Understanding Cash Flow Finance

Cash flow finance is a broad term to describe a range of different finance solutions required to bolster the working capital they need to continue business operations.

What is Cash Flow Finance?

If you’re asking “What is Cash Flow Finance?” – look no further. 

Cash Flow Financing is a type of “loan” that is secured or backed by a companies upcoming cash flow. Invoice finance, supply chain finance and trade finance are common types of cash flow finance.

Cash flow backed “loans” are available to businesses for day to day operating expenses and offer a more advantageous line of credit than traditional longer-term business loans.

Companies who utilize cash flow finance do so by essentially trading future accounts receivables revenue in advance for upfront funding. This can be done on both sides of the transaction – both as an advance of future issued invoices (Invoice finance & accounts receivable) and also as a payment for purchase orders and supplies (supplier finance & accounts payable).

Click these links for more information on Invoice Finance, OR Supply Chain Finance

How does Cash Flow Finance work?

Invoice finance allows a cash advance on existing invoices that are yet to be paid by your customers. The invoice is utilized as an effective promise of future revenue that will be used to repay the cash flow financier. On the Accounts Payable side, purchase orders are financed directly to your vendors, allowing you to retain your cash on hand. Once the order is received, you then typically receive extended payment terms to pay the cash flow financier.

Who is Cash Flow Finance best for?

Cash flow funding is a great tool to smooth cash flow for businesses that transact on credit or trade terms. This type of finance is best for businesses that engage in trade and sales with other businesses, and not consumers or direct to the public. Cash flow funding is ideal for any business that does not want to have an extended debt obligation such as a term loan or a secured business loan. Cash flow funding can be an ideal way for businesses with lumpy or seasonal cash flow challenges to smooth their cash flow, free up working capital and continue to trade and grow their business. 

Why choose Fifo Capital for your Cash Flow Finance?

By completing the form below, you can request a call from one of our Business Finance Specialists. In this call, we’ll seek to understand how your business operates and what the most suitable type of business finance will be for your circumstance – whether it’s debtor finance, supply chain finance, trade finance or even solutions we don’t offer – such as  a chattel mortgage or business loan.

Businesses aren’t cut from the same cloth, and neither are their working capital and financial positions. That’s why here at Fifo Capital, we create a bespoke solution for you that fits your business requirements. When you partner with Fifo Capital, you have the assurance that we’re by your side.

Complete the form below for a no-obligation, finance discovery call with our business Finance Specialists today.

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