Cash Flow Problems – what are the available solutions?

If your business has cash flow problems you may want to look for financial solutions. We can explore what these options are but you can also focus your internal operations to operate more efficiently.

In terms of operations you can look to reduce unecessary costs by finding alternative suppliers, making redundancies cutting back on non essential employee benefits, etc.. Many businesses that I speak with believe that they have already done this but it really does pay to be ruthless. Businesses can also look to extend the payment terms with suppliers either on a formal basis or simply by paying a little bit later. Most companies expect to be paid a little bit late and no doubt this is something that is causing your cash flow issues. This brings us on to collecting in invoices more effectively. By using professional and methodical collection techniques such as overdue letters and phone calls along with month end statements the debt turn should improve. Your customers need educating and these methods will help to get them in the habit of paying on time.

In terms of finance facilities available to help you smooth your cash flow or provide a cash injection you may look at the following:

An overdraft facility – these can be hard to come by as banks seem to have moved away from overdrafts for a number of reasons. However, if you can offer the right type of security an overdraft can be a cost effective cash flow solution.

Asset Refinance – asset refinance raises money against assets that you already own within your business. The types of assets are usually durable, saleable and easily identifiable. Suitable assets include vehicles, plant and machinery, printing presses, etc.. By raising money against existing assets you are releasing the ‘cash’ that is already tied up in your business and this can provide a valuable cash injection. However, you do create an additional monthly repayment. It is important to consider what you will do with the cash and wheter it raises sufficient income to meet the monthly repayments. If not you will only be compounding your cash flow problem.

Invoice Finance – Invoice finance can provide a cash injection as it provides cash against the outstanding invoices you have already issued. It can also smooth cash flow on a daily basis as invoices are raised. The most common types of invoice finance are factoring and invoice discounting. If you have a requirement for either why not contact us today. Invoice finance can release up to 90% of the cash tied up in your invoices and is a valuable source of working capital.

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