There are many reasons an SME business can suffer from short term cash flow issues. The good news is, however,there are plenty of solutions for such problems and most situations can be resolved quickly to put a company back on track.
Common causes of cash flow problems are things like seasonal fluctuations, important fixed asset purchases, unexpected bills and the late payment of invoices.
This issue of late payments can cause real concerns for SMEs, possibly leading to them not being able to purchase new supplies and materials, honour pipeline orders and, in the worst cases, can put the company out of business.
Seasonal fluctuations, such as the Christmas period, can cause its own issues as many SMEs see increased sales in the run up to Christmas but a big drop in sales afterwards. During the festive season companies may also need to bring in temporary staff to cope with demand and so face higher wage bills but their premises or offices are often closed for at least week with no income being generated. As other business partners and suppliers are also closed, it could be that more invoices are paid late too.
If problems start to occur it’s vital that businesses act promptly and get help to look at the best solution for their business. After all, you don’t want to choose the wrong type of finance or pay more than you need to over the term of the finance.
Most cases can be resolved with a cash injection and working with a good broker who can search the whole market for suitable finance solutions. Here at Key we’re constantly in touch with specialist lenders and we know their latest products geared to help SMEs over a cash flow blip.
Here are just some of the types of finance that can help:
• Invoice Finance– Offering either specific invoices, or your whole debtor book to a lender as security for a funding advance.
• Supply Chain Finance– Payments made directly to suppliers using the credit insurance limits available on your business.
• Peer to Peer Lending– A vast variety of unsecured and part secured finance and loans accessed via specialist web-based platforms.
• Revolving Credit Facilities – Similar to a bank overdraft, allowing a business to draw and repay amounts as and when they require.
• Short Term Loans– Either Secured or Unsecured, short term loans can be re paid over terms from a few weeks to a few years.
• Asset Finance – Funders lend against specific assets including ‘soft’ assets and fixtures and fittings, which carry negligible or no resale value.
We also see many clients reviewing their current funding arrangements at the same time of resolving their short term issues. They are keen to look at investing in their future growth, development and new initiatives to help ensure they have a clear path forward for a successful future by introducing new procedures, diversifying their offering or even taking the business in a new direction.
For more information regarding fast and flexible finance solutions for your business, please contact Key today.