Economic Downturn Protection
Some time ago we predicted a downturn in the economy and things seem to be getting tougher.
The widely publicised "credit crunch" appears to have impacted the ability of individuals to borrow and the postal strike is adding to the woes of small businesses that aren't getting paid on time.
Its not too late to protect your business against any further economic downturn.
Previously we published a list of useful tips to help any business protect itself against the effects of an economic slowdown but I wanted to focus on the issues that are currently affecting businesses cash flow.
Below are several of the key problems we have come across recently and how invoice finance is able to help you avoid the same issues:
"My customer's cheques haven't turned up because of the postal strike" - we have heard this numerous times lately. The postal strike has meant that we have seen payments taking up to two weeks to arrive in the post. Invoice Finance means that you receive the payment from the invoice finance company immediately you raise the invoice. You can upload the invoice electronically (avoiding the post) and you can be paid electronically, straight into your bank account by BACS or CHAPS transfer.
"My customer has gone into liquidation without paying me" - in any downturn this will become more prevalent. Invoice Finance has an optional add on option of bad debt protection. New customers are checked by the invoice finance company to confirm they are credit worthy and you are given a credit limit up to which you can trade with the customer knowing that you won't suffer a bad debt.
"My order book has slowed down" - invoice finance can release the cash that is tied up in your outstanding sales invoices and you can use that for any purpose. For instance in additional marketing activities. Similarly, you don't have to ever turn orders away because you can't see how you will be able to fund the raw material or wages to undertake the job.
"It is becoming harder to get personal credit through loans and credit cards" - some time ago we ran an article highlighting the amount of personal credit card borrowing that was being used to fund businesses in the UK. We have heard numerous reports that banks are tightening their belts and being more cautious about how they lend. Fortunately, invoice finance is based on the strength of your outstanding invoices rather than the state of your finances or your personal finances. Hence, it is still readily available.
"I had problems paying my staff last month because of outstanding sales invoices" - there are two possible benefits here. Firstly, factoring includes help collecting in outstanding sales invoices but even the invoice discounting option will free up the cash in your outstanding sales invoices for you to use to pay your staff or suppliers.
If any of the above sound familiar there might be some comfort to be gained from having an invoice finance facility that your business can fall back on. It is a common misconception that you have to draw all of the funding, you don't, you only need take what you need.
