A guide to funding your next level move …
One of the main things that I get asked about as a business growth accountant is funding. Business owners are often a little frightened of this subject, usually poorly informed and in most cases influenced by hope and expectation rather than facts and figures.
One of the major blind spots is shown by the statistic that most business owners only approach one lender when seeking finance. As with anything in business, the key to getting the best (not always the cheapest, but certainly the most relevant) funding solution is choice and market knowledge. In other words, what most business owners don’t know is that there is a wide range of funding options out there, depending on the requirements, circumstances and future potential of the business. You simply don’t know what you don’t know.
Here are some typical reasons that a business might need funding:
Asset Finance: Companies may need to access funding for the tools, equipment and machinery their businesses need, either as a start-up or for the next stage of their growth plans. To avoid upfront costs, they can spread the payments over a number of months, or simply lease the assets for as long as they are needed.
Invoice Finance: Cash flow is the fatal flaw in many business models and even companies that are profitable ‘on paper’ can sometimes fall foul of growing lists of unpaid invoices. One solution is to set up invoice financing, where a company can access immediate funding against invoices they have raised by advancing a percentage of receivables.
Merchant Cash Advance: If a business takes regular payments through a card reader, then they may be eligible for a merchant cash advance. This, often overlooked, option means that they can receive a lump sum payment, which is repaid each time they take a credit or debit card payment.
Trade Finance: This is a comprehensive solution which means that a company’s entire supply chain, from start to finish, can be financed. It works by the funding company purchasing stock from suppliers on their client’s behalf, with loans secured against all new purchase orders.
Working Capital Finance: In essence, this is like a general or multi-purpose business loan that can help clients to keep on top of everything and keep the pressure off the owners. These funds can be used for anything from staff wages and stock purchase through to utility bills and premises rental.
Property Finance: This kind of funding is useful for property developers and investors, or if a business is looking to buy their existing or new premises. These types of purchases are typically leveraged, and companies can access bridging loans or development and commercial finance.
With various types of financing available to businesses, and a multitude of funding companies out there, each with their own rates, rules and areas of expertise, it is hard to know where to start. Meades Group has recently partnered with a company that specialises in finding the perfect match for funding, with access to hundreds of funding companies and a unique software solution that narrows down the most relevant suppliers. Not only have we found their service to be excellent, Meades Group are certified to support you through the process.
Get in touch now to discuss your finance options.