How to raise finance to pay invoices on time
26/06/2018 / Comments 0
With late payment and rising business costs continuing to hit cash flows hard, paying suppliers’ invoices and business taxes such as VAT and PAYE on time is proving to be problematic for many. So, what do you do when your bills need paying but cash flow is tight?
Well, there are numerous finance options designed specifically to boost working capital to enable you to meet your commitments.
Here are three funding options to consider when you’re struggling to pay invoices on time.
1. Invoice finance
If you have lots of cash tied up in your sales ledger your business could benefit from an invoice finance solution.
Invoice finance allows you to release up to 90% of an invoice’s value within 24 hours of its issue.
The remainder is then passed across once payment is received from the customer, less the invoice finance company’s fees.
By bridging the cash flow gap between paying suppliers and getting paid, businesses can free up working capital to pay their own invoices on time.
It is also possible to fund single invoices rather than the entire sales ledger for a more immediate but temporary cash flow boost; for instance, those of a particularly high value or those supplied on longer-than-usual credit terms.
2. Business loans
Bank loans allow businesses to quickly access money that can be used for any business purpose. This is a good option when a business does not have any fundable assets.
Although bank lending figures aren’t as high as they once were, many lenders’ doors remain open, so a short-term loan could be the cash injection needed for you to pay your invoices on time.
3. Asset based lending
Cash flow can be a challenge for larger businesses, too. If your capital is tied up in a wide range of assets, you could use an asset based lending facility to release working capital to put towards paying your invoices on time.
Asset based lending typically has an invoice finance facility at its core, but also releases funding against a range of additional assets on the balance sheet, including property, plant, machinery and stock.
ABL is more flexible than loans or overdrafts as funding is secured against the value of your assets, and can provide larger businesses with comprehensive cash flow support that grows in line with your business.
As an independent commercial finance broker, we can help your business to secure the funding solutions needed to improve cash flow so that you can pay your bills and invoices on time.
We will listen to your specific challenges and requirements before using our extensive market knowledge to introduce the most suitable facilities for your needs.
Contact our team on 0800 9774833 or request a call back to see how we can help your business.