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How to handle a cash flow emergency

The recession has meant businesses, and their financial situations, have changed a lot over the last few years. Cash flow has become a major issue and can place a huge amount of pressure on the wider financial needs of a business—a lot of companies try to preserve their cash by paying invoices slower, but this then means that the smaller business doesn’t have enough cash to cover their own needs so then, in return, have to delay paying their own invoices, and so on and so forth. This cycle can affect everyone’s cash flow and in many cases can lead to a cash flow emergency, but if you’ve got contingency plans in place you’ll be able to handle such an emergency without it being disastrous.

Once upon a time the only real solution was to head to your bank, perhaps for a loan or business overdraft, but over the last few years these traditional forms of lending have been increasingly hard to source. This means if you’re stuck in a financial emergency your bank probably won’t be able to bail you out, but luckily there are alternatives—namely, factoring or invoice discounting. These are forms of asset-based finance and can offer a short-term cash injection to ensure your business can continue to run smoothly, and even if you’re facing a dire emergency you could get the funds you need to keep moving. They work by releasing up to 90% of an invoice’s value within 24 hours, meaning you don’t need to wait the 30, 60 or even 90 days for your clients to pay, giving you immediate cash flow that can get you out of difficulties.

Opting for invoice factoring or discounting means the cycle of delayed invoice payments is instantly stopped in its tracks so your business can continue to function, so if you’re facing a financial emergency make sure to get in touch and we could soon solve your problems.

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