Smartphone usage around the world has grown rapidly. In fact, a lot of people now own smartphones more than any other kind of phone. But it’s not only smartphones that are picking up in popularity. Almost everyone today owns some kind of smart device. In fact, as of 2020, 2.87 billion smart devices are collecting, analyzing, and sharing all kinds of information. Smart devices are useful pieces of technology because of their many features, like apps or cameras.
According to statistics, 52% of the world’s population are mobile internet users. This allows people to connect to storage clouds, where most data is stored. Having instant internet access also lets people connect to others whenever they want. The Internet has created new ways for companies to market to consumers through e-commerce and online shops.
In spite of advances in technology, it’s challenging for people in the digital field to make a profit. One problem that people in the digital industry have to deal with is how soon they get paid for their services. IT companies can wait months before getting their payment for setting up infrastructure. Digital media buyers and sellers can also experience this problem, because they rarely get paid upfront.
If you own one of these businesses, you might be tired of having to wait such a long time to get paid. The good news is if your business runs into this problem, there is a solution: technology financing.
What Is Technology Financing?
Technology financing is when a tech company uses outside funding to manage cash flow. This happens when the company has done a job for a client, but the client cannot make an immediate payment. The funds are often used by the company to fund its Cost of Goods Sold (CoGS).
These costs can vary depending on the type of service the digital company provides. Media companies can charge for the cost of traffic and advertising campaigns. IT companies can get paid for developing a company’s infrastructure, app, or website. Technology financing allows these companies to determine how soon they can take on new business.
How Does it Work?
Businesses can wait months to get paid for their services. This hurts tech companies because they may not be able to get their payment immediately. This means that they may not get the funding necessary for continuing operations. Worse, they may not be able to start a new project.
Through technology financing, tech companies can sell their invoices from other companies. This means they can sell debt for instant payment. This can mean getting their money sooner, giving them funding for other projects.
Who Benefits from Technology Financing?
Most businesses have some sort of digital presence. Usually, a company will have a website, app, or social media handle. To run their digital presence effectively, they need infrastructure or media. This is why businesses work with IT solutions providers or digital media companies.
Yet, it is these tech companies that gain the most from technology financing. Being able to cash-in their invoices whenever they want gives them a lot of flexibility.
One type of company that benefits are digital media sellers. These are companies that sell ad space online. Examples of these are publishers, web developers, and even eSports companies. Other businesses can buy ad space on their platforms and then advertise their brands. But the payment that these companies get for the ad space isn’t always in full. Thus, sellers can use technology financing to get paid whenever they want.
Digital media buyers also gain from technology financing. These are companies that are buying ad space from the sellers. Companies that run app-installation or website traffic campaigns gain the most. These businesses can also use technology financing to dictate when they get paid.
Finally, it helps IT solutions providers. These are companies that provide tech infrastructure to other businesses. They usually offer services like setting up cloud storage and website development.
How Can Your Business Grow Through Technology Financing?
The flexibility you get is the main benefit of technology financing. The days of anxiously waiting for the payment for a job you’ve done months ago will be long gone. As long as your company gets work done, with technology financing, you dictate when you get paid.
The cash your business gets through technology financing will give you instant funding. You can then use this capital to start your future projects even sooner. Through this, your business can further optimize cash flow and increase your profits.
Technology financing may be what your business needs to grow even bigger, especially if your cash flow is tied up in accounts receivables. If you want to learn more about ways to help improve your tech business, talk to fund experts here at Lending Builder for tips to get yourself approved for technology financing as soon as possible.