Cash Flow Planning and Business Funding

Funding for businesses will typically be a consideration at the start-up stage. It may also be an issue once the company is up and running either to smooth out cash flow peaks and troughs identified in your cash flow forecast or alternatively when unforeseen cash crisis issues arise.

The importance of cash flow planning becomes much more relevant now as you will find predicted or expected cash flow assistance much easier and generally less costly to obtain than what appears sudden knee-jerk requests for funding, after all to a potential investor or creditor if you have to look for crisis funding they will inevitably ask if you have control of your quick business funding and finances and who would want to lend or invest if they thought you didn’t.

So where could funding come from?

Own capital investment as an owner of the business you may be able to fund this yourself by your savings, investments releasing equity in a property or your salary from employment.

Friends or Friends or family may be in a financial position and willing to invest either a repayable loan or purchase a share of your business in exchange for some funding.

Banks or other financial Institutions lend to businesses if they think the business is viable and the likelihood of success is good for the business, don’t forget they will only lend if they think the chances of them getting their money back is good, no one wants to lend money they don’t think that they will ever get repaid.

Third Party Investors or venture capitalists are people and organisations who are financially able to invest money either as a repayable loan or purchase a share of your business, they are normally very cautious with their money and investments and will only invest in the business if the business and owner are professional have vision and a good chance of success.

Government grants or loans are available from time to time. Generally they expect such funding to result in the creation of new jobs some such funding may be based on geographical areas, business types and the criteria and availability will vary but its work an internet search to see what may be available.

Factoring (sometimes called invoice finance), if you meet the criteria of a factoring company the factoring company will advance you an agreed percentage of your invoices and they may then deal with collecting the money from your customers on your behalf.

Credit from suppliers may be available and if so this could be all you need to fund your cash flow requirements.

A Business plan and cash flow forecast will be vital if you are to obtain this kind of funding and you will really see the importance of such documents and the effort you have gone to in order to make them professional and well compiled.


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