Cash flow is the lifeblood of all businesses
Healthy cash flow ensures that your business can meet its day-to-day and week-to-week expenses.
The right cash flow finance will ensure that your business has a healthy short term position. You will be able to meet all expenses in the short term, and have some flexibility to meet any unexpected expenses (or opportunities) that present themselves.
Cash flow finance also ensures you can take opportunities to grow when they come along.
Your cash flow
Your cash flow is the amount of actual cash going in and out of your business over a certain period of time. This is the money that you use to pay operating expenses like payroll, supplier invoices, bills and loans.
Your cash flow may fluctuate due to unexpected orders, seasonal demand or the delay between paying a supplier and receiving payment from a client.
When would you want cash flow finance?
A healthy cash flow is important for all businesses. Financing can be a great way to smooth out ups and downs in your cash flow due to unexpected expenses, slow paying customers, or seasonal supply and demand.
It will also allow you to take opportunities to grow your business. You will be able to accept more or larger orders, and give major clients better credit terms without having to worry about the impacts on your cash flow and the ability to meet your weekly expenses.
Types of Cash Flow Finance available:
Overdrafts
An overdraft is a credit facility attached to your everyday business transaction account. It allows you to go into a negative balance (take out more cash than you have).
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Business Credit Cards
A business credit card allows you to pay for goods and services on credit interest free for a short period (45-60 days). The credit is revolving, which means that you can use up to your agreed limit as and when you choose – even if you’ve made payments. You only pay interest on the amount that you’ve used.
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Short Term Unsecured Loan
A short term unsecured loan is a business loan that is quick to process and doesn’t require assets as security. Instead, you use your business’s future sales or cash flow as security.
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Debtor & Invoice finance
Invoice or debtor finance gives you quick and simple access to cash owed by your customers that you haven’t yet received. The provider purchases your invoices from you. When you create a new invoice, they will generally forward you up to 85% of the invoice value. When the customer pays, they forward you the rest of the cash less the provider’s fee.
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Line of Credit
A line of credit is a loan with a redraw option. The credit is revolving, which means that even though you make repayments, you can still redraw up to your agreed limit as and when you need it.
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