Get sufficient working capital to help my cash flow…
Are you tired of missing out on opportunities or calling suppliers for extended terms is making you anxious? Maybe you have outstanding debts with the ATO as customers are not paying quick enough? Or do you just have a very seasonal business where there is a lag in time from expense being incurred in the business to when you get paid for sales?
Cash flow is the lifeblood of any business – if managed well it can help a business grow exponentially, assist in taking advantage of opportunities as they arise and keep your suppliers and the ATO happy. Lack of cash flow is still the most common cause of business failures not just in Australia but around the World. And of course, we never know when cash flow is going to get tight due to circumstances that may be out of your businesses control.
There are many different product types to manage cash flow to consider:
- Term loans for longer working capital requirements to inject cash back into the business;
- Overdrafts/lines of credit to manage shorter term cash flow timing mis-matches of expense and income;
- Debtor finance to shorten the length of your cash flow cycle by bringing forward the cash from sales;
- Credit card facilities to extend actual payment out of your cash flow for stock and other expenses;
- Trade finance facilities for those importing or exporting goods from overseas.
Security for these types of facilities can range from and can be a combination of:
- Residential property – generally your owner occupied home but can be investment properties. This is generally the preferred security type for a bank BUT this can impede you to grow your personal wealth;
- Commercial property – if you own your business premises and there is sufficient equity you can use them as security for working capital facilities;
- ’Goodwill’ of the Business – in certain types of businesses, lenders may allow a value to be assigned against the business as a whole to secure facilities;
- Specific Business Assets – some products will take security over specific assets of the business such as debtors in a Debtor Finance program;
- Unsecured lending – facilities that effectively have no security other than directly against the business which is sometimes referred to as ‘balance sheet lending’.
Most facilities will also need to be guaranteed by the Directors of the business.
To discuss what facility might be the best for your business speak with an expert