In a perfect world, growth opportunities would come along at the perfect time, when your business has surplus capital to spend, and operations are running smoothly. This, however, is rarely the case. In the real world, growth tends to be messy. Opportunities often arise even as creditors come knocking, equipment breaks down, and for suppliers unexpectedly go into administration.
In order to grow aggressively and successfully, businesses need to be able to take advantage of these irregular opportunities. To do this, businesses need to be able to adapt and pursue their growth strategy at any time, even while other issues are being addressed. Most pressingly, this means that businesses need ways to come up with funds to pursue growth without infringing on their ability to deal with their regular operation, and all the troubles that come with it. Fortunately, alternative finance companies like Fifo Capital are ideal for this kind of financing.
Alternative finance provides the flexibility businesses need
Using traditional financing options, it can often take weeks or even months before any funds are actually made available. Given that the windows of opportunity that business owners tend to be offered measure in days or a few weeks, this can become problematic. Worse, those loans might not be approved at precisely the times when your business needs them most. Traditional lending is easiest to access for businesses who are already doing well, and don’t necessarily need the help. Alternative finance institutions like Fifo Capital, on the other hand, make it their business to help businesses to help themselves.
For ambitious small businesses, that means working to maximise their growth. To do that, they need access to cash immediately, even at times when their finances aren’t in an ideal situation. Finance institutions like Fifo Capital, for their part, provide it. While a bank loan application can drag on for a prohibitively long time, alternative finance institutions can often process an application less than a day. They can do this because they don’t rely on collateral or on checking a business’ credit profile to inform their financing decisions. Instead, they build up a long term 1:1 relationship with each client, getting to know their business directly. This allows them to manage risks without requiring business owners to provide collateral they might not have available, or going through a time-consuming credit check.
Knowing the right tools for the job
When it comes to financing growth there are 3 particularly important financing tools that can be applied separately or together to provide the cash your business needs, when you need it. While each has unique uses on its own, they all serve to free up the funds businesses need to operate as effectively as possible and to drive growth.
Supply chain finance
Supply chain finance allows you to pay outgoing supplier payments through a credit fund, instead of with your own working capital. That fund can then be paid off later, effectively giving you more cash to work with in the near term. Best of all, you can continue to pay suppliers on time, or even early, so this doesn’t affect operations in any way. Supply chain finance is an ideal tool for keeping supply chains running smoothly when cash flow isn’t completely regular, but it’s just as effective for coming up with additional funds for growth purposes.
Where supply chain finance works by deferring outgoing payments, invoice finance allows you to collect incoming revenues early. Instead of waiting for a client to pay, you simply hand over your outstanding invoice to your financial institution, who will pay out most of its value up front. They will then work with the client to settle the invoice themselves, before issuing the remaining amount, less their fee. Unlike a loan, this allows businesses to effectively give themselves an advance on revenues that they have already earned.
Unsecured business loans
Unsecured business loans are an ideal solution when time is of the essence and invoice financing isn’t enough to provide the funds needed. Unlike more traditional secured loans, this type of loan doesn’t require collateral, and can be issued very quickly. This makes it possible for businesses to react to a growth opportunity immediately.
In managing their everyday affairs, businesses often find themselves in less-than-ideal situations. Dealing with unexpected costs, seasonal sales cycles, late client payments, or any number of other potential issues can make it difficult to pursue growth opportunities when they arise. Businesses who succeed are ultimately those who find ways to do it anyway. By using these tools, business owners can ensure that they always have the cash on hand to take advantage at those critical moments.