Overdrafts are the most common form of cash flow financing but often there are more appropriate solutions.
The gap between providing products and services through to invoicing and collection of money will always need to be financed. Few businesses have sufficient cash reserves to fund this gap and as trading grows, many find themselves with cash flow difficulties.
A number of alternative solutions exist, especially where a business debtor book is relatively well spread. By utilising cash flow solutions such as factoring or invoice discounting a finance house will advance monies against invoices. This is particularly useful for expanding businesses as overdrafts are often very inflexible. Imagine if your customers purchased twice the value of products and services they normally do, could you deal with the knock on effects to your cash flow until the invoices were paid?
Whereas overdrafts are only usually available to businesses with proven track records of profitability, other forms of cash flow funding can be very different. Where finance is raised on the back of invoices issued it is the debtor's ability to pay that is the most important underwriting consideration to the financier. Accordingly, new start up companies or even loss making companies can utilise cash flow finance as a form of turnaround finance or even as part of a business recovery strategy which may involve a pre-pack administration, insolvency or voluntary arrangement with creditors.
In every business, cash is king so why tie up capital when you don't need to?
Having been in the commercial finance industry since 1990, it is probably fair to say that we have more contacts than most. We were founder members of the National Association of Commercial Finance Brokers (NACFB) back in 1992 and through ongoing commitment to that organisation we have made lots of friends that are available to help our clients to organise competitive funding of every variety that you can think of.
Whether you are looking to capitalise the cash flow requirements of a booming business or to arrange funding for a business recovery, we will be delighted to put you in touch with the right company.