One of the most important parts of running a business effectively is making sure that capital is available to meet obligations and fund opportunities for growth. However, the needs of every small business are different and there is no ‘one size fits all’ approach to solving cash flow issues. Access to good advice and having a strategic financial plan for your business in place is key and can mean the difference between failure and long-term success.
The difference between a business loan and having an invoice finance facility
Quick access to a business loan or short-term finance may seem like a great solution to fill a gap in your budget. The injection of cash may help you deal immediately with a pressing obligation such as clearing a debt, the purchase of stock or equipment or hiring staff, but what then?
Put simply, a short- term business loan means you are taking on further debt. The likelihood is that the loan will have a high, fixed interest rate for the term, with repayments debited weekly or monthly. Another consideration is around short-term finance usually being sought quickly (in response to a pressing need) i.e. you may not have the opportunity to adjust your margins to accommodate higher fees – and find that your profits are impacted.
One of the key benefits of using invoice finance is that it gives you access to the funds from your own invoices faster – without taking on more debt. There are no monthly fees or lock in contracts so having a flexible invoice finance facility like Apricity ‘at call’ means you use it as much or as little as you need to.
A longer term prospect
A reliable invoice finance facility can have a stabilising effect on the cash flow of your business. Rather than being under the cloud of servicing a debt, you may find you are in better control of your financial situation and are in a position to say Yes instead of No to opportunities. Cash flow certainty is a real enabler to plan for the future.
What to do
In today’s market, it’s easy to be tempted to take on a loan but do you really want a fast solution to what can turn out to be a long-term problem? Fortunately, there are lots of independent sources that can give you advice when finance gets tight. Talk to a broker to gain an independent view and research your options to find a solution can help your business grow without being crippled by debt.
Find out more about how an Apricity Invoice Finance facility can help your business thrive and grow.
Head of Sales & Relationships NSW