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8 Strategies for Improving Cash Flow and Financing Growth

Did you know that over 85% of small businesses start and grow without outside financing? Unfortunately, however, longer term success is subject to risk simply because of a lack of financial management training.


To improve your knowledge and skills in this area, we introduce the following 8 Strategies focused on improving cash flow and securing financing for growth and other business objectives:

  1. Supplier Credit - the payment terms offered by vendors and suppliers to their customers. Finance growth by negotiating for longer payment terms. Improve profitability by negotiating for a discount when paid earlier than due date.
  2. Factoring - an alternative form of non-bank business financing where invoices are sold at a discount before they are due to a third party (a factor). Examples of factoring and other alternative approaches to financing are introduced below.
  3. Spot Factoring - is when you submit one (1) invoice to a finance company to borrow against. While this may improve short term cash flow needs, it can be more expensive than other options - 5% to 8% percent.
  4. Full-Service Factoring - is when you need to build working capital over time. The factoring company manages the receivables until they are paid and you will typically pay a discount fee of between 2% to 4% of the invoice.
  5. Accounts Receivable (A/R) Financing - is when you submit your invoices to an Accounts Receivable (A/R) financing company and they will professionally manage them for a set fee. The amount you can then borrow from them is calculated daily and an interest rate is applied on the monies you borrow.
  6. Purchase Order (P/O) Financing - is when your business has a valid purchase order from a financially solid customer, but you lack the funds to fill the order. With a track record for filling similar orders, you can work with a P/O financing company to secure advanced funds against the total purchase order value.
  7. Asset-Based Lending - refers to using all of your business assets to secure lending, such as Accounts Receivable (A/R), real estate and inventory. Under this arrangement, your objective is to secure a larger amount of working capital and typically for a longer term.
  8. Cash Management - Advancing knowledge, skills and business systems in areas of Credit Management, A/R Management and Collateral Management.

In summary, there are many valid options for improving cash flow and financing venture growth. The key is to know what they are, who to ask, who to trust and how to best utilize the most ideal solution for your specific business needs.

As always, if you have questions, feel free to AskBUZ. Thank you.

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