How to save money on your Working Capital FinanceOctober 12, 2017
Choosing a business finance product that works in accordance with your business’ unique situation can be a challenge, even at the best of times. But, so too is finding a product that’s cost-effective. To acquire the most appropriate Working Capital Finance product, with great rates to match, you need to delve in and scrutinise the details of any agreement put before you. This means assessing how each product works, how the lender’s prices compare, as well as whom to apply for finance with. So when searching for finance to help you manage your working capital, here are a few useful tips that may save you money.
What products are on offer and how do they work?
What makes Working Capital Finance so popular among borrowers is that it contains a wide variety of finance products, allowing you to tackle any issues affecting your working capital. This stems from the diverse nature of the products on offer, each working in conjunction with your business in different ways. Whilst one product may work with your monthly card revenue, another product works using your invoices or even by allowing you access to a lender-controlled facility, and so on. Ultimately, it’s about choosing a product that can comfortably fit around your business’ situation and medium to long-term goals. Just some of the products you could apply for include, but aren’t limited to, Bridging Loans, Merchant Cash Advance, Invoice Finance and Asset Refinance.
How much are their Interest rates and are there any fees?
When assessing different finance products, one thing that we all like to know is the cost. We want to know how much interest each lender charges and how they measure interest for different products. For example, with your typical business loan interest is measured using Annual Percentage Rate (APR). However, with products such as Merchant Cash Advance interest is, instead, calculated using a factor rate. In addition, you need to consider other charges, some of which may apply during the application process. Depending on the lender and the product, you may be asked to pay set-up fees, administration, legal costs and surveyor fees. So before entering into any finance agreements, ask lenders about any additional costs and ensure that they’re upfront about them. As always, check the small print.
How do I repay the agreement?
If you’re considering applying for a product under the umbrella of Working Capital Finance, know that each product is repaid differently. That’s why you need to consider a product that also has a repayment scheme that’s comfortable and affordable for your business. For example, business loans require fixed monthly repayments. Yet with bridging loans, you’re still required to pay fixed monthly repayments, but you can decide with lenders when repayments begin. Meanwhile, Merchant Cash Advance uses flexible monthly payments that depend on the strength of your credit and debit card sales. As such, it pays to know how each product is repaid, and whether your business can afford the repayments.
How do I choose a suitable business lender?
As well as ensuring that you pick the right product, you also need to apply with a suitable business lender. Ideally, you want to form a strong relationship with a lender who knows and understands the challenges of your sector. You’ll also want to know whether they can be relied on to deliver on what they promise. When first approaching any lender, you can ask to review a lender’s draft contact, if one is available. This will help give you an idea of what you can expect during the agreement and identify early any points you want to negotiate. In addition, you may wish to browse reviews from their past clients, seeing whether their services stand up to scrutiny. Ultimately, strong relationships are built on trust and reliability, and this is what really counts when choosing lenders.
Need help sourcing a Working Capital Finance solution for your business?
Sourcing finance for your business through Working Capital Finance isn’t easy, especially on your own. There’s so much to consider and so little time, you can be forgiven for getting lost. Ultimately, all you want is a product that is able to strengthen your working capital whilst being fair upon your business. You also want a lender who knows your sector and can appreciate the challenges, offering you terms and conditions that are reasonable. But how?
With so many products on offer, it’s easy to get confused and feel stuck. That’s why choosing the right brokerage for your business is vital, but not all brokers are equal. Rangewell is an Access to Finance provider that goes above and beyond the services of your typical brokerage, helping you source, apply and support you every step of the way for a Working Capital Finance solution that’s right for you.
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