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As cost of goods and business expenses continue to rise, more and more businesses see themselves struggling with traditional overdrafts. However, there are a number of other avenues available to business owners requiring additional cashflow in a more cost-effective way.
From Invoice finance to Trade finance options, Synergy Business Finance’s Managing Director Marcus Barnard breaks down working capital finance options below.
Invoice Finance
Small and growing businesses suit both Invoice and Trade finance options, with neither requiring property as security.
Invoice finance utilises amounts due from customers to provide an injection of cash to operate immediately. Cash borrowed is repaid when the customer pays upon the invoice payable terms (i.e. 30, 60, 90 days).
“Invoice finance is a way to release cash that’s locked up in invoices, versus borrowing additional cash on a traditional overdraft structure” Synergy Business Finance Managing Director Marcus Barnard said.
“This option is great for businesses with slower cash payments due to invoice terms” Marcus added.
Trade Finance
While businesses with large upfront costs for raw materials, and delayed income due to time to manufacture goods, Trade finance can provide an option for these businesses to buy additional raw materials and convert them into goods over a specified period until the goods are sold and finance is repaid.
“Trade finance is where a third-party financier finances the payment of a customer’s supplier and then receives payment once the customers goods are produced and sold” Marcus said.
“Either of these funding structures are also great for clients requiring working capital, but all equity is tied up in inventory not property” Marcus added.
“While customers who need their property to secure other debts but need large working capital facilities to run their business can also benefit from either Invoice or Trade finance options” Marcus concluded.
To discuss either Finance or Trade Finance options and whether they would be applicable to your circumstances, feel free to contact our Synergy Business Finance team to book an appointment.
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