Maintaining steady cash flow is crucial for any business. Managing incoming and outgoing payments to do that, however, is nearly impossible. The average business owner spends nearly 8 hours per week just chasing down later payments. These tactics alone simply aren’t enough to keep a business solvent, particularly considering all the unexpected ways that a carefully managed budget can be derailed. Once normal cash flow is interrupted, it can be very difficult to get things running again. Business owners are often left in an unsustainable situation, deciding whether employees will be forced to deal with late payment, important shipments will be delayed, or the business’ power bill will be paid late.

shutterstock 585671984 300x200 - Reliable financing is a critical part of a healthy small business

By learning about and strategically making use of short term financing tools, businesses can stabilise their working capital in spite of unexpected costs and cash flow interruptions. Doing so well not only helps business owners manage unexpected costs, it creates a more stable business environment for suppliers and employees, and frees up precious time for business owners that they can use to drive growth.

Steady financing enables the growth of a healthy company culture

Healthy company cultures encourage innovation, growth, cooperation, and the development of a low-stress working environment that keeps productivity high and employee turnover low. While this is built on many different factors, many of which are more social than economic, employees fundamentally rely on the foundation of trust built on their basic working relationship with their employer. Workers need a sense of real financial security and support from their employer before they can build that trust, and extend it to their peers in the workplace.

Financing enables growth directly and indirectly

Businesses often need access to financing to help them pursue growth opportunities. A stock loan or a business line of credit can go a long way for a business looking for capital to accomodate a large new customer. Financing, however, also helps businesses to grow in less obvious ways.

Businesses spend an enormous amount of time chasing late payments and figuring out how to spend inadequate funds to make ends meet just a little bit longer. By using short term finance like invoice financing, businesses can nearly eliminate the issue of late payments, and supply chain finance and unsecured loans make it easy to accommodate additional costs on short notice. This doesn’t just create a generally more stable financial environment, it also frees up enormous amounts of time for small business owners. That means that entrepreneurs who were mired in the task of navigating their business through day to day issues can instead focus on big picture issues, such as developing plans for growth.

Keeping your cash flow stable

The trick in finding success through financing is in applying it strategically as needed. There are a wide variety of different short term financing tools available to businesses, and each are best suited to different specific situations.

Invoice financing

Invoice financing is designed as a way for businesses to give themselves a quick advance on money that they’ve already earned. As an added benefit, the financial institution through which you finance an outstanding invoice will go and collect payment from the client themselves, meaning that the business owner won’t need to chase down any potential late payment.

Supply chain finance

Supply chain finance allows businesses to draw from a third party fund to make supplier payments, while deferring their own payments to a later date. This allows businesses to free up existing capital to cover unexpected costs, or just to defer a supplier payment to reduce the time between an investment and the return on that investment. Combined with invoice financing, it can sometimes even allow businesses to collect revenues before their initial supplier payments need to be paid off.

Unsecured business loans

Some types of businesses don’t issue invoices, or simply don’t have any suitable outstanding invoices to finance. Still others need an extra boost to deal with a particular situation. For these times, unsecured business loans offer an additional solution. Since they are unsecured, they don’t require any collateral, and can be accessed at a moment’s notice.

There are many more short term finance tools offered by different financial institutions that work slightly differently, and best apply to different situations. It can be very difficult to navigate all these options to optimally benefit your business. Because of this, it’s a great idea to sit down with your dedicated financial representative at Fifo Capital or an independent expert, and work out exactly what’s appropriate for your business in a given situation. By developing a robust system of financing tools to help manage your business’ cash flow, you can give yourself and your employees the time and security you need to grow and develop your business.

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