Best tips to improve cash flow

One of the most exciting activities that you can perform today is starting a business. It allows you to exercise your entrepreneurial skill. If your enterprise is growing and you are reporting profits, this is always a good sign. However, you may encounter a cash flow problem. Normally, an issue with cash flow problem emerges when your accounts payables hit their deadlines before your receivables mature. This can slow down the growth process and disable your day to day operations. Thankfully, there are some effective ways to use cash flow finance for solving this issue. Here are some tips to improve cashflow.

Instead of buying equipment, lease it

Many business owners view leasing equipment as being more expensive than actually owning it. However, it is an excellent way to get equipment for an entrepreneur who is focused on improving cash flow. When you lease equipment, you make the payments in small amounts. This ensures that your enterprise has consistent cashflow. Lease payments are also regarded as a business expense. As a result, they can be written off. As
such, leasing equipment is an ideal way to maintain good cash flow in your business.

Offer some discounts on credit purchases

Customers love discounts. You can use this incentive to boost your cashflow. This can be achieved by offering your customers a discount whenever they pay their bills early. There are very high chances that they will respond positively. As a result, you can use their payments to improve your cashflow.

Create a buying cooperative

There is power in numbers. You can research and identify other business owners like you. Convince them to pool cash with you and then approach the suppliers. Together, you can haggle with them and get lower prices for your business supplies. That’s because suppliers are more inclined to providing discounts to businesses that make purchases in bulk.

Perform an analysis of your inventory

In every business, there are goods that sell quicker than the others. Look through your inventory and identify the slow moving goods. Having done so, do not buy more of them in your next stock up. If it doesn’t sell, eliminate it. In this way, you can create a stock that moves fast and maintains high levels of cashflow.

Send your invoices out immediately

Whenever you supply a customer with some products, make sure that you send them the invoice immediately. This informs them of pending payment. By doing this, you are quite likely to see receivables being honored faster. This creates a consistent, substantial cashflow.

Cashflow is the lifeblood of a business. If it dries up, the enterprise can fail. You can use the cash flow finance strategies indicated above to boost your cashflow. They are guaranteed to help you improve the operating condition of your business today!

Everything You Need To Know About Invoice Finance

Invoice financing offers flexible funding and is dependent fully on your outgoing invoices. As you send invoices to your clients your lender will cover the correlating amount to the full invoices owed. it proves to be an amazing option for growing businesses, companies with cash flow issues, and SMEs. You will be offered a part of the unpaid invoice by the lenders when it is issued initially to your client and you get the invoice’s balance once it is paid, deducting their internal fees and interest.

Other Names for Invoice Financing

Invoice finance is also known as accounts receivables finance, receivables finance, invoice discounting, and invoice factoring.

Who Uses Invoice Financing?

Many businesses use invoice financing as it is one of the most well-known and accessible types of finance for growing companies. More than 30,000 small companies use invoice financing as their funding option, and this number keeps on increasing with every passing year. One of the reasons behind this growth is the fact that many independent firms and banks who also offer a similar service push this option. Since debtor book is the sole security you require with invoice financing it makes it a more attractive option compared to bank finance.

How Does Invoice Financing Work?

  1. You offer the services/products to your clients and give them an invoice.
  2. Next, you send this invoice details to your invoice finance provider.
  3. A certain percentage of the invoice’s face value is paid to you, generally within 48 hours.
  4. Depending on the kind of invoice factoring, you either will carry out a normal payment chasing or your invoice finance provider will control your client relationship.
  5. Once your debtor clears the payment, the part of the invoice that you did not get will be given back to you, minus the service fee.

Benefits of Invoice Financing

There are various benefits that invoice financing offers, including

  • It minimizes late payment impacts
  • There is no need of any other assets yet funding can be secured
  • The available funding level increases in sequence with the turnover
  • It is possible to raise more cash than one can with overdraft facility or bank loan
  • Even big companies can make use of invoice financing for low-rate borrowing, with no interest accumulation and fees agreed upfront.

So, invoice financing indeed is a very good option. However, you need to be very careful while selecting your provider. Find out the one who will lend you maximum money. Also, give importance to how they deal with their customers and how reliable they are. Once you find the right one, go through the contract details very carefully, sign it, and enjoy the benefits of invoice financing.

