In the world of business, there is one simple truth that always prevails: cash is king. Having good cash flow places your business in a strong position to succeed, where other similar businesses would quickly wither and fail. To help a business improve its financial situation, cash flow financing is a common and rather beneficial solution.
What is cash flow finance exactly?
Cash flow finance is a unique way for a business to gain access to its expected cash flow ahead of time. It involves taking out a loan with private lenders that is backed by the outstanding receivable accounts that will be coming in. Instead of linking the line of credit to large physical assets, such as property, it is instead linked to money your business expects to receive shortly.
4 ways cash flow finance offers a competitive edge
Cash flow finance is arguably the best form of debt as it gives you the chance to access expected funds now, rather than needing to wait weeks or months. Here are 4 key ways in which this can offer a competitive advantage to your business:
1. Seize new opportunities
Spare cash flow provides businesses with a very desirable trait, agility. Agility means being able to spot new opportunities as they arise and act on them before anyone else. Cash flow finance could be the perfect way to invest in an idea immediately, rather than waiting weeks for invoices to clear. By that time, you could have missed the window and a competitor will have stepped in.
2. Investing in R&D
Business success comes down to seizing opportunities in the short run, but also preparing your company for success in the future. Investing in R&D for new products is critical to your business’s success in the long run but can only be accomplished with spare cash flow in the here and now.
3. Improved economies of scale
If you need money now to fund the next round of production then, let’s face it, the more money you have, the better. With a greater level of cash flow, you can purchase more resources than otherwise possible and access economies of scale. This will allow you to produce a cheaper cost per unit and maximise profits.
4. It provides added security
Having little cash in your business at any one time can be dangerous, especially if something unexpected happens in the market and you need quick access to capital. Well, choosing cash flow financing can help you improve your balance sheet in the here and now and give you added confidence that your company won’t be caught unaware.
If you have realised an opportunity in your industry, and are considering cash flow finance as a solution to your short-term financial issues, then you are in the right place. Here at GCC, we offer cash flow financing options to a number of business located all across Australia. We believe in supporting business owners and understand that, through our private lending initiatives, we offer a vital service.
To find out more, request a call back today.