Do you need to generate cash in a business but believe that credit conditions are tight?

Are you worried that your bank may be reluctant to increase your business loans or overdraft?

If so, you may be interested to know that there are alternative forms of finance to the traditional bank overdraft that are gaining in popularity.  What’s more, these alternative forms of finance will help you to generate cash in a business.

And here are just 5 of them:

1. Cash flow finance

Did you know that in the current climate, in comparison to the bank overdraft, invoice finance is a more readily available and flexible funding solution for many SMEs?

Why? Invoice finance provides certainty of contract. Unlike a bank overdraft, invoice finance is not repayable on demand.

Invoice finance generates more cash than a bank overdraft – usually twice as much. Finance is based on sales. This is great for a business that does not have the time to keep going back to the bank, cap in hand to negotiate for more.

Whilst there is an argument that invoice finance can be a little more expensive than a traditional overdraft, most business-owners appreciate that it’s worth paying a little bit extra for greater flexibility and peace of mind. Some businesses even use it to obtain supplier discounts by paying them earlier.

2. How to deal with “one off” orders.

Stock finance is short term and is revolving. And most importantly, it can be used to finance one off orders. If your business requires further cash, the facility can be repeated. So if your business needs a fast injection of cash, stock finance may provide you with the perfect solution.

3. Does your business rely on a single customer, or do you have a project that demands upfront costs?

Single invoice finance, sometimes known as spot finance, can be particularly useful for a business that relies on a single customer for cash flow. It can also be used to help fund a specific order that requires upfront costs. The opportunity to set up rolling contracts provides your business with flexibility.

4. How to finance the purchase of new equipment

Do you know that you can release cash tied up in your business assets, such as vehicles, plant & machinery and even buildings? This form of finance is typically known as asset finance. One of the main benefits of asset finance is that payments are fixed. Therefore as well as funding equipment needs, you also retain your ability to manage your cash flow.

5. Does your business transact business via a credit card? 

If you are a business, such as a retailer, do you know that you can raise finance against historic credit and debit card sales?

This is an ideal solution for short term borrowing required to cover unforeseen expenditure. (Such as rent or VAT quarters, tax bills and PAYE etc.)

Choosing the right sources of finance for a business is no easy matter. In the market there are a plethora of commercial finance lenders and business finance products available for your clients. As a business finance broker I am more than happy to discuss your options for generating cash in a business.

So please do get in touch.

Author: Simon Button  Simon is a highly respected business finance broker who has worked in the commercial finance sector for over 25 years.

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