It doesn’t matter how your business is funded with, nor how profitable your business is When your cash flow grinds to a halt, the chances are that you will too. In an uncertain economic climate, the risks are even greater. In this rightBETA guide, we intend to discuss the options available to businesses to help ensure that they stay in business. Specially, we compare and contrast overdrafts with invoice financing and argue that businesses need help in approving new customers, avoiding late payments and mitigating the risks of bad debts. This guide will explains why invoice financing is more closely aligned to working capital than overdrafts and can provide safer support.
The current economic pressures create new difficulties for small businesses as they struggle to manage cash flow in an uncertain market. Cash is the life blood of any business and when the economy slows, and customers take longer time to pay, it can be difficult to assess which of your customers will pay or can pay. Payment terms can extent quite significantly and the likelihood of customers becoming insolvent and never paying increases. This uncertainty of cash flow can trip up even the most cautious and well financed small businesses.
Banks have a wealth of experience in dealing with a wide range of businesses and have specialist skills to manage the working capital cycle with help to achieve faster payments with grater certainty.
Many businesses fail not from lack of profit but from a lack of cash, because when the finance dries up, there is often nowhere else to go. That’s why safe and certain receipt of funds from customers is the top priority. Business overdrafts can provide a pot of money to bridge the gap between paying for suppliers and wages and receipt of money for trade sales. But, certain things more closely involved and shaped to the working capital will provide fuller and safer support. All businesses should have disciplines to approve who they sell to, to finance the trade terms (Typically 30-60 days), have effective credit control and have some form of protection in the event of bad debts. This rightBETA approach is to provide a full end to end service to cover these aspects, which blends the options of invoice finance, factoring or a complete package of asset based lending.
Small business often want to select from a range of services, perhaps they already have trade insurance or a very strong credit controller, but often they appreciate support right throughout the working capital cycle. In particular, businesses need help in approving new customers, avoiding late payments and mitigating the risks of bad debts.
Step by step approach to manage working capital cycle Find Solutions
