SME cashflow - how to save it or raise it - including using single invoice finance - part II20/4/2017
In this post I will summarise some more methods SMEs can use to raise cash. or to save cash, including the use of single invoice finance.
Sale and leaseback If your company owns valuable assets such as buildings, machinery, vehicles, then consider selling to release their cash value and then lease them back over time. The cash can be used in the business for essential items – such as paying VAT, salaries, and buying stock for an order. Retail bond A retail bond is a form of debt and can be for 1 year to over 5 years to maturity. It is not listed and there is no prospectus so costs are substantially lower (though still significant) than the bonds issued by the big companies. There’s no guarantee how much you will raise but it has proven a successful source for SMEs and it helps to market their brand and products. Unihousing, a Birmingham, property developer, issued a retail bond that I was a consultant on, raised over £800,000 in October 2015. At the time I said: “This is a great achievement for Unihousing – designing a bond that has successfully tapped new corporate and retail investor bases to fund modern student build-to-let properties. The bond structure provides flexibility and an attractive return with substantial security. We now have a great platform to launch further bonds for investors to invest in more of Unihousing’s student build-to-let projects.” Retail share offer Instead of a bond, shares can be offered also, though these can dilute your ownership in the business, but to avoid this, preference shares paying a fixed dividend and with no voting rights might be a solution. Joint venture In return for funds, you give up a share of your profits to your joint-venture partner Friends and Family Invite them to become shareholders or lenders in your business, but beware, relationships can become strained if they want a say in how your business is run. In part II I will summarise more methods, including single invoice finance - a recent form of factoring. For example, Cash for Invoices Limited offers single invoice finance 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. 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:
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