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Cash Flow Management: A Business Essential

Successful small businesses all have one thing in common – careful management of their cash flow. It’s no use having great customer service, lots of sales, and a talented staff if your cash flow is always tight and tied up. Maintaining healthy cash flow is an issue that’s found in every sector and industry; whether or not your start up succeeds often has a lot to do with your cash flow management. If you’re struggling to keep up, then invoice finance could help.

Many businesses go under even though they’ve made lots of sales, just because they can’t meet tax bills or HMRC requirements due to a large amount of outstanding customer debt. Instead of waiting for customers to pay, which can stretch on for months, you could use your sales ledger as a valuable source of working capital. Invoice factoring can release the funds tied up in unpaid invoices, helping you to bridge the gap between issuing an invoice and receiving payment. You can get access to up to 90% of the invoice value within 24 hours, with the remaining 10% released on customer payment, minus a small lending fee.

Invoice finance is a flexible way to improve cash flow for a range of businesses. Start ups and small businesses can benefit from factoring, which includes an entire credit control system with the factoring lending taking on the responsibility of chasing customer payments. This can be useful for small businesses without a dedicated finance department or if they lack the infrastructure to have a well regimented invoicing procedure. Invoice discounting, on the other hand, is available to businesses with larger turnovers, and allows you to stay in control of chasing customers. Selective factoring is another option, so you can choose to either turn over all your invoices to the lender or you can factor only certain ones – this makes invoice finance a flexible solutions for cash flow for all sorts of businesses.

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