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Cashflow Management

Category: General — Paul Morgan on January 9, 2013

For firms, effective cashflow management is extremely important. A firm with good cashflow can grow faster and be in a position to survive in a difficult trading environment. However, getting the flow of cash through a company in the right way is a challenge.

Planning is essential

Most firms plan their cashflow carefully. They understand the need to have cash available to buy raw materials, pay their bills and provide their workers with wages. For those firms, when things are running normally, there are relatively few problems with cashflow.

When the problems start

However, when something that is unplanned for happens, a company can quickly find itself struggling. Examples of this may include a large customer not paying a bill on time, or the cost of an essential raw material or power suddenly rising. At this point, a company can find itself short of cash, unable to pay its workers or buy raw materials to fulfil orders they already have on their books. Unless they get hold of cash, and fast, the company can quickly enter a downward spiral.

Sometimes, even positive events present firms with cashflow issues. A firm that has been offered a large order by a new customer may struggle to find the money to buy the raw materials and pay for the extra labour to complete that order.

Cashflow problems can stand in the way of a firm growing and prospering. It can also prevent a firm from taking advantage of opportunities for example buying out a struggling firm in their market, or picking up cheap used equipment and stock.

Firms with extra funds on tap are the ones that succeed the fastest. Cash is the lifeblood of business, giving firms the agility and flexibility needed to take advantage of opportunities as they arise and fulfil the expectations of the customers they already serve, making cashflow management vital.

Getting help with cashflow management

Most of the time, a short-term loan is all a company needs to get over cash flow issues. However, getting access to a short-term loan is far from easy. Most banks, building societies, and traditional financial institutions are not geared up to lend money on a short-term basis. The few that are often move slowly, frequently taking weeks to approve a loan, which is more or less useless in the modern business environment.

We can help

Over the years, Invoice Finance Scotland have helped thousands of firms with their cashflow management. We have lent companies money against their assets, including outstanding invoices, machinery, property, raw materials, and finished products. Our service is fast, flexible, relatively inexpensive, and suitable for practically any business.

'Disclaimer: The information contained in these articles is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.

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