In this post I will summarise some methods SMEs can use to raise or save cash, including the use of single invoice finance.
Sell your invoices so get the cash in them sooner. There is a fee for this but compared to waiting 60 days or more, this is worthwhile for many SMEs. Single invoices can be sold for temporary cash shortages.
Single invoice finance is a recent form of factoring or invoice discounting. For example, Cash for Invoices Limited offers single invoice finance service that has a number of key differences to conventional factoring and invoice discounting facilities offered by banks: It does not force the SME into selling all its sales ledger, it can sell just one. There is no facility so no ongoing fees and arrangement fee. No security is required. All that is required is one fee plus a refundable retention (paid to the SME when the debtor pays the invoice.). It is simple, quick, and transparent. For details of Cash for Invoices Limited's single invoice finance service, click here.
Rent, don’t buy
Before incurring capital expenditure or other significant costs, consider renting the item to save the high capital outlay
Search your business areas for expenditures that do not need to be incurred or not as high as before.
See if you can delay paying your creditors. This must be handled with care and consideration. Keep an open dialogue because there might be occasions when they will allow an extension.
Do you really need so much stock?
It can be better to get the cash sooner even if you have to offer a discount to get the debtor to pay. You will also reduce the risk of not getting the payment at all or late.
Do you need to install an effective credit management system that gets cash owed by your debtors on time?
Are you are eligible?
Energy costs and renewable energy
Undertake a thorough review of your energy usage to identify areas and practices where energy can be saved.
Move to a lower tariff, or move to a cheaper type of energy. Do your own homework before you install that wind turbine or solar panel on the roof.
For overseas sales, invoice in GBP to avoid losses from currency movements. If that is not possible, consider currency insurance from a bank. Take independent advice beforehand to ensure you understand the insurance terms. Brexit triggered a massive decline in sterling that is likely to have significantly raised costs for many unprotected businesses
Start to forecast your expenditures and see whether you will have enough income to meet them. Being proactive is often less costly than reacting at short notice to cash emergencies.
What is single invoice finance?
Cash for Invoices Limited offers single invoice finance (sometimes called spot factoring or selective invoice finance) - a type of debt factoring that has key advantages over conventional debt factoring and invoice finance: