.
T. Harris Transportation is one of them. On most days, the trucking company has as many as five trucks on the road, picking-up and delivering goods around Houston.
Even before the pandemic, financial margins could get tight, waiting for customers to pay-up. "It was a little tight, especially with the pandemic, because it was harder to get in touch with your customers," says owner Tharon Harris.
To help take the edge off, Harris uses the services of a 'factoring company', which fronts him most of the money he's owed and takes the responsibility for getting the invoices settled. Once the money is paid, the lender offers the balance of the invoice, minus a fee.
Joe Vawters is co-owner of Humble-based J.O.B.E. Services, which has worked with Harris and hundreds of other small businesses. Jumping into a company's finances is a calculated financial gamble that Vawters says can provide a vital alternative choice for cash flow. "They can't get the bank to finance them, because their personal wealth isn't great enough to sustain their business," says Vawters.
Tharon Harris thinks the financial assistance has meant the difference between staying in business, and closing-up shop. "Dealing with a factoring company frees up capital to where you can keep the maintenance going; make sure your drivers are getting paid on time," he says, "It also makes it to where, if you want to grow like I've been growing, you can go out and purchase new equipment."
It isn't a cure-all for every business looking for money:
If suppliers don't pay-up regularly, a factoring lender will be reluctant to get involved; and some of these lenders have very-high rates that can make for a very-expensive helping hand.