One Financing Option To Consider - Just in Time Financing

You can’t turn an idea into a business without capital, and yet not all of us can rely on traditional funding models to get ahead.

This is where the just in time approach to financing enters the picture, giving startups a cutting edge route to reaching their growth goals without being shackled by typical issues.

So what form does this financing take, and why should you be interested in it as a business owner or aspiring entrepreneur?

Time is of the essence

The purpose of just in time financing (JIT) is straightforward enough to understand. The idea is to provide similar benefits to a revenue-based financing solution, but with even more flexibility.

In short, whenever you need an injection of capital to fulfill the next stage of your business’ growth, the funds will be made available to you.

For example, let’s say you secure a contract with a new client, and you now need additional cash flow to fulfill it. This is when just in time financing will kick in, giving your emerging organization that extra juice it needs to succeed, while keeping your funding arrangements lean, mean and ultimately affordable.

Automation is part of the process

Another selling point of JIT arrangements is that they can be largely automated, so you don’t need to constantly be keeping the provider in the loop about where you are up to or when you need the money.

Indeed the entire process of predicting and projecting your funding needs ahead of schedule will be handled automatically. This takes guesswork out of the equation, and allows for you to focus on the more important things needed to grow your business.

It should be no surprise that the concept of JIT emerged because of a need in the manufacturing sector to empower smaller organizations with capital on-demand. Today, it has spread beyond this arena and is now popular in the tech industry as well, with automation definitely appealing in this context.

An additional layer of funding makes sense

As you might expect, JIT funding isn’t suited to being a first-round option for startups, simply because it requires that your organization has already generated performance data through delivering on client contracts.

However, where it really comes into play is in acting as a secondary layer of financing which can take the place of additional rounds of VC investment.

Aside from the aforementioned advantages in terms of timeliness, automation and flexibility, the main appeal of JIT funding in this scenario is that it is a non-dilutive alternative to standard investment fundraising.

With financing chosen, you get to retain complete ownership and control over whatever portion of your business is still in your hands. For a lot of entrepreneurs and leaders, this is a crucial distinction that gives the JIT approach the edge.

This is also consistent with revenue-based financing as well, so it is by no means the only package category out there. It’s just one more example of how looking outside of normal funding routes can pay dividends.

Final thoughts

JIT financing is undeniably a funding solution for businesses that is only going to be required by those faced with a particular set of circumstances, in addition to having aims that correlate with the advantages it offers.

That said, if you tick all the boxes in terms of JIT eligibility, then it could easily be a game-changer for your business. If agility and flexibility are the watchwords of your organization, then picking a financing setup that matches these is better than settling for an old-school solution.