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EOFY is a very stressful time for all business owners, big and small. Catching up with your accounts and settling debts is worsened during tax time due to deadline pressures. To help get on top of your accounts by EOFY, Swoop recommends utilizing these 5 funding products. These funding types can come from different sources. Before you utilize these funds, you should have a clear outline on how you plan to use the money.
1. Invoice
Invoice finance is a method of borrowing money that is based on what your customers owe to your business. This works by utilizing unpaid invoices as a representation of the money that will be paid to you. This cuts off the usual wait time for the payment terms.
Invoice factoring can be a great idea for businesses that want to release money from invoices more quickly, improve overall cash flow and even spend less time chasing late payments at EOFY. The biggest risk when using invoice finance is that businesses can become too dependent on it. Also, if your customers are not paying on time, the costs that you can incur can be very high.
2. Merchant Cash Advance
Another finance option you can take is a merchant cash advance. This is a great alternative funding option to a traditional business loan. Merchant cash advance providers do not term this financing product as technically a loan. MCA providers will give you capital upfront in exchange for a percent of your future sales.
Even though a Merchant Cash Advance can be a quick way to raise cash for your business, it can cost a lot in the future. Speak to a Swoop funding manager to understand your options better.
3. Traditional Loans
Traditional loans can be obtained from a bank, acquaintances, or an investor. Loans obtained from support organizations and investors generally do not require a personal guarantee. On the other hand, a bank loan will require a form of security.
The general rule of thumb is to be extra careful when taking out loans that include personal guarantees. This can cause extra stress and a lot of grief if the company fails to deliver.
4. Crowdfunding
Crowdfunding is another alternative funding type that can help you set up for a successful EOFY. Crowdfunding is a form of financing option where a startup company is funded by a large number of individuals. If you are in need of a quick injection and do not mind sharing the % of profits with investors, this could be worth an option.
5. Other ways to boost cashflow
Think about other ways to cushion your cash flow and boost your working capital. You might already have one or more of these in place, but consider the following:
- revolving credit line (even if you don’t need it right now, a line of credit is an easy way to delay cash flow problems. Think of it as an insurance policy. You might be able to get a line of credit using your accounts receivable or your inventory as collateral)
- business overdraft (if you need cash quickly or you want a safety net to use when you really need it)
- short-term or medium-term business loan (e.g working capital loan)
- trade finance (if you’re dealing with international buyers and suppliers)
- asset refinance (sale and leaseback)
- purchase order finance (if you are a product distributor or reseller and need an advance to fulfil a specific order)
- R&D tax credit loan
You can discover your funding options at Swoop. Swoop simplifies and speeds up the funding process, matching businesses with the right funding opportunities tailored to your business needs. Simply sign up in less than 2 minutes and discover more!
Our team of experts at Swoop will be happy to explain the best way for you to go about funding your business. Get in touch today.
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