When business owners make plans to restructure the company or finances or have their sights set on business expansion, cash flow is often a major concern. Large purchases or expenditures when undertaken have the risk of causing cash flow challenges down the line before cash reserves stand a chance to be replenished. Payroll, liabilities and other critical expenditures have to be maintained to keep your business running - does your business have a contingency plan if it needs capital?
Most businesses are familiar with the most common cash flow solution, debt financing. However, the problem with traditional debt-based financing is that it actually increases the risk of a cash-flow shortage during a business expansion or when restructuring a company. Debt-based financing creates more liabilities by resulting in an additional payment to fulfill, having a negative effect on available cash flow. This makes it a less than ideal choice for financing an expansion or a restructure where cash flow is already a potential concern.
Alternative financing for businesses is a useful tool that allows for unlocking the value in key assets and create the capital necessary to help finance a business expansion or for restructuring a company. Alternative financing such as invoice discounting
and inventory finance
provide the ability to receive advances on expected income, ensuring your business has a steady cash flow despite late payments or other volatility during a cash shortage.
To summarize alternative financing solutions, here are the key features and benefits of inventory discounting and inventory finance:
- Invoice Discounting (ID) allows your funder to make available an agreed upon percentage of your invoices - daily, weekly or monthly depending on your business needs. This makes ID a flexible funding solution as you only use the funds you require and the funding line can grow as your business's sales grow.
- Inventory Finance allows businesses to use held inventory to generate cash flow. By unlocking value from held inventory, businesses can ensure regular cash flow even when unexpected circumstances delay operations or shipment.
When seeking out an alternative finance partner, search for one that has proven experience understanding the unique needs of businesses and has worked through the types of potential cash flow issues that you anticipate could impact your business. That way, when the need arises for expansion or restructuring you can be assured your business’s cash flow crisis can be readily resolved.
Bibby Financial Services (BFS) Canada has been partnering with Canadian companies for 21 years, focused on a relationship-based approach. BFS Canada doesn’t believe in ‘one-size-fits-all’ approaches and tailors every funding solution to the specific needs of your business. To learn more, contact us today.