SME Blog & News

Who should an SME turn to for cash flow support?

In recent times there has been an intense focus on the SME sector particularly in relation to funding available for SME businesses.  The Hayne Royal Commission recently exposed a market failure where banks are reluctant to supply capital to grow. Government, the Reserve Bank and the regulators appear intent on opening new funding channels for SME’s which is great news, but if you are an SME business owner how do you best understand what the right funding options for your business are.

Traditional forms of funding like Asset Finance and Commercial Property loans remain available in the market, albeit the information requirements now in place by the traditional funders are more detailed and complex. This is required to enable a deeper analysis of your business performance.  These products remain appropriate for acquisition of property, business equipment and motor vehicles although this only accounts for a small percentage of the funding requirements for an SME. The growing SME business needs a whole lot more.

We all know that the most important ingredient to a successful business is strong cash flow.  We see poor cash flow management as one of the biggest impediments to business growth.  It doesn’t need to be, as there are several options available to assist your business.  Several debtor finance facilities are now available that are ideal for a growing business.  Your invoices are paid almost immediately by the funder and as your revenues grow the facility increases unlike traditional lines of credit that have restrictive limits. Consider what you can do with the cash flow from this type of facility rather than waiting for your customers to pay you in 60 or 90 days.

If your business has a short term need for cash to meet unexpected expenses or to purchase stock that you can sell at optimal margins, then some of the cash flow lenders in the market can be a viable option. These loans a generally provided without the need for property as security.  I am sure you would have seen a number of these Fintech companies advertising in the mainstream media or on social media. Interest rates, fees and early termination costs vary a lot across the range of lenders available and there are a lot of them. It has been well publicised recently about some of the excessive charges that these organisations charge.  SME owners should seek guidance from a professional broker for this type of lending.  The broker will assess your current business position, the reason for the funding requirement and the term required.  The broker would then match your request to the best lender for that situation.  Making an application for funding without this advice could lead to a very expensive experience.

SME Finance Group has a panel of lenders to support cash flow needs.  Each has been assessed for the terms and conditions in their agreements and the most competitive pricing available for this type of facility. Get more information here.


Written by Neil McKay, CEO SME Finance Group

(We arrange funding for business assets, residential or commercial property, fleet management services and vehicle purchasing to support SME businesses.)

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