How Trade Finance can Rescue your Cash Flow

How Trade Finance can Rescue your Cash Flow

Trade Finance to the rescue, as we have heard again and again that ‘Cash is King’.  But that analogy only really sinks in when you find yourself in that all-too-familiar cash crunch.  It can put your whole business at risk.

Unfortunately, this is a common cash flow problem faced by a lot of businesses.  They wait for their debtors to pay them, so that they can make good with their suppliers. In these situations you really are stuck between a rock and a hard place.

Not only are there obvious financial implications, but it can have a significant effect on your reputation in the market. Luckily, there are a number of alternative funding sources that you can take advantage of in these situations.  And in this article we’re going to focus on two in particular – trade finance and invoice finance.

This can affect future deals and partnerships that might come down the line.

Trade finance
Improve cash flow while preserving working capital

100% funding including deposit requirements

Utilise early payment discounts from suppliers

What is Trade Finance?

  • Trade finance is an alternative source of funding designed specifically for businesses trying to manage complex supply chain considerations.
  • Typically, you’ll get a revolving loan of sorts that offers much more generous payment options than your suppliers.  And you’ll also get built-in foreign exchange management to pay suppliers wherever they happen to be in the world.
  • This sort of financing means that your suppliers are paid immediately.  While you only have to manage one debt back to the financier themselves.
  • It helps directly with cash flow itself.  But it also simplifies operations so that you’re not chasing your tail all along a complex supply chain.
Supplier finance

What is Invoice Finance?

  • The financier will give you the money upfront at a slight discount.  That provider will then carry that timing difference and credit risk.  And when the time comes, they collect the invoice amount from the debtor when they pay.
  • This is a rather unique form of financing that can be extremely powerful when utilized in the right settings.
  • It’s been transformational when it comes to working capital solutions.  Here at Accrutus, we’ve seen so many clients over the years benefit from its flexibility and reliability.
When you enter into an invoice financing agreement, you are essentially selling off your customer invoices.

International Trade Finance
Accelerate business growth and strengthen relationships with local and international suppliers – without the cash flow challenges.

Powerful Trade Finance Methods

  • Instant pay-out.  The speed at which you can access your funds is probably the biggest advantage.  As long as you have an approved account and an acceptable invoice, you can have that money paid out to you in real-time.  This means that you can settle accounts with suppliers on time and keep your business going.  Thus, leveraging the time you’ve saved in the process.
  • Supplier bargaining.  Every supplier relationship relies on solid negotiation.  When you’re struggling to meet the deadlines, you find yourself in a very difficult position.  If you’re savvy, however, you can use debtor finance like this to get better deals on your purchases.  In addition, you can take advantage of early payment discounts, and much more.  All of this can greatly improve your operating leverage.
  • Shift the credit risk.  Imagine not having to convince a bank to supply working capital on the basis of your company credit record.  Instead, you can use the creditworthiness of your customers to back your application.  This is a big deal for companies that struggle to get traditional bank finance.  It gives them an outlet to fund their working capital.
  • Ad-hoc usage.  The very nature of invoice finance is that you can utilize it only when you need it.  This flexibility is worth its weight in gold because you aren’t tying yourself into any long-term contracts.  You can leverage it in an ad-hoc fashion.  All that matters is that you’ve got an invoice to use, and you’re off to the races!
  • Not shown on the balance sheet.  This form of financing doesn’t show overtly on the balance sheet.  This can be very useful when sharing financials with investors and other stakeholders.  It keeps things much cleaner and shows a more accurate view of the business.  It doesn’t let cash flow constraints hamstring the long-term outlook.

How best to use Trade Finance

  • As with all financing options, you need to determine if this is the right option for you.  Typically, working capital solutions should only be used to fund actual working capital gaps.
  • These are what you need to fill in order to continue smooth operation.  You shouldn’t think of this financing as a means to finance long-term investments or anything like that.
  • The more precise and focused your trade and invoice financing is, the more effective it’s going to be.  You want to use this cash flow finance as a tool to manage timing differences.
  • And this happens while you are looking at ways to solve the root cause of the crunch.  This is how you can leverage this alternative funding source to kickstart your company’s growth.
  • When you come to the table with that mindset, then these tools are phenomenally valuable.  And it’s why we’re so excited about them.

The Accrutus Cash Flow Solution

Here at Accrutus Capital, we have been offering trade and invoice finance to our clients for some time now.  It’s been incredibly rewarding to see how this alternative method has been so valuable for companies with cash flow constraints.

Working with us, you won’t get the same apathy that you might experience from a bank or another financial provider.  Because our interests are tied to yours, we want to do everything we can to help you grow your operations.  We genuinely care about our clients.

We focus on providing the most flexibility possible at an affordable price that doesn’t eat into your margins.  We also don’t require any security for this financing.  The trade invoices themselves serve as the collateral.  You simply won’t find an easier and more convenient way to solve your cash flow problems.

Accrutus Capital is committed to increasing awareness for SMEs providing this generic business cash flow checklist. We can advise on different trade finance options, saving you time and money.
contact Accrutus Capital

Call us today at 02 9006 1327 and speak to our trade finance specialist. Together we will devise a plan to help boost your cash flow with up to $5 million approved facility ready when you are.

Looking to fund your cash flow?

