Start your cash flow projection by adding cash on hand at the beginning of the period with other cash to be received from various sources.
If companies got paid for sales the instant they made them, cash flow would never be a problem. Unfortunately, that doesn’t happen, but business owners can still improve cash flow by managing receivables. Tracking down the cash they are owed has become a challenge for an increasing number of business owners.
The standard process is to improve the speed with which you turn materials and supplies into products, inventory into receivables, and receivables into cash. When this can’t be achieved, funding methods such as Invoice Discounting can help speed the process up by unlocking the cash tied up in outstanding receivables. Freeing up the cash then allows your company to operate on as normal with no delays.
Consider Using Invoice Discounting
Getting paid is always a concern for business owners. But the longer the tough times drag on, the more thinly stretched business owners and their customers become, and the more urgent the need to get paid becomes.
Invoice Discounting is a financial service that can pay you today for receivables you may not otherwise be able to collect on for weeks or months. At companies such as Populous World, you can receive as much as 95 percent of the value of your receivables. By adopting this form of funding, you’ll eliminate the hassle of chasing customers for payment and be able to fund current operations without borrowing.
Here are 5 reasons your business should use Invoice Discounting:
1. Speeds up the Working Capital Cycle
With invoice discounting, cash that has been locked in unpaid invoices can be freed up quickly the liquid cash to keep the business operating.
It can be particularly useful for small to medium businesses with a small number of customers who pay larger value invoices – in these cases, the late payment of a single customer invoice can pose risk to the overall health of the company.
2. No Need to Inform Customers
Since many businesses are concerned that disclosing the need for invoice finance may knock confidence in the brand. However, unlike invoice factoring, invoice discounting is confidential and does not have to alert customers to the fact you’re using an invoice finance provider.
3. Your Business Retains Control
With invoice discounting, it is the business that retains control over the sales ledger. Continuing to collect payments and chase invoices as normal, this type of finance does not affect the relationship between the business and the customer anyway.
4. Only Pay Interest on the Money that you Borrow
Invoice factoring often imposes a stricter interest on money borrowed. For many businesses, invoice discounting, therefore, offers a cost-saving option over other forms of invoice finance.
5. Allows You to Pay Suppliers Early
Since many businesses hampered by restricted cash flow and paying their own suppliers late, invoice discounting makes it easier to pay suppliers faster and possibly to negotiate early payment discounts as a result.
>> Is your business in need of fast, short-term financing? Do you need to access cash faster than your customers pay you?
Populous World is an Invoice Finance provider that unlocks working capital for UK businesses.
Bridging your business’s cash flow gap is something that Populous World excels in delivering, providing you with the funding tools to grow and sustain your business.