Cashflow Management

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English: Internal rate of return, two solution...

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Easy access to money is vital for growing businesses of all sizes. Whether you need cashflow management, to buy time to make adjustments or fund growth, if your business is seeking finance then it is important that you present yourself, your business and your requirements in the right way. This will help increase your chances of getting the finance that suits your businesses needs.

Think carefully about what you need the money for. Is it to thrive or simply to survive? Consider whether you need money to fund expansion, for example, taking on a new commercial property, hiring more staff or buying equipment. Or perhaps you simply need to operate more efficiently, or alleviate some short term pressure?

This may sound obvious, but this determines the type of sensible commercial finance you need that will help you decide what you need to apply for. Businesses often make the mistake of applying for the wrong type of finance that doesn’t address their specific needs. In addition, consider the amount you need to borrow and support your figures in your business plan. Too many businesses ask for too much or too little without working through what they really need.

Many business owners go straight for a commercial loan before exploring other options. This is not the only way to fulfil your finance needs and in some cases it may be the wrong option for your business. There are a number of different sources that businesses could consider.

If your objective is to improve your ongoing working capital and cash flow position, then invoice financing – using your sales invoices as assets against which money can be borrowed – could work for you. Or you may want to expand your business and invest in more machinery, at which point asset finance would be far a more suitable option.

If you are an early-stage business with high growth potential or an established business looking for funding to expand significantly, consider Venture capital finance and Angel investors. They will own a slice of the business and in some cases act as mentors to nurture their investment and ensure its success.

Remember to ask for a quote rather than make unnecessary multiple applications for finance from various providers. Large numbers of applications might trigger a warning to lenders as it is one of the signs that an applicant may be committing fraud or be in financial difficulty. As a result, large numbers of searches, when present in conjunction with other risk factors, can trigger fraud investigations or affect your credit scoring and your ability to obtain credit.

Nearly two out of three businesses are not aware of what impression they are giving to others in the business world. The information you provide on your application form is not the only information that will be considered. Lenders will consider your cash flow, revenue, credit history and may also look at not only your businesses credit score, but potentially your personal credit score as well.