3 Quick Tips to Improve Business Cash Flow

Business growth is an exciting time for any entrepreneur. However, sustaining positive cash flow may be easier said than done though the normal ups and downs of the business cycle, such as seasonal events, and long invoice payment terms, to name a few. However, there are always ways to improve your business cash flow.

Here are 3 quick tips to improve your business cash flow:

1. Review old equipment and inventory

Looking at options for equipment finance and/or asset rentals can be cost-effective, and dependant on the circumstance, it can increase your speed and efficiency to increase production, or take on new projects, which leads to more incoming cash flow. There will also be money saved with not having to manage and organise for repairs, as you’ll always have the latest technology. Why not seize the opportunity during current historic low interest rates! 

2. Consider invoice factoring

Even if you have incentives in place for your customers to pay their invoices quickly, be it by giving discounts, offering online payment options, or enforcing late fees, the invoice payment terms can still place a delay on money owing to your business for products or services completed. This can place a crunch on the cash flow you need now to meet wages, new equipment, or growth. 

This is where invoice factoring enters as a solution, allowing your business to access a large percentage of the funds held in your unpaid sales invoices. You simply forward your invoices to the factoring firm in exchange for a cash advance, and the factoring firm now owns the invoices and is paid when it collects from your customers. Imagine what you could do tomorrow, if you got paid today, for the work you did yesterday!

3. Customer Loyalty

Your customers returning is key to business cash flow and growth. The above two points can certainly play into their customer satisfaction. If you present as a quick and efficient business with the latest technology, who also offers unique invoice financing solutions for your customer’s (and your) benefit, it can lead to a win/win scenario. Your loyal customers will also turn into an advocate of your brand which will bring in even more business. 

Being strategic about your business will improve your cash flow. The normal ups and downs of the business cycle will always be there, but the pressure will be less with a positive cash flow solution in place. Contact us today obligation-free for a cash flow solution for your business.

What Is Invoice Factoring?

What is Invoice Factoring?

Invoice factoring is a cash flow solution that allows businesses to access a large percentage of the funds held in their unpaid sales invoices, from a finance company called a factor. With invoice factoring your business can enjoy the benefits of the cash flow of the invoice before your customer pays it. Positive, steady cash flow is one of the most critical components of the growth and success for small to mid-sized businesses. Invoice factoring allows your business to control its cash flow and focus on business growth.

Pro tips:

* Factoring fills a cash shortfall when your customers don’t pay you immediately, but you need the cash flow to run your business

* You forward your invoices to the factoring firm in exchange for a cash advance (usually 80%), less a factoring fee for the factoring service (between 1-3% of the value of the invoice/s)

* The factoring firm now owns the invoices and is paid when it collects from your customers (within your customer invoice payment terms)

* Once the factoring firm has received the outstanding funds from your customer, your business will receive the remainder of the funds, called a rebate

Contact Nova Business Finance to see how we can help your business grow today.

Invoice Factoring – an Alternative Financing Solution

The only collateral you need are the invoices from your customers. Invoice factoring companies do not require many documents compared to banks.

Invoice factoring is a great way to get positive cash flow in the form of short-term working capital to keep running your business without having to worry about cash flow to cover business expenses such as salaries and rent. With invoice factoring, you are also assured of the cash flow to produce goods or offer services to your clients.

Contact Nova Cash Flow Finance today to find out how we can assist your business.

How Can Cash Flow Finance Help Business?

SIGNIFICANCE OF CASH FLOW FINANCE IN A BUSINESS.

1. Cash flow finance is an option when your company has a short supply of money whilst waiting for invoices to clear. It often happens in small businesses as they build a customer base, and when they are growing. It may even occur in businesses where sales are seasonal and have specific natural peaks and troughs.

2. Cash flow finance is an option when you need an injection of funding to make a quick investment in pieces of equipment and other genuine business needs.

3. Cash flow finance is obtained fast and can help your business from falling or collapsing.

4. Cash flow finance assists business growth and expansion.

5. Cash flow finance can assist your business to diversify product lines.

Contact Nova Business Finance today to see how we can assist your business.

How Does Invoice Factoring Work?

Factoring finance is an alternative form of a cash flow secured against the invoices themselves, not against real estate. It is incredibly significant when you need quick finance to meet immediate obligations in your business such as wages or rent. Factoring cash flow finance for your business is flexible, manageable, and quickly accessible. Once the invoice advance is secured by your business, it is repaid by your customers to the factoring firm within the invoice terms you have set with them. 

HOW IT WORKS

* Your business delivers goods or services to your customers as usual and they confirm your invoices. 

* Due to the time it will take to receive payment from your customer, your company sends the invoices to an invoice factoring firm otherwise known as the factor.

* The invoice factoring firm verifies the invoices by contacting your customer and once the verification is satisfactory, your company receives an advance of the invoice amounts immediately. The amount you will receive will depend on your agreement with the invoice factoring company.

