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Can I get finance to improve my cash flow?

PUBLISHED ON: 25/10/2023

How to use commercial funding to boost your cash flow position

Cash flow is the lifeblood of any business so if your company is to fulfil its potential it’s crucial to keep a close eye on its cash position. Unfortunately, it doesn’t take much to disrupt cash flow – a higher than expected tax bill or the sudden loss of a key customer may be all it takes to start a downward financial spiral.

The good news is that you can get finance to improve your cash flow. A range of products exist that significantly improve your company’s cash situation and provide the stability you need for the short-term and the long-term.

What types of cash flow finance are available?

A range of different loans and alternative funding means you have options that provide a cash lump sum or a regular injection of working capital. Furthermore, alternative cash flow finance is generally flexible and faster to obtain than standard bank loans.

There are also choices that can be tailored to your type of business. Those with a strong sales ledger, for example, can benefit from invoice finance, whilst retailers might find merchant cash advances help them to function optimally.

How invoice finance improves cash flow

Factoring and invoice discounting support healthy cash flow using the value of unpaid invoices. If you operate a solid sales ledger and your customers have a good history of repayment, it will release the value locked inside your unpaid invoices.

This is because the financier releases around 90 per cent of the invoice amount, typically within around 24 hours. Their fee is then deducted from the remaining amount, which is paid as soon as your customer pays in full.

Merchant cash advances to boost working capital

If you operate a retail business and offer debit and credit card payments you can harness their value to release cash into your business. In this case, the financier makes an upfront payment that you repay over time using a pre-agreed percentage of your card sales.

If card sales are higher than expected the advance is repaid faster, but always at the agreed proportion of sales. Merchant cash advances can benefit retailers, but also hospitality businesses and trade-based business such as plumbing firms and electricians.

Asset refinancing for a cash lump sum

A cash lump sum can considerably improve cash flow and provide stability if your business is struggling to find the working capital it needs. Asset refinancing typically involves selling a valuable asset such as a piece of equipment or a vehicle to a financier and leasing it back using fixed payments.

The rights to use the asset are uninterrupted, and the regular payment schedule means you can budget easily. Furthermore, at the end of the leaseback period your company takes ownership of the asset once again.

These are just a selection of the potential funding options that could boost your cash flow. Our team at UK Business Finance can present your best options and are here to help you decide on the right type of finance for your business. Please get in touch to find out more.

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