Short term funding options

[smo]

We're running out of cash....fast!

Its the end of the quiet season as christmas is when we make 80% of our money, we've moved to larger premises, purchased another company and equipment and all was looking good until today!

Our corporation tax is due shortly and it'll be another VAT return soon too, this combined with some unavoidable large invoices for which we don't get credit (printing the new catalogues etc.) its going to be rather tight.

We might not need any extra funds, but if we did what options are available to us, we've got a 20 year history of good trading and healthy profits and will be fine in a few months without doubt.

 

[Esk247]

Have a word with the bank about extending any overdraft facilities?

With the invoices are they 30 days net? pay on the 31st day?

Tighten everything right up, don't spend on anything that isn't a necessity for the business for the next few weeks.

 

[Scalloway]

I suspect that you will have to rely on your supplier's goodwill. I find that some are quite strict at chasing up their debts, some never seem to notice until a couple of months have gone by and some are amenable to letting you have a little longer to pay as a one off.

 

[smo]

I spoke to the bank and was quite surprised at the cost of arranging an overdraft, like most things relating to the banking sector it seems counter intuitive to have a large fee for sorting out an overdraft!

 

[blackberry1]

Hi

Smaller items stick on a credit card if you are in need as long as you can pay it off on TIME - It may just give you an extra 30 - 45 days.

 

[smo]

We have a credit card but things like corp tax and the big invoices we need to pay can only be done by BACS.

I had thought about taking a personal loan and putting that into the business but it just seems like a bad idea even though i'm 100% confident of this being just a few week blip.

 

[blackberry1]

Thought about factoring or do you get paid up front?

Have you spoken to the tax office or your accountant about the shortfall can you defer on some payments?

is this going to happen again next year at this time

sorry hard to help without knowing all your companies money matters which are of course private.

 

[CashManagement]

Have you thought about alternative lending, if you have a business you can show is worth the investment, how about Peer to Peer lending or Business Angels? Not always any cheaper than the bank but maybe an option to consider, have a look at www.fundingknight.com as an example.

Krs

Carolyn

 

[smo]

Factoring wont work as we are B2C so take money at point of order with the exception of a very few orders.

My accountant is due to call first thing tomorrow so i will see what he suggests but i suspect that an overdraft may be the best option.

 

[Billmccallum]

The credit card idea sounds like a good option if you can get 4 or 6 different cards.

assume a credit limited of £5,000. Max out one card to pay some bills. before the end of the month you use a second card to pay of the first, means no interest (assuming interest free period still applies). at the end of month 2 do the same again, paying off card 2 with card 1.

if you can get 4 cards it can give you added funds, again with 6 cards.

lots of juggling, but it can help over 2 to 3 bad months.

 

[Ian J]

The credit card idea sounds like a good option if you can get 4 or 6 different cards.

assume a credit limited of £5,000. Max out one card to pay some bills. before the end of the month you use a second card to pay of the first, means no interest (assuming interest free period still applies). at the end of month 2 do the same again, paying off card 2 with card 1.

That is a dangerous game assuming that you can actually suucessfully apply for six credit cards in the first place as the credit card companies aren't that daft and I expect that he already has at least one card.

A bank overdraft is much the simplest option

 

[businessfunding]

In order of priority:

1.Juggle debtors / creditors

2. Overdraft

3. Usecured term loan

4. Raise funding against assets, either on a monthly basis or to support a term loan (assuming unsecured isn't available).

Do feel free to PM regarding options 3 & 4.

 

[fundingconrad]

Hi smo

Appreciating that you're B2C (so invoice finance won't help), if you take a meaningful amount of your turnover through electronic card payments there are some products available that enable you to raise finance against card receipts, and their repayment flexibility means they often work well for seasonal businesses like yours.

Drop my team a line at FundingOptions.com if you want (free) help.

Good luck
Conrad

 

[paulstewart64]

There are a number of things you can do to help ease the pressure.

1) make an arrangement with payment of tax over 6 months rather than one payment. This can be done very quickly and it's better to do it before it's due.

2) there are other types of short term funding available if the bank isn't an option. However, please remember that despite base rates being at an all time low, there is no such thing as cheap money.

I understand you cannot go down the route of factoring, but there is still help available from finance companies. Feel free to PM me if you want to discuss options. I don't need to know your numbers but would gladly discuss what other options you may have.