As the saying goes, Cash is king. This is a reality when your business develops from a small to a medium size business where you have to absorb 30-day terms to your clients without obtaining credit from your suppliers. This is when most businesses look for funding to assist in this growing phase.

Finding the right finance injection is never an easy task as there is a lot of red tape or not enough trading history or assets to warrant a capital injection from the bank or even an overdraft.

Here is some advice on how to secure and get the right funding for your business and ensure your business cash flow.

Take the financial pulse of your business

Just as a doctor can tell a lot about a patient’s current well-being just by taking the simple measurements of pulse, temperature, and blood pressure, it is critically important for every business to keep strict checks on the flow of its revenue. How much is coming in and from where, and how much is going out and for what purpose? It may sound like a very basic piece of advice, but it is crucial for monitoring your finances. You can use do-it-yourself financial software to keep track of your company’s finances but hiring a business accountant may be the best step to take.

Trim down your expenses

This tip takes a page right from common medical advice, and from household budgeting. Eating less and trimming down is likely advantageous for most people and spending less than you earn has saved many a household and business from going belly up. While boosting your sales is one way to make more money, an equally tried-and-true method is to reduce your spending. As an example, plan on upgrading old equipment, rather than buying new.

Look around to ensure that you are working with the suppliers who are offering the best deals. If you’re not, make the change even if it makes you a little uncomfortable. Also, don’t be afraid to negotiate with your long-time product merchants. You never know, they might lower their prices if they have reason to believe you will bail on them in favour of their competition.

Run a tight ship when it comes to invoices

A person who has poor eating, exercising, and hygiene habits isn’t in a strong, healthy state. Taking care of your body is important. You can apply this principle to your business’s financial health, too. Sloppy invoicing habits can lead to lost profits and tense relationships between you and your customers. To avoid this pitfall, engage in good invoicing practices. Be totally clear and transparent about pricing, covering every aspect thoroughly and asking questions to ensure that you are being understood.

Credit check your new customers and ask for a deposit when a customer makes the order. When billing time rolls around, send the invoice on time, and ask for acknowledgement that it has been received. Hire a specific person to monitor and chase down unpaid bills and consider charging late fees to motivate your clients to pay on time. Take pains to make your invoices clear and detailed so everyone involved can understand them.

Cash Injections

When all the other checks of the of business have been put in place, it could be time to source funding. First step is to understand exactly what you require. Is it funding to buy raw material upfront to supply customers or has the service been rendered and the business requires faster payment from your client to service the next orders? Always look at the margin you are running on the service or products that you provide. The finance costs of the funding will directly impact the bottom line, and this might put the business in a loss situation. If the option is to acquire funding upfront go look in the market for facilities called: Trade finance’ Structured finance’ Term loans or revolving loans. These are typical finance models that provides capital upfront with the repayment over a couple of months. Normally over 12 months. You would normally only pay the interest every month with a bullet payment at the end of the term. This is great for turning over the capital and making the required sales and profit to pay back the funding.