Cash Flow Finance
Nothing in the world beats cold hard cash and there isn’t a business out there that can operate without a steady influx of it. Sure, there are a variety of payment methods and financing options out there to enable a business to continue operating without handing out cash if necessary. We have various credit card options, banking credit and business account overdraft to mitigate a short periods of being cash poor. But when its not just a few days of negative cash on hand, when your ins don’t exceed your outs, this is where businesses can go from operational to closing time, for good. Depending on the kind of business, the amount needed and the options a business has there are a variety of financing options to become aware of.
This is one of the reasons a grocery owners need financial support, here are some others:
Invoice Financing – If a business deals with commercial type invoices and is in a dire need for cash, they can leverage these invoices at a higher interest rate to receive up to 85-90% of the value of the invoice before the customer settles it. This method allows for businesses to get on top of cash flow downturns and/or slow periods, such as seasonal purchasing, etc.
Merchant Cash Advance – When a retail business hits a low point within the fiscal period all sorts of challenges can occur as a result. When a retail business experiences cash flow problems it can cause issues in the long run that can be detrimental to the business operation. For example, if a company sells boutique clothing and shoes made by local designers and it can’t gather enough cash to satisfy outstanding invoices, it is very likely that these local designers will postpone deliveries of new inventory just because they can’t afford the financial risk. If that happens during the 3rd quarter in the calendar year, the business may not recover in time to stock the shelves for the busy 4th quarter ahead, thereby losing valuable business opportunity.
Bridge loans – Companies involved in real estate can often find themselves in cash shortage scenarios because of the volatile nature of the business. Bridge loans help bridge the gap between two <a title=”short term business loans” href=”http://www.ezbob.com/”>short term business loans</a> that aren’t aligning in a workable timetable. They are taken to specifically mitigate cash issues when cash is needed most during real estate transactions, such as seed money for a down payment.
Asset Financing – Collateralized loans are one of the less expensive loans to take but it requires two very important things: Assets of value and good, longstanding credit. If you have both this is one of the most financially sound methods to get cash.
2nd Chance financing – You see this happen a lot when small business owners need money for their business and only have an existing mortgage with equity to work with. A refinanced mortgage can bring the necessary stipend of cash to help a business owner through tough times. Of course taking a loan of this nature personalizes the risk, putting the onus on the homeowner.
So there you have it. Cash flow needs happen as often as strong revenue periods. The key for any business manager is how to work through those downturns by using the best tools out there to help mitigate. By doing your research you can find the right pathway for you business.