Trade Finance Loans $5 million

  • Set your own trading terms
  • Track and manage your supply chain
  • Tailored facilities from $100K to 5 million
  • Pay your international suppliers with market leading FX rates

DISCLAIMER

The disclaimer covers content, comments, responsibility, links, government and local laws, jurisdiction and communication methods. None of the contents on this website or blog should be construed as any kind of advice or recommendation. Nothing in it should be taken to constitute a statement that is intended to influence a person or persons in making a decision regarding any investment or financial product. This website or blog does not purport to be complete, accurate or contain all information which its users may require to make an informed assessment of whether to invest in any Offer listed through Accrutus Capital Pty Ltd.

Boost Business Cash Flow Checklist

Boost Business Cash Flow Checklist

The Business Cash Flow Checklist is a useful resource to independently evaluate the financial health of your company. There are many aspects to having a successful and profitable company. However, the single most important skill is mastering business cash flow as your company grows, because the #1 reason for business failure is insufficient cash.

If you want predictable cash flow in your business you’ve got to learn what to measure in order to get there. Otherwise, how will you know you have met your goals and level out the highs and lows when it comes to cash flow.

Break even points are another measurement that allows us to know when we have our bills covered monthly, importantly can you pay yourself.

Predictable business cash flow can ease a lot of stress and allow us to focus on other important operational areas. 

Is your cash flow management style chaotic?

Do you constantly seek out short-term business finance?

Is your business providing you the lifestyle you want?

Cash is King

  • Learn the small business principles of cash flow management by working through your own business cash flow checklist.
  • Review your internal sources to reduce stock levels, reduce overheads and watch out for theft and fraud.
  • Review your customer payment cycle, terms and overdue accounts and offer discounts for cash payment.
  • Develop a solid system to manage your suppliers and track the relationship.
  • Negotiate favourable payment terms such as paying by instalments or use interest free credit card cycles.
Boost Business Cash Flow Download
Most importantly make sure your business operates entirely for the purpose of providing you with a profit, not just a job.

Business Cash Flow Checklist Review

If you take a truthful critical review of your business, you will recognize gaps and potential negative traps on the realistic financial health of your company. Before you start, remind yourself WHY you started this company?

  • The journey to managing business cash flow is unlikely to be a smooth one. Along the way, there will be unforeseen expenses, costs blowouts and under performance of sales departments to meet projected budgets.
  • If you are a new business without 3 years trading history, traditional banks are unlikely to lend your money. The Business Cash Flow Checklist takes a independent first step approach, ensure you consult with a professional accountant to confirm the financial health of your company.
As the business grows, investment into technology upgrades will be required in order to stay competitive.

Business Cash Flow for Technology and Innovation

  • This can often be a major capital expenditure and if not planned appropriately in advance, can impact your business cash flow. This off-course is highly relevant to the type of business you operate.
  • How innovative is your industry sector in embracing new technology that could easily make your product or services redundant. Investment into a professional sales and accounting platform is essential to track and report on the cost and profitability of delivering your different products and services. Alternative sources of funding provide a solution to innovative companies seeking to raise capital.

Business cash flow success is closely aligned with the growth plans of the company, to ensure there is sufficient capital to implement its strategy.

Business Cash Flow for Strategic Growth 

  • For a new company the main focus is on building a solid revenue base while building up the profit margins.
  • For an established company the focus shifts to a more tactical or strategic plan to keep momentum, or to speed up growth through acquisition or mergers.
  • This is also a dangerous time for a company if it grows too quickly, where management and current systems may not be adequate. This could have a spiralling negative effect on customer satisfaction, quality control and ultimately revenues.

Temporary cash flow boosts from the ATO will support small and medium businesses and not-for-profit organisations during the economic downturn associated with COVID-19.

How to use the Business Cash Flow Checklist

  • Identify the critical cash flow areas of the business
  • Assess the management of your debtors and creditors
  • Quickly determine your company’s liquidity to better manage cash flow
  • Review your pricing and cost of goods or services to remain competitive
  • Understand your assets, liabilities, equity, and business cash flow before borrowing money
  • Use the Business Cash Flow Checklist as your building blocks to mastering money

Download 97 Money Mastery Questions

Boost Business Cash Flow Download

Accrutus Capital is committed to increasing awareness for SMEs providing this generic business cash flow checklist.

We can advise on different working capital finance options, saving you time and money.

contact Accrutus Capital

Call us today at 02 9006 1327 and speak to your finance specialist at Accrutus Capital. We might just be able to help boost your business cash flow with up to $1 million, with no security required.

Looking to fund your cash flow?

Unsecured Business Loans $700K

  • Purchase more supplies
  • Start a new contract
  • Grow your team and business

DISCLAIMER

The disclaimer covers content, comments, responsibility, links, government and local laws, jurisdiction and communication methods. None of the contents on this website or blog should be construed as any kind of advice or recommendation. Nothing in it should be taken to constitute a statement that is intended to influence a person or persons in making a decision regarding any investment or financial product. This website or blog does not purport to be complete, accurate or contain all information which its users may require to make an informed assessment of whether to invest in any Offer listed through Accrutus Capital Pty Ltd.

How to use Invoice Finance for Growth

How to use Invoice Finance for Growth

Invoice finance is a business funding solution that helps to provide cash flow for growing businesses in an easy and affordable way. If preparing for a busy time of year or securing cash flow to take on new projects, then invoice finance is an ideal solution for growing businesses. Cash flow finance or accounts receivable funding is an unsecured cash advance that you receive against outstanding invoices.

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Cash flow Management

Cash flow Management

Cash flow management is essential to small business finance requirements to provide continuity of trading and that it has sufficient funds to meet daily expenses and any debt payments due. The management of working capital involves managing these 4 aspects of the company’s operations. (more…)