Maximizing Cash Flow with Cashflow Finance

In the dynamic landscape of business operations, maintaining healthy cash flow is essential for sustaining operations and driving growth. However, the need to finance significant costs such as stock, raw materials, and operational expenses can strain cash reserves, limiting a business’s ability to capitalize on opportunities. That’s where cashflow finance steps in, providing businesses with the flexibility to preserve cash earned by the business in the business, while accessing the capital needed to fuel expansion and optimize operations. At PFC Finance, we understand the importance of cashflow finance in preserving liquidity and empowering businesses to thrive. Let’s delve into the nuances of cashflow finance and how it can unlock new possibilities for your business.

Optimising Cash Flow

Cashflow finance allows businesses to leverage external funding to finance significant costs, thereby preserving cash reserves for strategic initiatives and unforeseen expenses. Whether it’s investing in stock, purchasing raw materials, or covering operational overheads, businesses can access the capital they need without compromising their liquidity.

Maximising Savings and Discounts

By financing purchases through cashflow finance, businesses can take advantage of potential savings and discounts offered by suppliers and vendors. Whether it’s negotiating bulk purchase discounts or securing favourable terms through early payment incentives, businesses can optimize their purchasing power and enhance profitability. The savings derived from these discounts often outweigh the cost of borrowing, making cashflow finance a strategic financial tool.

Mitigating Inflationary Pressure

With inflation figures surpassing predicted numbers, businesses face the challenge of mitigating rising costs while maintaining profitability. In this context, borrowing money to invest in stock and raw materials can serve as a prudent risk management strategy. By locking in current prices and securing inventory at today’s rates, businesses can shield themselves from future price hikes and inflationary pressures, thereby safeguarding their margins and competitiveness.

Empowering Business Growth

Cashflow finance empowers businesses to capitalize on growth opportunities, seize market share, and expand their operations without draining their cash reserves. Whether it’s funding business expansion initiatives, launching new product lines, or investing in marketing campaigns, cashflow finance provides the necessary capital to fuel growth and drive success. Often in a declining market where there are pressures on business to cut back and reduce spending, that can impact on the whole supply chain resulting in sourcing opportunities and inflation busting discounts for bulk purchase of raw materials.

One such example we know of, was a GRP manufacturer who recognised that during Covid he could not guarantee his raw materials supplies (plastic resin and glass fibre matting), so he investigated buying more stock to protect the business by securing supplies.  He found that raw materials costs fell so significantly for ‘up front’ bulk orders that there was sufficient margin to build in a wholesale margin too.  That coupled with the strategic support of his Far Eastern Supplies manufacturer who, wanted to both offload a ‘stock mountain’ and maintain local stocks here in the UK to avoid the risks to local customers from the vagaries of shipping and freight for future business.  The two were able to work together to expand the GRP Manufacturer’s business by adding a wholesale trade counter and an on-line trade sales operation.  These additional profitable sidelines meant that the original business not only held larger stocks of raw materials but was also able to increase its gross margin as its raw materials costs fell.

Yes, the GRP manufacturer had to invest in more stock and more favourable prices but the raw materials supplier also made a contribution both in terms of stock availability and credit terms to enable the new wholesale venture  to become established and flourish. Another North West based clothing and accessories manufacturer was able to raise the funding via a commercial mortgage to buy his factory from the Land Lord and then bolster cash flow by reducing the demands on it as he no longer had to pay high rent for the unit.

Boosting Cash Flow

Cashflow finance offers businesses the flexibility to preserve cash while accessing the capital needed to finance significant costs and drive growth. By optimizing cash flow through strategic financing solutions, businesses can maximize savings, mitigate inflationary pressures, and unlock new possibilities for success. At PFC Finance, we specialize in providing tailored cashflow finance solutions to meet the unique needs of businesses across industries. Trust us to be your partner in preserving liquidity, optimizing operations, and achieving your business objectives.

Our more common place cashflow funding often includes simple VAT and Tax funding – splitting larger bills into manageable monthly instalments to slow down business outgoings.

Our more traditional lending includes Asset finance – businesses are still looking to grow or may simply just need to replace old equipment and vehicles so why not spread large lump sum payments over 5 years rather than the cost impacting on day to day cash flow. We can also help fund the VAT deposit element of new vehicles / equipment when the asset loan or finance only provides for the VAT exclusive capital cost.

A less well known but effective cashflow boosting solution is provided by Invoice discounting or Invoice factoring with bad debt protection.  This gives the business owner confidence that their invoices will be paid, ensuring the business gets paid straight away on invoices rather than waiting 14, 30 or even up to 90 days.  The other significant cash flow boost, when setting up Invoice Factoring, is that the existing ‘Debtor Book’ can be factored too often providing a significant lump sum to bolster the cash in the business as in effect all of the outstanding invoices get paid at once. Contact PFC Finance today to explore how cashflow finance can empower your business to thrive in today’s competitive landscape typically we’ll help you secure the funding finance designed in a way to suit your business.