It can be often found that company owners find it difficult to access finance. This is especially true to funding a growing business. More recently business owners turn away opportunities for growth due to the uncertainties in the current economic climate preferring to reduce their debt exposure. Many business owners believe their only source of finance is through a bank loan or a further extension on their overdraft facilities.
The problem with this is that banks are especially conservative today. They are wary in giving finance unless there are consistent and solid profits, significant assets as securitization and liquid finances to support their contribution to your investment. It is rare for small to medium sized companies to be in this healthy financial position on an ongoing basis to support the bank’s strict lending criteria.
However there are certainly many alternative sources of funding available. One is to change financial policies within the organization. In particular, issues with regard to cash flow. This can be particularly prevalent when companies give their customers up to 60 days to pay their invoices. A solution is to give your customers incentives to pay early for example a discount if they pay within 2 weeks.
Another option is to use a factoring company for invoicing which ensures faster payments from customers. The factoring company buys your invoices at a small discount and pays you upfront thereby improving your cash flow. The ‘factoring discount’ depends on the value of your invoices, their volume and the credit worthiness of your customers. Creditworthiness of your clients is the most significant issue for the factoring company so if your customers have strong reputations paying their bills on time factoring would be a good alternative. Coaching Sydney, Business Services Sydney.
At Illumina we are experts in building successful growth strategies that ensure you a stronger, profitable, more valuable business. Contact us on 02 9660 8557 or info@illuminaconsulting.com.au for a free, no obligation consultation.
Author Name: David Zaoui
Address: PO Box 647 Edgecliff, Sydney NSW 2027
