Marketing worked around the clock to fill your lead funnel. Sales closed the corporate you pitched for months. Factory delivered on time. Finance sent out the invoice. Your biggest customer loves your product so much, they just placed the biggest order yet! Growth is sweet.
But wait. How come the bank account is empty? Where’s the cash for new materials? How do we pay VAT on those sales? Is this really what growth is all about? Well, yes and no.
Growth can feel like this when you supply corporates. Buyers at large companies expect 30 or 60 days to pay you, which seems like no problem, right?
But here’s the thing. While you wait 30 or 60 days, your cash flow is literally trapped in your Debtors
Book, stuck in limbo, just waiting for the chance to become cash in your bank account 30 or 60 days later!
But business doesn’t wait. Materials to buy, staff salaries, SARS…. and to make matters really interesting, that big order is due next week (with penalties!) A fresh funding injection is urgently needed.
It is at this point that our clients frantically reach out for “a loan to buy materials”, “a loan to pay the bills”, “We urgently need a working capital loan!”
But is a loan really the best fix?
First off, a loan won’t fix a problem caused by giving customers 30 or 60 days to pay. Your payment terms are baked into your sales and they repeat every delivery. Putting an extra R100,000 into more materials simply means you wait 30 to 60 for the extra R100,000 too!
Secondly, you already have the key to your cash flow challenge. Neatly tucked away in your Balance Sheet is your “Accounts Receivable”, arguably the most valuable and liquid asset that your business owns; just that it’s dormant until your customers pay.
An experienced business cash flow partner, such as Growth Finance will assist you to release the cash trapped in your Debtor’s Book, so your Debtor’s Book becomes the cure for your Debtors Book!
Can you even imagine all the benefits of having running your business as if it is COD?
A cash flow partner will also finance your debtor’s book when you need to give your customer longer payment terms to convince them to grow their orders and because the funding Growth Finance provides is a % of your invoice value, your funding line grows as your invoicing grows.
A cash flow partner releases your own cash from your Debtors Book immediately. Could there be any smarter solution to your cash crunch?
Closing challenge: “What would you do if your biggest customer called you this morning to say they need to extend their payment terms to 60 days instead of 30?”
Ask Funding Hub about a cash flow partner to walk alongside your business.
Contact William Barrett 0795754552 or William@growthfinance.co.za
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