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Things to watch out for when dealing with Cashflow Financing

Published on 5th July 2018 - Last update on 8th January 2019

For your business to grow and remain sustainable, ensuring a reliable cash flow each month is essential. However, achieving that goal can be tricky. You will naturally run into slow trading periods, receive unexpected payment demands or further invest in your business’ development. Whatever the cause may be, if your business’ cash flow has fallen below what’s required to function you need to act. One way of doing this is by applying for Cashflow Finance. Cashflow Finance is an umbrella term describing a wide range of business finance products that all work in different ways to support and resolve uneven cash flow. If this sounds like your business, Cashflow Finance could be the right choice for you, but it’s worth understanding how this type of funding works so you can be sure. So if you’re thinking about applying for Cashflow Finance, some of the aspects you need to consider are:  

  • How is Cashflow Finance secured?
  • What do you need to apply for Cashflow Finance?
  • What additional costs and fees are involved?

How is Cashflow Finance secured?

Cashflow Finance contains a wide range of business finance solutions that are either Secured or Unsecured. Secured products typically require you to offer collateral in the form of unencumbered assets such as equipment, machinery, vehicles or property. What this means is that if your business defaults on the agreement, the lender will gain the right to repossess and remove assets from you. However, Unsecured products don’t require such a commitment but may offer a higher interest rate which takes into account the amount of risk the lender is taking on by lending to your business. In addition, some lenders may also require you to offer them either a written or verbal Personal Guarantee expressing your commitment to repaying the agreement on time.

Is your business suffering from uneven cash flow? Need help supporting your finances? Apply for Cashflow Finance or learn more about how your business could benefit.

What do I need to qualify for Cashflow Finance?

As well as deciding whether to use a secured or unsecured Cashflow Finance agreement, you also need to assess what your business needs to qualify for each product in order to make an informed decision and avoid wasting precious time. Depending on your chosen product, you may need to present documents such as recent and past bank statements, sales reports, inventory management reports, collateral documentation, invoices, profit and loss statements or tax returns. Plus, when dealing with a product that is unsecured, lenders will adopt a more cautious approach, usually requiring you to possess a strong credit profile. However, with a secured solution, lenders may be more flexible with their criteria since they’re accepting less risk.

Since some product may have a stronger focus on past income, unpaid invoices or the worth of the assets you’re presenting as collateral, lenders may not always use your credit profile against you when coming to a lending decision, however they may still request access to it in order to gain a stronger understanding of your business’ performance and financial standing. Some of the factors they will incorporate into their search include whether you have CCJs, Accelerated Payments Notices (APNs), arrears, debt and a history paying off debt on time. Therefore, if your business has a weak credit score you will be offered a higher interest rate as a result, and vice versa.

Are there any additional costs and fees?

In addition, you also need to take into account whether there are additional costs and fees involved before applying for Cashflow Finance. Depending on your chosen solutions, some of the costs you may be confronted with could include setup costs, administration, legal costs, late payment penalties, exit fees or balloon payments. Therefore, in order to ascertain the overall cost of finance, make sure that you read through all documents provided by the lender. If necessary, you can also request a face-to-face meeting with them if you are unsure about any of their charges.

Still thinking of applying for Cashflow Finance?

At the heart of every successful business, regardless of sector, lies a strong and reliable cash flow. Without it, you will struggle to manage essential day-to-day operations and give your customers the service they expect. This is why, if you expect or are experiencing issues involving your cash flow, you need to act fast in order to minimise the damage and avoid insolvency. By applying for Cashflow Finance you could gain access to a wide range of business finance solutions that each work in their own way to help you resolve the issues that are responsible. However, with so many solutions to choose from, how can you be sure that you are being offered an appropriate solution at a competitive rate? Simple. If your business expecting or experience cash flow difficulty, apply for Cashflow Finance today or find out more with Rangewell.


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