
Funding vs. Lending: understanding the difference
There is a wide array of different reasons why a small business might need access to extra incoming cash
Working Capital is defined as current assets less current liabilities, which is the amount of liquid assets (cash + debtors) less current expenses. Positive Working Capital means the cash at bank + receivables is greater than the current expenses (payables) of the business. Negative working capital balance means the business owes more than it has in cash available and what it will receive as income in the near future.
Cash at Bank | $100,000 |
Receivables Ledger | $450,000 |
Payables Ledger | $300,000 |
Working Capital | $250,000 |
In the above example, the business has positive Working Capital of $250,000 however the free cash position is only $100,000 as the majority of the Working Capital is locked in the receivables ledger. If there is a timing mismatch between when the debtors pay their invoices and when the creditors need to be paid, the business has a liquidity issue.
This short term liquidity crisis is one that many businesses face, particularly growth companies who need to spend upfront on marketing and opex but the income from that spend may not be received for as long as 90 days later.
OptiPay offers a flexible funding solution which is like a cash flow loan, but without the high fixed interest charges and the usual minimum term.
Solve your business cash flow needs with flexible, fair funding.
We’ve funded over $850 million to Australian business using their Account Receivables ledger.
No upfront Application fees, no property security required and no hidden fees.
We’ll provide the flexibility you require in order to manage your cash flows. No long lock-in contracts either.
Don’t wait weeks or months for your money.
This is Paul, he is one of the directors of UVS, a labour-hire provider to the construction industry. Here’s what he has to say about how OptiPay was able to help his business grow and succeed. Contact an OptiPay expert today to see how we can help you.
There is a wide array of different reasons why a small business might need access to extra incoming cash
Owing the ATO For small to medium size businesses, that trades month to month and has working capital fluctuations, it’s
As an Australian business owner, you could turn to the banks or various Fintech business loan providers for your short-term