Business Finance

Financing a your new business will be a challenge, particularly in the current economic climate, however without enough capital, a new business will shrivel and die very quickly.

The very next step is to know that you have enough money to support both yourself and your business.

Controlling your cashflow is crucial, especially in the early stages of your business

To really understand its role, think of cash on hand as a small business’ vital fluids – the more cash on hand it has, the more ‘liquid’ a small business becomes.

A favorable liquidity level means the business is able to settle the current portion of its obligations when they become due, thus allowing for smoother operations.

Good cash flow simply means the business is able to maintain adequate cash on hand.

Cash flow happens in two directions: inflow and outflow.

Cash inflow means the amount of cash coming into the business.

It occur when a business receives money from sales, collects invoices, receives interest, raises additional funds or sells a capital asset.

Cash outflow, on the other hand, is cash going in the opposite direction.

Pitfalls to Avoid

There are some things to remember to avoid

Do not attempt to get financing when your  credit is in a very poor place.

Take the year or so that it will take to tidy up your credit report.

This can save you money in the long run by making you eligible for better interest rates.

Also, do not get discouraged if a bank refuses to offer you financing or gives you an unsatisfactory interest rate.

Check with multiple lenders because each organisation will have its own criteria for analysing potential loans and lines of credit.

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