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What is Cashflow Finance?
Quite simply, cash flow finance is short-term finance that is used to help you cover the business’s day-to-day expenses by smoothing out your business’s cash flow.When you’re running a business, cash flow is often one of the most difficult things to manage.Because while your P&L may look pretty rosy come to the end of the financial year, the day-to-day reality is often somewhat different.The peaks and troughs of money coming into the business are very, very real – and they can cause significant issues for the day-to-day.Unfortunately, seasonal business fluctuations or late-paying clients don’t seem to care too much about your financial obligations.In fact, research frequently shows that cash flow – rather than unprofitability – is a major reason why Australian businesses go out of business.While businesses can implement steps to improve their cash flow management – for example, stipulating full or partial payment upfront, issuing tighter invoice terms, or moving people to debt collection more quickly – and introducing measures to smooth those seasonal ups and downs, that will only go so far.After all, there are still bills to pay, staff to employ, and inventory to buy.That’s where cash flow lending comes in.
