My OperaCarlos Hank Rhon - Business Loans to Improve Cash Flow
Monday, January 14, 2013 9:17:29 PM
Not every business loan is intended to purchase new equipment or buildings, explains Carlos Hank Rhon. There are occasions when a company is looking to improve its cash flow and will consider securing a business loan to cover what is perhaps a short term situation.
This is not necessarily the result of anyone's poor fiscal management, explains Carlos Hank Rhon. It can happen that outstanding invoices have gone unpaid. While this does occur in business it can mean that a company is facing a shortfall, which can be particularly critical if it appears that payroll might not be met. The types of loans that may be considered cash flow related include revolving lines of credit or equity loans. These provide just-in-time funding so that not only payroll but also creditors are paid punctually. Other possibilities include invoice discounting, in which the lending institution will turn as much as 85% of the value of the sales invoice in the cash within a 24-hour period. As soon as the invoices are received, the lending company is repaid and whatever is left of the invoice, minus a service fee, is given to the borrowing company.
Business loans for cash flow are considered advantageous in the event of emergency but there is another reason to consider them. Depending on the market, sales can be up or down. If the particular company product is cyclical, it is conceivable that some additional time may be needed in order for sales to rise to acceptable levels. The cash flow loan essentially buys time for the sales, explains Carlos Hank Rhon. While not necessarily the most optimal way of financing, business loans for cash flow can prevent a temporary inconvenience from turning into a financial nightmare.
This is not necessarily the result of anyone's poor fiscal management, explains Carlos Hank Rhon. It can happen that outstanding invoices have gone unpaid. While this does occur in business it can mean that a company is facing a shortfall, which can be particularly critical if it appears that payroll might not be met. The types of loans that may be considered cash flow related include revolving lines of credit or equity loans. These provide just-in-time funding so that not only payroll but also creditors are paid punctually. Other possibilities include invoice discounting, in which the lending institution will turn as much as 85% of the value of the sales invoice in the cash within a 24-hour period. As soon as the invoices are received, the lending company is repaid and whatever is left of the invoice, minus a service fee, is given to the borrowing company.
Business loans for cash flow are considered advantageous in the event of emergency but there is another reason to consider them. Depending on the market, sales can be up or down. If the particular company product is cyclical, it is conceivable that some additional time may be needed in order for sales to rise to acceptable levels. The cash flow loan essentially buys time for the sales, explains Carlos Hank Rhon. While not necessarily the most optimal way of financing, business loans for cash flow can prevent a temporary inconvenience from turning into a financial nightmare.
