Every day I speak with business owners about their financing needs. Often they are comparing our facilities with a bank overdraft or sometimes it is because they have already been declined additional funding by their bank. For too long SME’s have been held hostage by the banks because most banks (and many other providers of working capital) fail to differentiate between a business owner’s personal assets and the true assets of the business.
This means business owners are under fire on all fronts. They must offer their personal assets, like their family home, as security for a business overdraft and yet they are charged interest rates which should be reserved for riskier unsecured loans.
We encourage all business owners and managers to compare our fees to bank lending costs. Try our funding calculator to see if your business really is getting the best deal.
Because banks have not been efficiently utilising all the available business assets of those seeking working capital funding there has been a proliferation of facility providers (including some banks) offering very expensive solutions (sometimes in excess of 50% pa).
Such rates belie the security that business assets offer and are generally unsustainable for ongoing business growth and prosperity. In some cases, particularly with the single invoice discounting solutions that are offered, the excessive costs seem unjustifiable.
Quite simply by not using your accounts receivable to fund your working capital you are:
- paying too much; and
- not getting access to as much funding as you possibly could; and
- providing too much security; and
- being fooled into thinking accounts receivable financing is a last resort when really it should be your first call.
We think SME’s deserve a better deal. Ask yourself, “would having a better idea of cash flow and working capital available to you help you prepare for whatever lies ahead”?
Here are some benefits to be gained from better cash flow management:
- reduced cost of finance and maximised borrowing capacity; and
- funding available so you’ll have to the ability to handle fluctuations in your day-to-day business needs; and
- with cash flow and debtor administration under control, you’ll actually spend less time managing your business’ finances and tasks such as reconciliations, collections and bank deposits. This can free up more time for you to devote to key accounts, customer service, and new business opportunities; and
- Improved cash flow can help you retain more of your hard-earned money in your business. You’ll have more opportunities to get supplier discounts, buy more stock etc. making your business more productive, competitive and profitable; and
- being less concerned with funding (and better rested) will allow you to concentrate on meeting the needs of your clients, employees and vendors.
Our clients say that we keep it simple, we're accessible and we respond quickly. Compare that with any bank; they typically require considerable documentation to support an application (business plans, past financials, projected cash flows etc.) and can take considerable time to process a request.
For more information on how CFF can help address your working capital needs please contact us today via 09 579 4204 or marty@cff.co.nz.
