9. Put the right finance options and funding liquidity in place
If your business is seasonal or your cash flow is unsteady – for example you are a retailer who does most business around Christmas – you'll need to think about the best ways of financing.
If you need to collect cash more quickly from your customers, you can sell the debt to an invoice factoring company who will pay you 90% of the invoice value immediately. Once the customer has settled this 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.
Keeping a close eye on your cash flow means you can plan for potential periods of shortfall and get the best deals possible. If your business unexpectedly runs short of cash, this can be stressful for all and end up costing you a lot more to rectify.
You can also consider using any surplus cash more effectively by putting it into interest-earning accounts to generate extra income rather 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 is a great way to help the planet and save costs at the same time. Find out more about Green Finance from our team of ESG and sustainability experts.
