With Secretary of State for International Trade, Liam Fox recently contradicting Prime Minister Theresa May’s tough stance on Brexit, by stating that ‘a deal is better than no deal’, it is obvious that the UK’s relationship with the EU after Brexit is extremely uncertain.
Logically, business owners and entrepreneurs will be concerned as to how the new regulations imposed after 29th March 2019 will affect them.
In this article, we’ll suggest a few methods of handling business-related financial problems, should the new deal with the EU begin to cause issues for the financial position of your company.
Business loans
Loans can be useful to grow the business, or to weather cash flow problems such as those that may come up with Brexit. Sometimes in business it’s impossible to plan for everything, and a loan can help you navigate a storm.
If a sudden payment is required that is more than you can afford at that particular point, a business loan could be extremely useful. Read this article here to find out more about taking out a small business loan.
Revolving credit facilities
Using a revolving credit facility is comparable to having an overdraft. An amount of credit is approved by the lender and this can be used as and when the business requires it. When it is used you pay interest only on the money that you have borrowed.
Although interest rates are slightly higher than a standard business loan, this financing option will provide a safety net for the business. It’s a worthwhile buffer zone to explore.
Trade finance
If your business orders goods of any sort, trade finance can be extremely useful. Essentially, once you confirm orders with a supplier, your lender will pay the bill. The invoices you create, when customers then purchase these goods from your business, are then used to pay the lender.
This financing type would be very useful to allow the continuous supply of goods to your customers even if the cash flow is not in your favour.
Invoice finance
Invoice finance is where a lender will pay the sum of the money owed to you by your customers. In exchange, they ‘chase’ the invoice. Usually, you only do this with invoices which aren’t being paid, or in the event that you need the payment to do the work (a cash flow problem).
Since invoice periods can vary greatly, sometimes up to 90 days, this type of finance would allow your business to continue functioning, and for you to keep up with handling all of your business’ admin related needs, without having to wait for the cash to return to your business. However, if you use a cloud accounting system which can handle the invoice administration, you should only ever need to consider invoice financing for stop-gap cash flow needs.
No matter how sound your business plan is, financial difficulties can always be just around the corner. Especially with the new Brexit deal looming, it has never been more important to be prepared.
Have you used any of these financing methods? Are there any we’ve missed? Let us know and comment below.