* The invoice factoring company then receives the invoice payment from your customer and deducts a fee for the factoring service it has offered you. The remainder is forwarded to your company as a rebate.

To find out how Nova Cash Flow Finance can help your business, contact us here.

Why Invoice Factoring is the Best Source of Growth Capital

Growth capital is private equity used when a business wants to expand its facility, buy equipment, or enhance sales and marketing strategies. With extra capital injection, many small businesses can grow. But, sourcing growth capital is not an easy task. One of the best methods to source capital for the expansion of small businesses is invoice factoring.

Many businesses offer credit to their customers, especially those buying in large quantities. This causes the tying up of funds that businesses could otherwise use for growth. Invoice factoring these transactions can help you acquire funds for the expansion of your business through cash advances from your invoices.

Benefits of invoice discounting as a source of growth capital

Alternative to loans

Due to the limits and constraints that loans put on small businesses, it is challenging for them to grow. Invoice factoring has fewer formalities than banks giving a platform for small businesses to source capital.

Increased cash flow

Since growth capital is tied to working capital, it is important for small businesses to have an immediate method to improve their cash flow. Invoice factoring offers a simple solution for small businesses to achieve those short-term objectives, which leads to long-term business growth.

Access to business advice

Information about how business processes are conducted to achieve growth is vital for small businesses. Invoice factoring finance lenders have the know-how on how to achieve business growth. Despite these institutions providing you with growth capital, they also advise you on how to use it.

Credit protection

In the event that your customers are unable to pay for your invoice, you are at least insured against it. Many lenders offer debt protection for a period that you select. If your customers are aware of this, they will most of the time comply with the repaying terms.

Grows as the business expands

If you invest the money you get from invoice factoring into expansion, your business will be in a position to offer more credits leading to a growth in your invoice discounting status.

If you want an easy and effective method to get growth capital for your small business, you should consider invoice factoring. This method does not overwhelm you with complex processes and restrictions when you are beginning or growing.

All you need to know about business financing

If you are a small business that is just getting started, it is very important to make sales payments on a regular basis. The reason for this is that the funds available for business are not too large and, if more payments are reserved, this can put you in a bad financial position. In most small businesses, debt management can be a very difficult task, as they usually do not have the financial structure to absorb the debt. There are times when payments are so poorly supported that business approaches bankruptcy. The cash flow from the company occurs at the usual rate because the services provided for the production of goods cannot be stopped. Thus, withdrawal of money and lack of money can lead to serious problems.

In these situations, many companies are looking for business financing from banks to keep them in line. It is usually quite expensive. The reason for this is that now the company must not pay the production team regularly, but also make payments to the bank. Also, the bank has a long process of applying and approving for each loan and the business may not have too much time to obtain finance. If the business rating is not very good, then the loan can be rejected as a whole.

In such cases, there is another viable option that companies can use. This option is called Financial Factoring. Billing companies usually redeem unpaid invoices from these companies at a discounted price and then receive full payment from customers. This greatly helps both businesses and companies. From the point of view of the company, it does not need a sale product, all it has to do is buy an invoice at a cheaper price and collect the whole amount. The difference leads to its profit.

For business, money is available after 24 hours. The profit they make is a little lower than they could get, but at least they get enough money to support the business. In addition, there is no need to make any payments, as this is not a loan, but what it has done is mainly direct sales. The process of acquiring this type of financing is much simpler and is therefore preferable to loans.

In some companies, finance suffers because customers do not pay on time. Doing business on credit can be very risky. If you do not have the money, sooner or later your production will stop. This is where factoring companies come from. These companies buy unpaid invoices from other companies at a discounted price. This is good for business because it may not be able to make a profit, but at least the cost of production will be reimbursed. business financing do not need to spend their money to continue production and do not have to borrow to pay salaries.

How To Make Money Through Cash Flow Finance For Your Business?

Cash flow finance for business is a form of short term funding where a business acquires a loan backed by money to be earned in the future. Cash flow finance is a quick loan, but it’s not a permanent solution to your cash flow. This type of funding will have higher interest rates than the traditional loans, and they get paid within a short period, which is one to six months. However, cash flow finance for business can be used to make money if the cash acquired is appropriately used. So how can you make money through cash flow finance for your business?

1.Expand your business

You can use cash flow finance to open more branches, and this will earn you more money. The more branches you have, the more money you make. You can also expand your business by adding more products to your line of business. However, before you use cash flow finance to open another branch or add products, make sure you have a ready market. This is because you will have limited time to pay your loan back.

2. Buy equipment and stock

Another right way of using cash flow finance to make money is by adding your stock and buying any necessary equipment that your business may need. If you have a ready market, why don’t you use that funds and buy stocks for your customers? If you are in the manufacturing sector, purchase equipment to produce more products that will meet market demand. Of course, the profits you will get will be more than the interest you will pay. That is if you did the right research.

