Working Capital Finance – can it help with cash flow?

Finance, News,

Working capital finance solutions are designed to offer a boost to cash flow for a business, usually for specific growth projects, such as taking on a large project or entering a new market. They offer the cash flow that can be needed to get through the period when cash is under the most pressure. 

Commercial finance and asset based lending (ABL) is a complex market, that is constantly evolving, and products, terminology and the requirements for security and information to support any application will vary between lenders. 

The benefits of some detailed research and comparison between the various options and a successful application can include the following:

  • Up to 90% of outstanding invoice value may be available relatively quickly.
  • Flexible lending – funding increases in line with your growth (UK and Export).
  • Confidentiality – lenders can offer a completely confidential service – your customers need not know you have a facility in place.
  • Lenders allow you to manage your funding at all times.
  • Sector-specific finance is often available.
  • Structured ABL – funding for management buy-outs / management buy-ins.
  • Trade Finance & Supply Chain Finance Solutions.

We’d always advise dealing with a Specialist in this area, who can advise on the primary options, being:

Invoice Finance

An effective way of quickly accessing a proportion of the value (up to 90%) of your sales invoices. Effectively a business ‘sells’ its invoices to the lender in return for accessing cash when products and services are sold, avoiding the leadtime for payments to be processes. Specific sector based offerings are available, as is the ability to arrange finance for selected invoices only.

Structured Asset Based Lending

You can generate a higher level of funding by ‘unlocking’ the most value that is usually tied up in the assets of your business, including Debtors, Inventory, Plant & Machinery and Property. 

Trade Finance

This is supply chain finance that includes various options, enabling, for example, the purchasing of goods from overseas where you may otherwise be unable to obtain credit from suppliers.

What would any application include?

Typically, you’ll need to ensure your management accounts are up to date and have current detailed lists of debtors and creditors. Up to date projections would usually be required as well before any application will be considered. 

If you’ve got any large projects looming, or are aware from your cash flow projections that there’s a period of time coming when your cash flow may come under pressure, please get in touch sooner rather than later! We can put you in touch with people who can help you find a solution, but to find you the best options, they’ll need good information and the time to find the most suitable solution for you.

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