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Cash flow solutions

Avoid trading while insolvent: cash flow solutions

If you think your business may be insolvent, you must take action immediately.

Being insolvent means a business is unable to meet its financial commitments. It does not necessarily mean the business is in terminal decline. It’s not unusual for a growing business to run the risk of insolvency, simply because its financial structure can’t cope with the speed of expansion.

However, trading while short of cash will usually lead to serious problems if prompt action is not taken to improve the situation.

Often what’s required is a new injection of working capital. This cash could come through borrowing or outside investment, but these can be difficult to arrange at short notice.

The specialist team at Business Recovery often speaks with firms who are looking for innovative ways to improve their cash flow without getting into more debt. Here are the most popular ways of solving the problem.

Invoice factoring

If your cash flow difficulties would be solved by your customers paying their bills immediately, then invoice factoring could well be the answer that you are looking for.

Invoice factoring releases capital that would otherwise be locked away inside your sales ledger. Firms use factoring for a variety of purposes: to help them through the early stages of trading, to raise capital for an acquisition or investment in growth, or simply to cover a period of restricted cash flow.

Invoice factoring funders are increasingly flexible in the arrangements they permit, with many offering a rolling three-month agreement.

Invoice discounting

The main difference between invoice factoring and invoice discounting is where the responsibility for credit control lies. With invoice discounting, you remain in charge of chasing debts, while with factoring this passes to the funder.

Asset based lending

In the same way that invoice finance turns your sales ledger into a source of cash, so asset based lending unlocks the capital that’s tied up in your assets.

These could be land or buildings, plant or machinery, vehicles or computers. If they have a capital value, this can be converted into cash. You benefit by keeping the asset in use within your business, and also getting a lump sum payment.

Companies of all sizes, including large corporates, are taking advantage of asset based lending. It helps to solve cash flow problems and, more excitingly, the money can be put to work promoting business growth and generating more profits in the future.

Commercial mortgages

Bricks and mortar always have a value that can be turned into hard cash when the occasion demands. Even if you already have a mortgage in place, you may be able to replace it with one which offers better terms, or provides more capital.

Solve your cash flow problems with Business Recovery

Our commercial finance professionals have built a network of strong relationships with the leading lenders in the UK. They have worked with hundreds of firms looking for help with their cash flow, matching their individual circumstances with the most appropriate provider and product.

Let our experts help you. Our service costs you nothing and you can begin with a no-obligation call to discuss the options. Ring us now on 01451 832533