Need help with cash flow financing?
Whether you’re looking to grow your business , be experiencing a short term cash flow shortfall or need to invest in plant or stock, we can help you find a suitable funding solution.
Through our broker access to the lending market, we can work with you to quickly find a solution to your expected cash flow funding shortfall and introduce you to a suitable a business cash flow lender.
Note: Cash flow financing must be viewed as a very short term solution to a particular situation and not as a quick fix for poor management controls.
Frequently Asked Questions
Cash flow financing is a form of secured lending where the loan is made against the expected cash flow through the business over the next few months, but usually not more than 6 months. As the lenders security mainly lies in the accuracy of the cash flow projection, the lender will study the business projections and will only advance the loan if it is fully satisfied with the plan. As additional security, the lender is likely to require personal guarantees from the business owners or directors that the loan will be repaid.
Cash flow is the inflow and outflow of money through a business and provides the business with the funds to pay its bills, pay its employees, invest in equipment, stock or expansion.
Positive cash flow is vital to any business and determines the profitability of the business and secures its future.
Negative cash flow, if allowed to continue for extended periods, will destroy a business.
Businesses usually turn to cash flow finance when they experience a sudden drop in their bank balance which threatens the survival of an otherwise profitable company. Some situations that can bring this about are:
– A major client has informed you that it will withhold payment to you until a certain event has been cleared.
– The business is experiencing a temporary slow down due to reasons not associated with any downturn in its market.
– An opportunity has arisen that will enable the business to grow but to take advantage, the business will need a short term injection of cash.
Due to the short repayment terms associated with these loans and the higher levels of risk undertaken by cash flow lenders, it is inevitable that the fees and interest rate charges will be significantly higher than you would expect from traditional long-term bank loans.
For this reason it is vital that you carefully examine the terms of any loan offered to you and build these costs into your businesses cash flow projections over the term of the loan to be absolutely sure that what you plan is fully workable.
As there are a lot of products on the market with many lenders offering them, always double check that you fully understand all of the fees, interest rates and the terms and conditions that are being offered.