Cash flow is the most important thing in your business – more important even than profit. If you imagine cash to be the blood cells of a business, then cash flow is the flow of blood, keeping the business alive.
A healthy person will quickly die without blood. And a healthy profitable business will quickly die if it runs out of cash.
There’s no rule that says you must open a separate business bank account when you start working as a sole trader. In theory, you could use your personal bank account to receive client payments, pay your suppliers, and handle other business-related transactions.
There are several different measurements that will provide you with insights into the health of your business. Profit is certainly one of them. However, even the world’s most profitable enterprises can experience financial difficulty if they ignore their cash flow. (more…)
If you’ve got a business headache right now, there’s a pretty good chance it’s to do with clients owing you money.
It’s almost as if the current economic shutdown (late 2020) has become a prime opportunity for anyone who fancies improving their own cash flow to help themselves to better credit terms from their suppliers… but without asking permission.
That has a knock-on effect right down the line. And it’s no wonder that small, cash-poor companies at the bottom of the chain are the ones that suffer the most.
Financial crises are not like your average recession or corporate fraud. They involve firms and people overborrowing, usually to speculate on shares or real estate. They turn legitimate economic booms into gluttonies of lazy assumptions, hucksterism, and recklessness. Because they’re based on debt, the loss of confidence in one specific area of trouble quickly reverberates. Presto, credit dries up for everybody. (more…)
When it comes to buying or selling a business, the most important question you need to ask is – how much is it worth?
There is no single formula that can be used to precisely value every private business. The seller will want to drive the price up, and potential buyers will want the opposite. (more…)
In this article, we look at the business banking options you have, depending on whether you are a sole trader (self-employed), or operating via a limited company.
If you’re doing well enough that your business is growing rapidly you would expect your finances to be healthy. But that isn’t always the case.
If your firm is expanding quickly, you could find that your cash flow becomes a problem, even though your business is profitable.
It’s a unique financial situation where you are selling so much that you can’t get the money in the door fast enough to pay for the raw materials you need for your next batch of products.
If a stranger walked up to you and asked to borrow £100 on the spot with a promise that you would be paid back in 30 days, would you oblige? Thought not!
What about repayment and the implications if it failed to materialise? Despite these obvious risks, many firms are expected to do business this way.
One of the most frustrating things you will come up against as a small business owner are bank charges.
Unlike personal banking, where we are used to paying only to have an overdraft, most business bank accounts have to be paid for. And the charges seem to keep coming whether you’re doing well or badly. The more you pay in, the more they charge you; meanwhile when times are bad you are more likely to be penalised for dipping into the red!
Here are a few simple ways to help you stay on top of bank charges and reduce the impact on your business.
Whether you’re starting a business, or taking it to the next level, the right finance can be a significant factor in driving growth.
Perhaps the growth of your business depends upon the purchase of new equipment to enable you to increase capacity, provide additional services, or win a particular new contract. In that case, asset finance could be the key to unlocking your growth potential. (more…)
There are lots of things to think about if you’re considering taking out a business loan. The UK’s business lending market includes a wide range of providers offering subtly different types of business loans.
If your business needs to borrow money, here are some of the key considerations you need to bear in mind when deciding which business loan is best for you. (more…)
One of the first things you will do when you set up a new business is to open a business bank account.
The easy thing to do is to use your personal bankers to act for your new business, but this isn’t necessarily the wisest move as there are significant differences between the services you will receive from the various high street banks.
Here’s some sound advice, together with some practical tips to help you get the most out of your bank, and choose the best business current account for your start-up, or small business. (more…)
Fundraising for your business is rarely a walk in the park. It’s a tough process, regardless of the industry you’re in, it can take up vast amounts of time, and more often than not, ends in failure.
Communicating effectively with investors will really boost your chances of success, so we asked funding expert, John Auckland, to reveal which buttons you need to press to get investors onboard. (more…)
When you need to find business funding fast, what are your options and what are the quickest ways for you to secure more finance?
We talk you through the most viable fast funding options for SMEs who need finance in a hurry, and include practical tips on how to ensure your funding application goes as swiftly and smoothly as possible. (more…)
Look around at the world’s many unpredictable events and it could not be clearer that our political, and social, tectonic plates are shifting.
Fueled by the digital revolution of young technology adoptees who are now reaching adulthood, it is unsurprising that the connected generation is favouring the peer-to-peer model over outdated intermediaries. (more…)
One of the biggest obstacles to growth for start-up businesses is investment. Investors are often reluctant to commit their money to a new business with a promising idea but no track record of success.