How Invoice Factoring Can Save Your Business

Invoice factoring is a form of debtor finance which plays a significant role in the growth of your business. Not to mention, it has the capacity to allow business deals to be less hectic on you as the user, your bank account and on your business partners. Invoice factoring makes it more easy to enable you to get immediate cash flow for your sales invoices and also ensures that it is easy for you to obtain a business loan from your financial institution like a bank.
I am going to provide copious details on how invoice factoring can save your business. By the end of this article, you will definitely understand in details its importance on your business enterprise.

  1. Funding growth with an upfront of working capital
    When you incorporate invoice factoring in your business, a bigger percentage of the value of your invoices that have not been paid will automatically be converted into cash. This will, in turn, offer you upfront of working capital. Consequently, this will be used in the most convenient way to stabilize your business.
  2. Allows you to provide more competitive terms to your new clients(customers)
    This crucial factor allows you to provide improved terms and conditions of trade to your customers with more confidence. It gives you the power and mandate to win new customers in your line of business.
  3. Improves your profit margins
    Invoice factoring releases cash flows tied up in invoices. This one gives you the ability to negotiate better and improved deals with your creditors including the suppliers in your business.
  4. Allows you to take opportunities
    The capacity to access business finance faster opens you to more opportunities. Once they arise,you are able to take them and save your business.
  5. Offering a line of credit which grows with you
    Unlike a bank overdraft, invoice factoring offers a line of credit which automatically improves when your sales increase plus the value of your client’s invoices grows. Renegotiating is not there as in the case with a bank overdraft.
  6. Frees up your time and energy
    Understanding the fact that, you have money available when a need arises puts pressure away. You will have the responsibility to focus on making and accomplishing your goals in your business instead of wasting time and energy looking for funds.
  7. Improves the reputation and image of your business
    Invoice factoring allows you to pay your creditors and suppliers on time. Consequently, this enables you to accomplish clients orders more effectively. In each stage, you will probably earn a positive reputation as a business that people can easily relate well with.

    In conclusion, invoice factoring is very crucial in running of your business. Incorporate it appropriately to save and grow your business to greater heights.

Small Business Financing for your Business

Every small business idea or startup needs resources or small business financing to take off and flourish as an ideal business. There is a number of options that one can consider for small business finance.

Small business or startup financing or franchise financing are methods that the entrepreneur applies to get resources to implement the business idea. It can entail a number of approaches like personal finance, bank loans, government, equity, and other sponsorships.

The small business financing landscape transformed drastically after the world financial meltdown of 2007–08, known and regular financing options dried out and new methods emerged for small business financing.

This article will outline some of the existing traditional and more innovative new small business financing models that can be used by an upcoming entrepreneur.

Personal financing

Starting up a business you need to put in your own personal finances to get started. It could be the initial resources for registrations, drawing ups plans and for your initial production. Person finance can be in form of assets used a surety when applying for bank loans and other such
commitments.

Patient Capital

Many times small business finance comes as soft loans from acquaintances spouse, family friends, and parents. This is patients capital or love money it normally comes cheap with not strict repayment deadlines or competitive interest rates. Repays it once the business starts realizing
profits. This form of small business finance has a couple of challenges family always want a stake in the business but might not invest substantial capital in the business.

Bank loans

Bank loans are traditional forms of financing models for small business and big business. They have different options for financing but they
need surety and specific documentation like business registration, business plans, and financial projects. To access this finance one should be ready.

Crowdfunding

This is a relatively new model of small business finance, very fascinating more appropriate for inventive industries such as art, music, design studios or apparel brands, or practical industries and software. The methods propose that instead of getting resources from one get little shares of the cash from different individuals. The individuals then in return they get a stake in the company and share an interest in an exchange of their cash. This works well if people are will to invest in your business with a potential for good returns in future.

Angel Funding

Angel funding or investment depends on “angels” wealthy people who invest in a start-up business for a small stake in your business. There are different models that the angel funds operate some may want to be part of the decision-making process of the business with a seat in management while other done mind they will leave you to run the show. The other group may just want to be mentors and not make a decision on your business.

There are many other forms of small business financing models not discussed here that can be considered when starting a business.