3. Employ more staffs

Serving customers well is the key to any business. If your business is expanding, you will need more staff to serve your customers well. If you don’t have enough money and you feel that your business needs an extra employee, then cash flow finance is for you. Cash flow loans are processed quickly, and they will help you to hire employees no matter how urgent you need them. You can you this finance to cover for hiring expenses and the first few months’ salaries.

Expanding your business is vital if you want to increase your profits. For your business to thrive, you will need to open more branches, add equipment and stock, and also hire more staff. If you don’t have ready cash to do all these, you can consider getting cash flow finance for business.

What Can Factoring Do To Double Up Your Business Working Capital?

Definition of Working Capital

When you subtract the current liabilities from the existing assets, you get the working capital. Working capital helps take care of the daily expenses of a business.

  • Current Assets: They include liquid cash and other assets that you wish to convert to money before the end of a financial year such as inventories or accounts receivable.
  • Current Liabilities: These refer to any debts that a business owns and which it must clear before twelve months elapse, like short term loans.

Working capital is essential because it will help you know the amount of money you have to run your business once you have accounted for all the current liabilities.

Balancing Cash Flow

Many businesses fail because they lack consistent cash flow. The biggest challenge that entrepreneurs face is how to balance cash and ensure their business is healthy and flowing smoothly. When a new business needs working capital, the owner will turn to personal liquidity, investors, friends and family, bank loans or factoring.

Once a business owner exhausts all personal assets and does not want to give control of his business to an investor, they have two options left, a bank or factoring company. The business owner will first visit a bank to apply for a loan. However, banks have many regulations that you must adhere to, making it difficult for entrepreneurs to secure loans. Factoring comes in handy at this point, and the business will have the necessary capital to keep the business running.

What is Factoring?

It refers to the selling of invoices to acquire working capital which in turn provides the business with the liquidity necessary for growth. Factoring offers a financial package that includes, working capital, protection from credit risk, bookkeeping of account receivables and collection services. A factoring company Australia will purchase account receivables from a business at a discount hence allowing the business to access capital instead of waiting for a month or two for a customer to pay for an invoice. A factor will buy invoices from the company, pay the business a portion of the account receivables immediately and clear the balance after collecting from the customers.

There are two major types of factoring:

  • Recourse: The factor is at liberty to demand that the client pays them if customers fail to pay for account receivables.
  • Nonrecourse: Here, the factor cannot demand payment even if customers will not pay.

The factor is highly dependent on the clients’ customers; therefore, it will take time to determine the creditworthiness of a new customer.

Factoring is not a loan, and that is what most business owners like about it. The owners are not borrowing money; hence there is no collateral involved. They get immediate cash and do not need any paperwork, unlike bank loans, which are also slow. Factoring, therefore, acts as an extensive line of money for the business.

Discovering Invoice Factoring Financing And Its Benefits

Businesses face financial struggles after starting up. That’s an inevitable thing that can happen to you especially if you are not an experienced entrepreneur. Rest assured that it’s a common thing for companies to undergo a lot of financial pressure during the course of their business. What’s not common is letting the financial pressure affect your business decisions badly. So, if you are currently under this type of situation, there’s something you can do. You can borrow money from banks and financial institutions or sell your receivables. Selling your receivables is called invoice factoring and it is a well-known method to finance a business. If you think this is the best way for your business to stand up, here’s what you need to know about invoice factoring and its benefits.

What is invoice factoring?

Invoice factoring is a factoring finance method wherein you will sell your accounts receivables to a third-party called the factor. Receivables are achieved when you sell your products and services to your customers. You exchange your goods for the amount they are going to pay in the future. Most of the time, vendors give terms to customers so they can enjoy discounts for paying the receivables early. For example, a vendor or your business will provide 2/10, n/30 terms for clients who will buy on account.

However, not all customers can pay early even with discounts. There are times that you will have to wait for more than 30 days just to get their payments. As someone who is continuously running a business, this can affect your cash flow and your overall business decisions. This is one main reason why companies are choosing to sell their accounts receivables in exchange for funds that they could have gotten from paying customers.

So, what are the benefits of invoice factoring financing?

First and foremost, it allows you to get the funds you need for your business. The main purpose of why you are selling your receivables is to get additional money to keep your business running. If you are going to use this factoring finance method, you’ll be able to get the amount you need in your hands.

Second, it reduces your hassle of asking your customers to pay. Invoice factoring is selling your accounts receivables to a factor. This means that you are transferring the responsibility of an AR owner. The factor becomes the owner of the receivables so he/she should be the one contacting your customers to pay. With this factoring method, you are going to save yourself a lot of time. Communicating with customers might take a while. You don’t have to worry about this anymore once you find the perfect factor.

Finally, invoice factoring will only cost you around 5-10% of the account receivable plus the factoring fee. If there are variances as to the amount collected, the money will be deposited back to you. Compared to the amount you are going to get, a 5-10% discount is not that big especially if you really need the funds for your business.