WORKING CAPITAL FINANCE – CAN IT HELP CASH FLOW?

It’s essential for business owners to carefully manage their working capital finance to strike a balance between having enough liquidity to cover short-term obligations and investing in long-term growth and profitability.

Improper management can lead to cash flow problems, increased borrowing costs, and potential risks to the overall financial health of the business.

Working capital finance can assure cashflow by providing funding or financial resources to cover day-to-day operational expenses, such as inventory, payroll and rent to ensure that your businesses short-term financial obligations are met.

WHAT ARE THE BUSINESS BENEFITS OF WORKING CAPITAL FINANCE?

The world of commercial finance and asset based lending (ABL) is complex and expansive, with products, terminology and contractual interpretation varying from lender-to-lender. Seeking expert advice and pursuing an understanding of the various options can, however, deliver considerable business benefits which are outlined below.

• Advance invoice payments. Quickly access up to 90% of your invoice value using invoice finance. This effectively ‘sells’ invoices to a lender in return for access to cash at the point products and services are sold. Specific sector based products are available, as is the ability to arrange finance only for selected invoices.
• Generate a higher level of funding for structured asset based lending (ABL: management buy-outs/buy-ins) by unlocking the maximum value tied up in combined business assets including debtors, inventory, plant and machinery and property. Other forms of funding can be structured in addition to this, such as top up loans in order to drive growth.
• Facilitate the purchase of goods from overseas using trade finance, where you may otherwise be unable to obtain credit from suppliers.
• Guarantee agility: respond quickly to market changes, adapt to customer needs, invest in new projects or expand your operations to stay competitive.
• Weather a financial storm: during unexpected financial crises, having access to working capital finance can provide a safety net to keep the business afloat.
• Manage seasonal and cyclical needs: working capital financing can cover periods of low sales or increased demand.
• Optimise inventory levels: ensure you have enough stock to meet customer demands without tying up excessive funds.
• Enhance your negotiating power: maintaining sufficient working capital can potentially lead to better terms and discounts from suppliers.

HOW CAN I ACCESS WORKING CAPITAL FINANCE?

To access working capital finance, you will typically need up-to-date management accounts, a detailed list of debtors and creditors, and financial projections.

Our experts have years of experience in advising businesses across a wide range of sectors and would love to hear from you if we could assist you in this area. Contact us today!