9. Put the right finance options and funding liquidity in place
If your business is seasonal or your cash flow is unsteady – for example, if you do most of your business around Christmas – you'll need to think about the best options for financing.
If you need fast access to cash from your customers, you can sell the debt to an invoice factoring company, who will then pay you 90% of the invoice value immediately. Once the customer has settled the invoice, the factoring company will pay you the remaining 10% less their fee.
You could choose to renegotiate your overdraft facility with your bank if you can see that your cash needs are short-term but if your forecast suggests a longer-term challenge, you could look at more structured forms of financing such as bank loans. Alternatively, trade loans or working capital loans may be available for companies that have significant trade flows. Trade loans are used to bridge the gap between the purchase of product and payment from the end customer.
By keeping a close eye on your cash flow, you can plan for potential shortfall periods and get better deals. If you unexpectedly run short of cash, it can be stressful and end up costing you a lot more to rectify.
Make better use of any surplus cash by putting it into interest-earning accounts to generate extra income. It's better than leaving a high balance in a non-interest-paying current account. Talk to your bank to find the best option available.
Managing your cash flow is a vital element of running a sustainable business. When the economic situation is fluctuating, leading to uncertainty and volatility in prices, all businesses, whether long-established or just starting out can benefit from advice, funding and support.
Creating an environmentally-friendly business can help the planet and also cut costs. Find out more about Green Finance from our specialist ESG and sustainability team.
