With a number of businesses struggling with cash flow at present, it may be a good idea to have the business cash flow expert in our office give this week’s report.
Joe Podobnik has thirty years experience in commercial lending – so he has seen it all before – the good times and the bad. With the pressure coming onto some sectors of the market, we can suffer a real pain in the cash flow if not prepared.
What can we do?
Well, if your current lender has not been your best friend of late, it may be time to consider other options to make the cash flow again. Alternative lenders who provide debtor finance, factoring, inventory financing and special leasing/renting options can be outside of what major lenders are happy to offer.
Why is this important?
Well, having the ability to free up – in some cases, up to 80% of invoices – meaning some of the pain of balancing cash flow has taken care of. How can this done? If an invoice can be raised, there are lenders who under certain conditions who will advance monies within 24-48 hours.
Similarly, short-term inventory finance can allow your business to take up opportunities when they arise by injecting much needed cash into the business. This can be the case where goods/materials are to be purchased and then on sold quickly in 1-3 months.
Equipment rental, instead of leasing can in some cases be a valid option if the equipment will eventually fund itself. This can be useful to buy equipment and machinery with a rental repayment held off balance sheet-useful when short-term contracts are on offer, and when lenders are not willing to advance leasing facilities on big-ticket items.
Can these be used for a growing a business
Obvious benefits exist for using the above types of lending facilities when business is growing. Many of these style of funders don’t have the rigorous criteria, like performance ratios as do the major banks. And although they are pricing for risk (more on this next month) it can in some cases be the only way to keep business moving.
If any of these are options that you may not have explored before, then the time may have come to look a little harder. Banks feel particularly nervous in times such as these and being prepared for the future is always a good idea.
Joe can be contacted on 1300 55 10 45 or email info@intellichoice.com.au. Visit www.intellichoice.com.au for more information about alternative business cash flow solutions.
