Managing Your Cashflow

7. New Funding

You need a solid financial base to underpin the cashflow of your business. Take full advantage of the different types of finance available.

7.1 Overdraft and loan finance may be limited by the security you can give the bank. (See Overdrafts and bank loans.)

7.2 Factoring allows you to raise finance based on the value of outstanding invoices. (See Factoring and invoice discounting.)

• Growing businesses in particular often find that factoring provides a more substantial and flexible source of working capital than overdrafts or loans.

7.3 Consider using asset finance to purchase computers, vehicles, plant and machinery. (See Financing equipment.)

• For example, both hire purchase and leasing allow you to spread the cost of the acquisition, with the asset itself providing the main security.

7.4 A strong financial base of equity finance (and directors' loans) is vital when a business starts up. Subsequent injections of equity finance can help you achieve step changes in the growth of the business. (See Venture capital and Business angels.)

• For example, if you need extra finance to buy another firm or open a new factory.