Finance August 18, 2014 Last updated January 11th, 2022 1,892 Reads share

How To Boost Cash Flow Through Alternative Finance

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Cash flow concerns keep many a company director awake at night and the process of juggling payments can put huge pressure on any financial situation. There are of course many different methods of solving these issues but it’s no secret that traditional routes to finance have in large part dried up entirely for small businesses in recent years.

As a result, alternative finance providers have seen demand for their services rising sharply as companies look to find new ways of accessing the funds they often need to survive.

Let’s take a look at some of the best alternative finance options currently available.

Asset refinancing

Value tied up in assets can be accessed in order to provide a business with a cash injection when they need it. The process of refinancing in this context essentially involves selling the rights to ownership of assets such as heavy machinery or a fleet of vehicles to a third party who then leases the equipment back to the company involved.

Clearly, it’s preferable for a company to own all of the equipment or machinery that underpin its operations but when cash flow is unbearably tight then asset refinancing presents a very real and reasonable alternative.

Invoice factoring and discounting

Other assets that a company can leverage in order to raise funds quickly include invoices. Waiting for payment of invoices can be not just frustrating for directors but actively damaging for company finances. What factoring and discounting offers is a means of accessing funds more immediately and a way of freeing up cash for short term reinvestment. There are costs involved in selling invoices but very often from a company perspective they are worth paying for immediate access to monies owed.

The distinction between invoice factoring and discounting is that with the latter a company retains control over its sales ledger and is required to deal with customers in relation to payments, whereas with factoring that is not the case. Invoice factoring can be of particular use to small businesses that are generally not well placed to spend time and resources chasing clients for payment.

Company growth loans

Company growth loans offer another means of accessing finance and freeing up funds. Criteria for successful application tends to be strict but, with the right business plan and a persuasive proposition, growth loans are accessible to companies across a wide range of sectors.

Finding routes to finance is as important today as it ever has been. For a variety of familiar reasons, major banks and traditional lenders have become less willing to lend to small or medium-sized companies but other players are stepping into gaps in the market. Alternative funding is already playing a very important role in helping businesses find the funds and the finance they need to stay afloat and ultimately to thrive as sustainable operations.

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Mark Halstead

Mark Halstead

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