Good to Great: How to Scale With an Outsourced CFO

Poor cash flow is one of the biggest reasons that businesses don’t make it past the first year of operation, but cash flow problems don’t just affect new businesses. In fact, cash flow problems can plague companies of any size and age, and they often stem from everyday problems like disorganisation, bad debts, out-of-sync credit terms, profit problems and even growing too quickly.

Fortunately, there are several effective strategies you can use to create intelligent, dependable cash flow. In this post, we’ll look at how to use strategic asset financing to help your company’s cash flow.

 

Arrange Regular Fixed Payments

The purchase of large equipment or vehicles can seriously disrupt a company’s cash flow. During the month in which the large purchase is made, it may be difficult to meet all of your other financial obligations, and recovering from such a purchase might take months. 

With asset financing, however, you can arrange to have regular, fixed payments for your large purchases. This irons out your cash flow and makes your expenditures more predictable. Which assets can be financed in this way? You may be able to secure asset financing for passenger cars, office furniture, computers and other technology, light and heavy commercial vehicles, construction equipment, medical equipment, and plant and machinery.

 

Choose Your Preferred Payment Method

Another way that asset financing can help you to create intelligent cash flow is by allowing you to choose your preferred payment method. For example, instead of paying directly from a bank account, you may be able to make your monthly asset payments from a credit card that offers an attractive rewards program. 

 

Using a credit card for your monthly payments may also simplify your company’s accounting by running many transactions through a single point. There’s less to monitor, and when you pay the card off in full before the statement date, you don’t have to pay any interest charges.

 

Keep Cash Flow Steady While You Scale Your Operations

If your business is growing quickly, you may find yourself in the midst of significant cash flow problems. Rapid growth sounds like a dream for many businesses. It means you’ve created products and services that many people want. But as the orders pour in, you may experience a cash flow crisis. 

Instead of spending cash to purchase new equipment and vehicles with which to service your new orders, use asset financing to reduce your capital outlay while you’re still growing. You’ll need your working capital during phases of rapid growth, so don’t spend it. Allow asset financing to take the pressure off.

 

Get Approved for Debt Financing

Debt financing can be a huge help for business owners who are struggling to get their cash flow under control, but it can be difficult to get approved for debt financing, especially when your business is in its infancy. Banks usually implement blanket policies regarding debt financing, and if your company doesn’t fit into their policies, you’re out of luck.

Asset financing can help this situation. Instead of having to prove a long track record of success, you can simply use your company’s balance sheet as security for asset financing. In some cases, you may be able to secure a lower interest rate, thus saving money on repayments. Asset financing is generally more customised as well, so you may be able to make arrangements that are suitable for your company and your industry.

 

Overcome Poor Credit Problems

Because traditional lenders follow rigorous and inflexible lending standards, you may not be able to borrow from them if your credit is poor. This may also be the case if you already have bank lines of credit. 

Asset lending, however, is much more flexible. It may take the form of a revolving line of credit, or it can simply be structured as monthly payments for particular vehicles, machinery or technology. Therefore, asset financing can be a strategic move for businesses that are just starting out and struggling to keep cash flow under control.

As you can see, asset financing can be used in many different ways as you work toward developing intelligent cash flow in your business. To discuss asset finance, cash flow or any other business concern, reach out to us at Altus Financial. Our business experts are here to help you succeed.