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Regaining control over your business’ cashflow

Published on 2nd July 2018 - Last update on 8th January 2019

Issues with your cashflow? Managing and maintaining your business’ cashflow is vital. It’s a responsibility that affects the effectiveness of your day-to-day operations. So only when your cashflow is at healthy levels will your business have the ability to grow and ensure a sustainable future. However, remaining in control of your cashflow can prove challenging for any number of reasons, such as monthly revenue shortfalls, unexpected expenses or even emergency situations. Yet, whatever the cause may be, what really matters the most is knowing how to act when a situation arises. So if you need help regaining control of your cashflow, here’s what you need to consider.  

How can I improve my cashflow?

Your cashflow is an essential part of your business, which is directly affected by the strength of your income and monthly outgoings. Yet although it can be difficult, there are plenty of steps that you can take to stay on top of your business’ cashflow.

Start by conducting a thorough review and ensure that you’ve got a solid overview of your business’ finances and day-to-day operations. Assess whether you’re:

  • Aware of any potential issues
  • Driving enough sales
  • Generating a profit from each sale
  • Spending too much money on supplies, contracted services, utility bills, accounting, legal, insurance, rent and so on.
  • Paying for services, products and equipment that you’re not using.

If there are any issues, carefully review how you can improve your customer services and reduce any expenses that are unnecessary. However, not every aspect of your business’ cashflow can be resolved by rethinking how you operate. You may need to explore what external resources are available that could help you overcome any obstacles standing in the way of your success.

Seasonal cashflow shortfall? Unexpected payment demands? Having trouble managing your financial obligations? Apply for Cashflow Finance or learn more about how your business could benefit.

What Cashflow Finance solutions are available?

If you’ve reviewed every aspect of your business but are still having trouble managing your cashflow, you might want to explore what external resources are available that could help you regain control over the situation. The problem might lie outside of your control and could be a result of seasonal trade fluctuations, local competition or even trends among your customers.

As such, investing in your business growth and long-term sustainability might be the answer. If so, there are a number of Cashflow Finance solutions on offer that could help.

Business Loans

Typically either Secured or Unsecured, Business Loans offer you access to a lump sum. In exchange for providing collateral (unencumbered equipment, machinery, vehicles or property) as security, a Secured business loan could enable you to borrow up to £1,000,000. Meanwhile, Unsecured business loans don’t require the use of collateral and can offer up to £250,000, but often charge more interest compared with a secured agreement. Yet, regardless of which option you choose, you’ll be required to make fixed monthly repayments throughout the agreement, plus interest.

Invoice Finance

If your business trades using business-to-business (B2B) invoices, you could release up to 90% of the capital they contain by applying for either Invoice Factoring or Invoice Discounting. Subject to little or no usages restrictions, any funds that you gain access to can be used for purchasing supplies, subsidising revenue, equipment or any other growth projects. Keep in mind that you’ll need to maintain up-to-date ledgers with this type of finance. But in order to make an informed decision, it is important to be aware of how both options work.

  • Factoring: may be appropriate if your business has an annual turnover of at least £25,000. It can even help save you time by allowing the lender’s credit control team to pursue the debtor on your behalf. Plus, some lenders may offer you Bad Debt Protection, safeguarding your business in the event that the debtor goes bankrupt or doesn’t pay what they owe.
  • Discounting: another option if your business has an annual turnover of at least £100,000. With this product, you’ll be responsible for collecting the debt from the debtor. However, instead of paying you, they’ll pay into an account controlled by the lender. Once they’ve fully paid off the money they owe, the lender will release a balance to you (e.g. the remaining 10% of the invoice) minus costs and fees.

Overdraft Replacement

Another quick way of obtaining funds for stimulating growth is by applying for an Overdraft Replacement facility. Offering your business a line of credit, overdraft replacement gives you access to an allowance based upon your past income. Although you’re not obliged to use any of the funds that are made available to you, anything that you do withdraw will be charged interest and must be repaid with 30 - 90 days (depending on the agreement). This means the product behaves much like a credit card and creates a buffer for your business. And because it is not subject to any usage restrictions, Overdraft Replacement can be used for a wide range of purposes, including subsidising revenue, tax, staff wages, funding existing projects and supporting growth. If you withdraw more than permitted, the lender will impose an overdraft penalty. Plus, once you’ve fully repaid anything you’ve previously withdrawn, you can instantly draw and repay funds on a revolving cycle.

Merchant Cash Advance

With this product, you could gain access to an advance based upon your business’ predicted future credit and debit card sales for an upcoming month. To do so, you’ll need to submit at least 3 or more of your business’ latest consecutive card sales reports. Merchant Cash Advance also features flexible monthly repayments which work by the lender automatically deducting an agreed percentage from each of your card sales until the agreement has been repaid. As such, the amount taken each month can vary depending on the number of card transactions that have been performed, but leaves your cash-based revenue untouched.

Need help establishing control over your business’ cashflow?

As well as having a clear vision and a team you can rely on, you need to keep a close eye on every aspect of your business to succeed. Although it’s important to make sure that you’re not spending more than you earn, not every issue can be resolved by adjusting how your business operates. Sometimes, the main challenges to your business could lie beyond your control. As such, as well as forming a strategy for overcoming any potential issues, you might want to consider exploring what Cashflow Finance has to offer.

At Rangewell, we’re an Access to Finance specialist working with over 300 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide through the application process. We’re with you every step of the way. So if you’re looking to support your business’ cashflow, apply for Cashflow Finance today or find out more with Rangewell.

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