Growth and expansion is the goal of every small business owner or start-up entrepreneur. Every large corporation today has initially started out as a small local business, only to grow and expand over the years.
However, expansion can present challenges, particularly in the area of cash flow. More than half of new businesses are prone to fail within the first 5 years of operation. Why? Because they lack cash flow and working capital management.
We’ll share with you, in this article, a few ways to help manage your cash flow during expansion in order to achieve real and sustainable growth.
Develop a realistic expansion plan
This is the time to determine not just how you’re going to expand, but why. Business plans should be based on a plan of action designed to meet your targets and objectives. It should never be a hard and fast document to be followed meticulously, but rather a blueprint to help make better decisions in the running of your business.
A poor business plan can lead to financial risks. Get in the habit of doing a short business plan for every project, complete with a cash flow forecast and best to worst scenarios. It is also important to seek feedback from your advisers, clients and shareholders on whether this is a realistic plan. The plan should then be updated quarterly to monitor progress against the original plan.
Monitor your cash flow during every phase of the expansion
Doing this does not demand any advanced accounting skills, and most of the time the business owner/s are able to keep track of their cash on their own however, if you are a busy owner, then employing a professional is highly recommended. Any competent financial controller can help you identify some of the common issues that often arise in the cash flow cycle of a process, a process that can take anywhere from a few months to several years.
Forecast your short and long-term cash flow
Cash flow gaps happens all the time, especially if your business is only a few years old. There are several factors that should be considered before expecting a continuous and uninterrupted cash flow. It often occurs that owners who are just getting started have to give their businesses a financial boost before they actually get to enjoy the uninterrupted cash flow – and before that happens, it is not rare for them to experience some gaps on the way, which is perfectly common as long as they have the tools and knowledge required for handling them in an efficient manner.
For example, you may sometimes have to borrow cash or take out a business or commercial loan, if you plan to expand your business but you do not have the necessary property as security to secure the loan. Nevertheless, before you do that, it is critical to weigh all the benefits and the downsides of borrowing money, including the interest rate and the overall length of the loan, as borrowing money can make or break your business. It is the nightmare of every business owner to inadvertently lead his business to bankruptcy, which is why many business owners find it safer to use invoice financing rather than trying to borrow cash from banks. Why invoice financing over a loan? Invoice financing does not require property as security; it is fully flexible – you can come and go and use the funds as you need. There is no interest that one need to pay like a business loan and most importantly invoice finance is based on your current and future sales, not your balance sheet. The more you invoice the more funding you will get.
Finally, know how to get the right financing for your expansion
Growing companies must know how they will finance additional costs prior to initiating growth. To kick start productivity and launch your business into expansion, you may need to cover immediate expenses without waiting for customer payments, especially those that pay in 60 or 90 days.
A quality invoice financing company like OptiPay (OptiPay) can provide your business with capital needed for expansion within days. The quick turnaround times for invoice financing approval and funding allow you to cover immediate costs that cannot wait for weeks or months.
OptiPay is very simple and easy to use and because it’s a fintech, you can access it whenever and wherever you need to. You simply upload your invoice/s and supporting documentation to us. It’s that easy. Once you have been setup on our system, there is absolutely nothing for you to do other than provide invoices to us, as and when you would like them funded. The rest is all taken care of by our excellent support team at OptiPay
OptiPay can help your business access funding for growth through the sale of your open receivables. Contact us today to learn more.
“Get Tomorrow’s Cash flow Today”
Who is OptiPay?
OptiPay, one of Australia’s leading business finance providers, has been dedicated to helping small business owners solve cash flow challenges for over a decade and has provided $1.5 billion in business funding to more than 500 Australian businesses. OptiPay specialises in modern financing solutions such as invoice factoring, invoice finance, debtor finance, and lines of credit. OptiPay’s mission is to support business growth providing liquidity in as little as 24 hours, ensuring they have access to tomorrow’s cash flow today. This rapid access to funds helps businesses maintain smooth operations and seize growth opportunities without the stress of cash flow constraints. At OptiPay, we believe that healthy cash flow is the lifeblood of any successful business. Our commitment to helping businesses overcome financial hurdles and achieve their growth ambitions has solidified our reputation as a trusted partner in the business finance sector. Whether you are looking to stabilise your cash flow, expand your operations, or navigate financial challenges, OptiPay is here to support your journey with innovative and efficient financing solutions.
