Don’t Use your Business Funds to Pay for Business Vehicles and Equipment
It is a common occurrence for business owners to purchase vehicles and equipment for their business with funds in their business bank account causing a strain on the business when its time to pay wages, suppliers, and order new stock.
By using an Asset Finance solution to purchase your vehicles and equipment or even to fit out your office premises you will be able to free up your cashflow and use the funds in your business bank account to sustain and grow your business. In addition, many Asset Finance solutions provide tax benefits by allowing you to claim deductions on your rental payments, loan repayments or GST repayments depending on the type of Asset Finance solution you choose.
If you are a business that has already purchased your vehicles or equipment using business funds you may be able to use your already owned vehicles and equipment as security to get finance for these items in order to inject cash into your business.
Don’t Let Your Debtors Slow Down Your Cashflow
Overdue Invoices can seriously impact a business’s cashflow and in turn its overall growth.
There are some strategies you can employ to manage your debtors to ensure you are paid on time so as not to jeopardise your business cashflow. Don’t delay sending your invoices, offer discounts for early repayments, try to keep your payment days at 30 rather than 60, 90 or 120, make sure the payment terms are easy to understand on your invoices and do not wait too long to follow up your overdue accounts.
In many businesses long payment arrangements of up to 120 days or more exist that cannot be negotiated but the business still needs cashflow to pay for wages, bills and stock during this time. If you are a B2B business (a business that sells to other businesses) and you invoice for your goods and services, you may be eligible for Invoice Finance.
Invoice finance provides a business with readily available funds secured by their outstanding invoices. Businesses usually receive 80% – 95% of their debtor book as available funds that they can use for their business. When the debtors pay their invoice, you receive the remaining balance less invoice finance fees. With Invoice finance you don’t need to use your home as security as it is secured by your outstanding debtors. Don’t wait months and months for your debtors to pay you, invoice finance provides a consistent cashflow funding solution for your business.
Control and Manage Your Inventory
There is a fine balance between having enough inventory to manage client demand or having too much inventory sitting around slowing down your cashflow. For this reason, it is a vital part of any business to plan and manage their stock requirements based on supply and demand. Hold too much inventory and you tie up your business funds, hold too little inventory and you run the risk of disappointing and losing customers. Analyse your past sales to determine what sells, when it sells and how often it sells, look for seasonal trends and use this to forecast your potential sales for the next, week, month, quarter and year.
There are many businesses that manufacture or purchase goods and due to customer demand, they require large amounts of stock to be readily available. Despite forecasting and managing their stock to minimize their inventory days there is no way to reduce the amount of stock that needs to be produced or purchased and be made readily available for customers. In addition, in most cases these businesses need to produce or pay for their stock over 120 days before they are able to sell it to their customers. This means that they need to find the funds in their business to produce or purchase their stock and they have to wait 120 days or more to sell their stock and reinject the funds into their business. This kind of delay can cause a strain on a business’s cashflow impacting the business owner’s ability to sustain and grow their business.
If you are one of these businesses and you find that your cashflow is being impacted due to the delay between producing or purchasing your products and receiving payment for the purchase of those products there are many Business Finance options you can leverage including Invoice Finance, Trade Finance, Lines of Credit, Overdrafts and Business Loans.
The type of Finance you need will vary based on your industry and business. For example, if you are a business that imports your products from overseas to sell domestically, trade finance may be the best solution for you. If you are a business that relies on equipment and vehicles to sustain and grow your business, Asset Finance would be more suited to your circumstances.
Whatever your industry or business requirements your Finance Broker at World Class Finance can help you.