There is a famous quote that many business owners have heard that goes something like "Turnover is vanity, profit is sanity, cash is king”, but what does this actually mean?
In layman’s terms this means that although it is nice to brag about how many sales (turnover) a company makes, good turnover does not necessarily result in profit or cash. Even a business that has a healthy turnover and good profitability can still fail if they do not have access to ready cash when they need it.
A well known statistic is that 85% of businesses fail in the first 5 years and the most common reason is “lack of cash”. But it is not just new or small companies that can suffer cash flow problems, even large or established businesses can find themselves in trouble if they do not have enough cash to cover business essentials such as buying stock or raw materials, paying wages or covering VAT bills.
However, if you are a profitable business with a healthy turnover you can use these to help you get the finance you require. If you are looking for a Short-term loan to cover cash shortfalls then Cash flow finance is something you should consider.
Cash flow finance differs from Asset finance in that any loans are usually based on the expected cash flow of a company rather than the assets that they have. It is usually used when a company needs to get some financing in the short term rather than having to wait months for the loan to come through.
At Davies Finance we realise that effective cash flow is critical for the survival and growth of any business and we will endeavour to find the most appropriate form of cash flow finance for your business.
Ideally if you offer normal credit terms with no stage payments and have a good spread of debtors then factoring or invoice discounting may be best for you. But if you are looking for some specialised or niche financing that is industry specific then we can also help with Construction Finance, Recruitment Finance, New Start Business Finance or Trade or Export Finance.
Call us on 0845 077 9117 for more details.
