This is a guest post. Enjoy!
Most businesses start off small, with a good idea that the proprietor has, or perhaps they take over their parents’ business, or even one that they work in. And while trundling along at a steady pace is satisfying for some people, others what to kick start things and really get some momentum going. That generally involves an injection of cash, to take the business in a new direction, or perhaps just to advertise or improve search in an effort to reach more potential customers.
But where do you find cash today, especially when we hear so often that the banks aren’t lending?
Well, first up, let’s question whether that is actually the case.
The banks have had their fingers burnt by some of their own careless lending during the more excessive years of the past decade and they are now being more cautious. On the other hand though they are also being actively encouraged by the government to help get the country back on its feet. The business secretary, Vice Cable is on the case of all the banks that are not lending. It is worth having a meeting with your bank, especially if you have been with them for some time.
While you’re at the bank, ask them to talk through the different options that might be available to you. You might find that while lending is the obvious solution, it might not be the best. If you are in business already and have a valuable book of creditors, that is customers who owe you money, then it might be that your business problem is just getting the money that you’re owed into your account quicker.
A potential way of accessing what you’re owed before your customers get around to paying up is through invoice finance. You can often arrange an invoice finance contract through the bank itself, but you’ll probably prefer to talk to an independent IF broker like Touch Financial so that you can find the best deal, spread your risks, and can keep some things to yourself.
Invoice finance makes your book of creditors work harder for you. You send your invoices to the company and they will immediately pay you a high percentage of the face value. What generally happens is that the company then collects the debt on your behalf and then either pays you the remaining sum and you pay an interest charge, or they’ll pay the majority, retaining a small percentage as a fee. If you’d prefer to keep control of your sales ledger you may find that confidential invoice discounting is for you.
If you know that your business is viable but you just want to move it along a bit faster then it may well be worth discussing your options with a business adviser. The better ones have great contacts and will know who to speak to according to your business’s particular needs. They may even help you to arrange the funds you require from your own bank, but by taking a different approach they may succeed where you haven’t been able to.
A lack of funds need not hold you back. But knowing the right approach is vital.