Lets be honest here we are talking about cash. Cash being the lifeblood of any business to keep it trading and to help it grow. We know the saying “growth sucks cash” well so does a reluctance of your customers to pay in a timely manner. So whether you are planning on growing or just happily trading within this ever stretched financial environment, read on.
So what is cash flow? “Your cash flow is the money coming in and going out of your business — and how much of the money sitting in your bank account is yours to spend. A healthy cash flow is having enough money to pay what you owe when it’s due”. (business.govt.nz)To achieve a healthy cash flow you need to be able to release the money you have tied up in debtors in a timely manner. So what happens when they are taking longer and longer to pay?
What happens when the gap between your ever increasing sales and your overdraft is getting too wide and the Bank cannot give you more money?
What happens when the new lending rules means you might not be able to use the equity in your property to put money into the business? Or what happens if you have a spouse/partner or family that want to keep the house separate?
This is where invoice finance can help your business.
The benefits of invoice finance will ease your cash flow and enable you to grow, even if your financier cannot help you.
The many benefits include:
- The ability of taking on additional businesses as the company expands - you need a constant cash flow to enhance how your business runs. Invoice finance helps you by providing the cash that could help you improve your marketing and advertising. You can now say “yes” to all your clients even those who take up to 3 months to pay. After all, you know that your cash flow is supported by the invoice finance company.
- Time and money are saved. Once you embark on invoice finance, you get to eliminate supplier constraints. Your business can now pay suppliers quickly and often gain discounts by paying early. You can buy good ready for the next big order.
- You get to improve your cash flow. Financing invoices for cash gives you the power to get cold hard cash immediately. This reduces the strain that would have been induced on the business by waiting 60 to 120 days for payment.
It's a simple process and easy to apply and take on. It is far more flexible than a standard overdraft and Lock Finance work alongside your existing bankers in support of your business; so your banking relationship remains.
Lock Finance can even help improve the collection of your debtors by using our full factoring service. This not only saves you time but also cost in employing someone to collect the debt or even taking away from another vital company roles, such as sales, whilst a debt is chased.
Michael Gerber, author of "The E-Myth: Why Most Small Businesses Don't Work and What To Do About It", says that 40% of businesses fail in their first year. 80% fail within their first five years. BECAUSE THEY RAN OUT OF CASH.
There are a few ways you can help yourself to improve your cash flow, such as invoicing quicker, shortening your payments terms, chasing regularly, manage your stock and look into staff productivity and management.
If you are interested in finding out how Lock Finance could help improve your cash flow so you can get on with the business of making profit simply give us a call Sarah Lochead-MacMillan 027 700 2065 for a free chat.