For a small business owner, especially a beginner, this seems like a no-brainer. For a light discount and what at first glance seems like a manageable discount, a third-party finance company will expedite payment for delivered goods and services, eliminating 30, 60, or even 90-day waits that can stall production and growth.

Rather than risk stagnation or inertia by waiting 30 days (or more!) for payment – ​​or risk losing repeat customers by demanding payment from customers sooner than your competition – you entrust this task to a third party. As a result, you remain liquid – at least in the short term – able to pay for inventory or purchase equipment, meet payroll, and perhaps even bid on additional products.

In short, grow your fledgling business.

Well, here are some tips: Breathe. Stay safe. Crunch the numbers.

Because rather than growing your business, these quick loans can sometimes seep into long-term profitability and even choke it to death.

Let’s say you are owed $10,000 for the goods and/or services you provided. The customer has agreed to pay you in full within 30 days. But if you’re at the start of your new business, or even if you’re not, waiting even 30 days for payment could prevent you from creating a new product or running your business at full capacity.

The cash intermediary says the arrangement leaves all parties happy. Buyers still receive their goods weeks or even months before they have to pay for them. In contrast, salespeople get paid faster and – especially for small businesses – without the anxiety that often accompanies waiting to get paid. The middleman closes the loop by later collecting the full invoice amount from the buyer and profiting from the margin.

So you go to one of these cash flow platforms. But at what pace? If your house is in order and you are dealing with a client who has an excellent track record of paying in full and on time, it could be as low as 5%. On the other hand, you may have to offer a higher percentage rate for someone with a less stellar record.

Let’s say it’s 12%. Rather than waiting 30 days for the full amount, you can access $9,800 in 10 days. Offering a $200 discount seems beneficial because it frees up money to reinvest in your business sooner. Multiplied over time, however, with a recurring customer – or multiplied by a consortium of customers – that discount can erode growth, liquidity, and flexibility.

Would it be better to wait for full payment? This depends on several factors specific to each company. Maybe cash flow optimization is right for you, at least to start with. But there are other routes, a little slower to access but potentially less damaging to your long-term health. Other options, such as SBA-backed loans or asset-based loans, may suit you better.

A revolving line of credit or a more traditional loan could cost you as little as one percent during those 30 days and ultimately give you a better return.

Can you afford to wait? Even if it initially hinders increasing inventory and attracting new business? Like I said, every business model and every situation is its unique case. Breathing is essential; be careful and calculate the numbers.

In short, use your brain.

You owe it to yourself and your fledgling business to consider all options.

The opinions expressed here by columnists are their own, not those of