Fortunately the Government lent a helping hand in 2012, and introduced the Seed Enterprise Investment Scheme (SEIS) to help smaller, riskier companies attract investors willing to take a punt on a bright idea becoming a successful business. (more…)
If you’re looking to raise money, from either a bank loan or outside investors, a cash flow will be one of the financial forecasts that you will need to produce for prospective lenders and investors.
The Enterprise Investment Scheme (EIS) is designed to help smaller, risky businesses raise funding to fuel growth.
Early-stage businesses can find it difficult to secure investment, so the EIS was set up to encourage more investors to back fledgling businesses by offering generous tax-breaks.
To help you see whether the EIS could help you raise funding for your business, we asked award-winning chartered tax adviser, Jonathan Amponsah CTA FCCA to explain how it works. (more…)
A form of finance which is rapidly gaining popularity in the UK business market is bridging finance. Around £750 million was borrowed through the means of bridging in the year 2011, since then it has only gone up where in 2016, this number went up by £4 billion. (more…)
“Any time is a good time to start a company“, so said renowned American angel investor Ron Conway. That may be true, but how easy is it to find the necessary funding?
The answer largely depends on your understanding of how fundraising should be done. (more…)
Invoice finance is an umbrella term for two distinct forms of business funding called invoice discounting and invoice factoring.
It’s likely you’ll have heard of these alternative types of business finance before, but without knowing exactly how they work, you might dismiss them as just another financial product that you and your business don’t need. However, there are real benefits to these products, so here is what every business owner should know about invoice finance. (more…)
One of the big issues, when you’re taking on a new client, is whether you can trust them to pay you or not – so how best do you deal with this concern?
Some people charge a deposit or part-payment up front, but that can be off-putting to customers, who equally don’t know whether you’re trustworthy and might decide to go with a freelancer who doesn’t ask for payment upfront.
Cash is the lifeblood of any business. And in the first few years of your start-up, the ability to get cash into your bank account faster than it goes out again will be one of the main measures of whether it is a viable business.
While “entrepreneur” may occasionally be a euphemism for “out of work”, there are more and more individuals working in earnest to start a business of their own. Indeed, statistics show no fewer than 400 million such individuals globally, with over 2 million in the UK alone.
Most small businesses will, at some stage, seek funding or investment – for growth, starting up, or to see them through a transitional period (or a downturn). In this article, we look at the main sources of funding that are available.
Dealing with late payment can be tricky for small and medium-sized businesses. Handle it wrong and a customer could be lost, ignore the issue and it can stifle business growth, have a huge impact on cash flow and even cause a company to go bust.
Whilst mainstream finance is still great for some businesses, since the last recession, banks still have lending criteria that small businesses are unable to fulfill.
Fortunately, ‘alternative finance’ can offer a viable substitute for entrepreneurs looking for innovative and flexible ways to fund their business growth.
You may have heard the expression: ‘Revenue is vanity, profit is sanity and cash is reality’. If ever there was a philosophy which I passionately believe in, it is this.
However, there are three important financial measures, which we need to unpack in this expression. Let’s look at each of them in turn; (more…)
Business is a complicated old game sometimes. Just when you think you’ve got your head around one thing, you realise that there’s another rule you didn’t know about!
Here’s a good example. Did you know it’s possible to get your business into serious financial trouble by selling too much?
Most companies will face some kind of cash flow problem at some point. Temporary cash flow problems or financial squeezes usually arise out of matters that are outside of the immediate control of the directors, but when problems like this happen it’s vital you take the right steps and move quickly to ensure the issue doesn’t escalate.
Borrowing money from a bank to finance your business is a lot harder than getting a loan to buy a new car or to improve your home.
Banks have a number of tough rules that you need to know before you approach them for a business loan, and these rules have become even more stringent as a result of the credit crunch. (more…)
If you are looking to start a new business, there is a good chance that you will need some funding to get it off the ground.
Most businesses will have start-up costs, whether it’s securing premises, stock, equipment or hiring people, and they will all need paying for, so what options are there to fund a new business? (more…)
Understanding the numbers of your business is crucial to your success. If you have a grasp of key figures, and have an understanding of your business’ accounts you are more likely to make good business decisions.
While it may be tempting to ignore a mounting debt problem in your business, it is the worst thing you could do.
If your business is a limited company, there are many avenues open to you to resolve debt-related problems. So, where do you start?
If your customers do not pay you on time (or at all), then they are inflicting serious damage to your business.
It is something that is so often overlooked as ‘one of those things’ small businesses just have to put up with, but with the right approach you needn’t let your business succumb to this common problem.