How these 9 businesses conquered their cash flow challenges
When it comes to conquering cash flow challenges there isn’t a one size fits all solution.
Overcoming day-to-day cash pressures is a different proposition to keeping cash free to facilitate expansion. Likewise, complications caused by seasonal trading is different to having to make a large investment in new stock or plant and machinery.
Not only this, but what will work for one business might not work for another.
This doesn’t mean that options don’t exist, however. In fact, there has rarely been as much choice available to businesses to overcome different cash flow challenges, given the number of different products and lenders on the market.
The key is knowing which combination to select.
Here are some real examples from real businesses to show how different companies overcome different challenges and achieve their goals.
CHALLENGE: Sustaining rapid business growth
Growing a business is exciting but growing too quickly can cause some significant cash flow challenges.
A metal fabrication and engineering company who were experiencing substantial and sustained growth needed additional cash flow support when their overdraft could no longer keep up with the speed of their expansion.
To maintain and increase their impressive sales figures, they knew a funding solution that would grow with them was required, so they contacted Hilton-Baird Financial Solutions for help finding the best fit.
We got to know the business and then used our specialist knowledge of the market as a broker to introduce the client to a variety of suitable providers.
After assessing the options, the business chose a factoring facility with the funder they felt offered the best service and fee structure. With their new facility behind them they have been able to keep growing whilst keeping cash free.
CHALLENGE: Purchasing stock without tying up cash flow
Purchasing stock can have an undesirable impact on cash flow for any business, especially when that stock is imported from overseas.
A wholesaler of hair extensions was experiencing rapid business growth and required access to working capital to import stock to meet increased demand.
Whilst they had struggled to find a lender willing to look past their limited trading history and lack of confirmed purchase orders, with our help the company was able to secure a competitive £50,000 trade finance facility which has allowed them to increase stock levels and service all of their customers.
CHALLENGE: Bridging the cash flow gap caused by trading on credit terms
The upfront investment that’s required to fulfil large orders or offer long credit periods can considerably stretch cash flow. So, for companies that trade on credit terms, a steady flow of cash is vital for success.
A UK-based importer and wholesaler of batteries was growing nicely but, with clients expecting 30-45-day credit terms and VAT on stock due on arrival to the UK, insufficient working capital was stalling their expansion.
So the business approached us in search of a funding facility that would provide constant access to cash and outsourced credit control.
With our help the company secured a recourse factoring facility which improved cash flow, provided additional support through a sales ledger management service and allowed the business to go from strength to strength.
CHALLENGE: Raising funds to pay staff and suppliers
When cash flow problems arise, pressure can come in many forms. One of those biggest pressures is the need to pay staff wages and other bills on time.
An IT and software consultancy approached us for help when a delay in funds coming in from an investment round meant they wouldn’t be able to meet month-end payroll and general creditor deadlines.
Understanding the severity of the situation we used our team’s expertise and knowledge of loan providers’ lending criteria to quickly introduce the right lender and ensure the funds could be accessed in time.
Within just five working days the client accessed a £200,000 business loan at a competitive rate. This allowed them to pay their staff and other suppliers on time and avoid any late payment charges.
CHALLENGE: Funding expansion
Whatever the size of your business, scaling up can require significant investment.
A business which was already established in the logistics and supply chain management sectors was keen to expand into haulage and pallet distribution and needed appropriate funding to support this.
With our help they were able to secure a flexible funding facility that could grow with their business and allow them to achieve their goal.
Having this facility in place has provided the business with the cash flow needed to expand the business and increase their turnover.
CHALLENGE: Overcoming extended credit terms
When it comes to common causes of cash flow problems, extended credit terms and late payment is currently one of the biggest issues.
Without money coming in you may not be able to meet your own commitments such as paying suppliers or employees.
For example, this newly established temporary recruitment business was on target to turn over £250,000 in their first year.
However, as a new business with limited reserves, paying weekly salaries whilst offering clients credit terms of 30-60 days was proving challenging.
With our help the company was able to secure a payroll finance facility which not only boosted their cash flow to cover the gap, but also gave the business additional support – with the funder also providing back office support.
CHALLENGE: Overcoming seasonal trading patterns
Many businesses experience seasonal highs and lows throughout the year. But, without the right cash flow support, these seasonal imbalances can cause businesses to feel the financial impact.
A wholesaler of fishing tackle required a funding boost to be able to purchase next season’s stock, but their direct application wasn’t successful as they’d approached a lender who wasn’t comfortable with seasonal trade.
With our extensive knowledge of the funding market and access to a multitude of lenders, we were able to introduce the business to a variety of funders who understood the dynamics of their seasonal business.
Equipped with their new funding facility, the company was then able to buy stock for the season ahead and move their business forward.
CHALLENGE: Purchasing commercial property
Buying commercial property can be expensive and it usually ties up a large portion of a business’s cash flow. While commercial mortgages are available, the process can be complicated and a large deposit, typically around 30% of the property’s value, is usually required.
A Scottish retailer thought they’d have to give up their prime location when their landlord announced the sale of their property and they didn’t have enough cash to put towards a deposit for a commercial mortgage.
The business feared they would have to move premises and deal with the upheaval that it would bring to their business.
But, with our help, they were able to quickly secure a sale and leaseback facility which meant they could continue trading from the same address.
CHALLENGE: Financing large orders
Large orders often demand substantial upfront resource and, without careful financial management, fulfilling them could pose significant challenges to even the strongest of companies.
A maintenance solutions company approached us for help finding a solution to facilitate large capital outlay to satisfy a new and significant order.
After reviewing the business’s needs and the suitability of the various available options, we helped them secure a spot factoring facility which was tailored to their needs and supported their ability to meet the expectations of a new customer quickly, without being tied into an ongoing agreement.
Could we help your business too?
As an independent commercial finance broker with more than 20 years’ experience, we have helped thousands of businesses to conquer their cash flow challenges by introducing the most suitable funding solutions on the market.
We get to know our clients’ businesses, its goals and its challenges so that we can identify the most appropriate funding facility for their specific requirements.
To explore the best options for your business with one of our funding experts, call us on 0800 9774833 or request a call back.
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