Working Capital
No matter what type of business you're in at some stage , sometimes cash flow is tight. You may have over-expanded, ordered too much stock, not collected your debtors well or had an unexpected bill. It's vital you have a plan B for when you're up against it. We're here to help and ensure you don't find yourself in this position again. It's important you understand how you got in this position and what you can do to stop this recurring. We're happy to assist you in reviewing your cash flow and provided you have decent management information, should be able to ascertain what's happened to your cash flow and see where the problem lies. From there we can work on a solution for you.
Overdraft Facility
The most common facility you may already have or need is an Overdraft Facility. This facility is normally set by your banker after reviewing your cash flow forecast and enables you to temporarily dip into the "red" when needed. It's a convenient form of funding that's normally easy to organise and can be either a temporary or permanent facility. For convenience it's hard to beat. If you need one, then you'll need to provide a basic cash flow forecast which should be accompanied by a summary of your current debtors and creditors to show what bills you have to pay and what money you're expecting to receive that will eventually clear this facility.
Cash flow forecasts can help predict upcoming cash surpluses or shortages and help you to make the right decisions. It can help in tax preparation, planning new equipment purchases or identifying if you need to secure a small business loan. By including every case scenario in your cash flow forecast you will see how your business will cope if you hit tough times or do better than expected. Prior warning allows you to work out solutions to anticipated temporary cash shortfalls or arrange short-term investments for temporary cash flow surpluses. Be realistic though, as the banks don't tend to like increasing this facility in a short space of time if you underestimate your requirement. We've attached a cash flow template below for you to use if you don't have one to hand or your accountant will be happy to help you out with this if you prefer:
Cash flow forecasts can help predict upcoming cash surpluses or shortages and help you to make the right decisions. It can help in tax preparation, planning new equipment purchases or identifying if you need to secure a small business loan. By including every case scenario in your cash flow forecast you will see how your business will cope if you hit tough times or do better than expected. Prior warning allows you to work out solutions to anticipated temporary cash shortfalls or arrange short-term investments for temporary cash flow surpluses. Be realistic though, as the banks don't tend to like increasing this facility in a short space of time if you underestimate your requirement. We've attached a cash flow template below for you to use if you don't have one to hand or your accountant will be happy to help you out with this if you prefer:
| cashflow-forecast.xls |
Trade Loan
Another form of funding that may suit your business if you are importing stock is a Trade Loan. This is designed for importers but can also be used for payment of domestic suppliers too. It requires you sending the bank copies of your supplier's invoice which the bank will review alongside proof of shipment and then provide you with a loan for a set period of days typically from 90 to 180 days. The period will depend on how long it normally takes from when you pay the supplier to getting cash in from the end sale. The loan can be in currency or AU$, which will depend on how you are getting paid yourself.
It has the benefit that the loan is only available for stock purchases leaving your working capital or overdraft intact and purely for day to day expenditure. Because the purpose of the facility is clearly defined its often cheaper than using an overdraft facility.
We have access to a number of trade experts with the major banks who can discuss with you your current trading situation and how this facility could benefit you. This facility can also be incorporated with Letters of Credit facilities which can enable you to enjoy longer payment terms with your suppliers overseas. Please feel free to contact us to discuss your particular situation and how we can help you.
It has the benefit that the loan is only available for stock purchases leaving your working capital or overdraft intact and purely for day to day expenditure. Because the purpose of the facility is clearly defined its often cheaper than using an overdraft facility.
We have access to a number of trade experts with the major banks who can discuss with you your current trading situation and how this facility could benefit you. This facility can also be incorporated with Letters of Credit facilities which can enable you to enjoy longer payment terms with your suppliers overseas. Please feel free to contact us to discuss your particular situation and how we can help you.
