Getting on top of the cash flow challenge in the new financial year

JASPRET SINGH, Partner of FIFO Capital provides an insight on ways to get on top of your cashflow.

It’s a very old story and it’s known to every business – some trade debtors are slow payers and more so at the start of the new financial year. It’s not that they won’t pay, it’s just for a whole range of reasons they take longer to put the cheque ‘in the post.’ Ordinarily it’s not too much of an issue, but what if your own cash flow is going through one of those ‘tight’ periods, or perhaps a particular job has been larger than usual so the amount outstanding is more significant. Similarly, any business subject to seasonal variation, and certainly every business that has experienced growing pains, knows that ‘cash is king,’ and having funds locked up in invoices can be highly frustrating.

What are the options?

According to Jaspreet Singh of Fifo Capital, invoice financing is the ideal solution for businesses with working capital stress. Invoice financing refers to the business selling one or more of its current invoices to a third party, which then pays the business a large part of the face value of the invoice.

In Fifo Capital’s case, Jaspreet says that’s 80% of the value. Then, when your trade debtor actually settles the account, Fifo Capital remits the balance of 20%, less its fee.

According to Jaspreet the advantages are considerable. It could be that you want to invest in new plant or equipment, or you simply need a quick fix to meet your own obligations. rather than having to go to your bank for additional overdraft or other borrowing arrangements that generally require collateral, you simply turn the asset you already have – the invoice, into instant working capital.

It’s amazingly quick, painless and efficient and it’s also becoming a preferred option. In fact, many banks will recommend it because it does not interfere in any way with your existing financing.

Recently an excavation business needed a one-off $35,000 cash injection to pay for equipment and running costs for a large project which they had just won. With only a handful of clients, their next round of invoice payments were a good 30 or so days out – leaving them well short of funds to commence the project.

To quickly improve their cash flow position, the customer selected one of their outstanding invoices valued at approximately $45,500 and ‘sold’ it to Fifo Capital – at which point an advance of $36,400 was provided to the business. the business was then able to pay for equipment and labour allowing them to commence and complete the project without any cash flow disruptions.

In this instance, from first contact Fifo Capital advanced the funds within 24 hours. Jaspreet says that after the first transaction, one fax or email is all it takes and subsequent invoices can be turned into working capital within 2 hours.

Anyone interested in this highly effective solution can discuss their requirements by contacting:

Jaspreet Singh at Fifo Capital on 1300 786 540 or
jaspreet.singh@fifocapital.com

60 Seconds with a voting member . . .

What is your name?
Jaspreet Singh
Who do you work for?
Fifo Capital
How many years have you worked for this business?
2 Years
How many years have you been involved in the Industry?
6 years
What is your role?
Business Partner
What does your job involve?
Enable businesses to grow and expand by providing tailored cash flow solutions
What is the best part of your job?
Working closely with businesses and assisting them to realise their full potential is very satisfying for me personally

You must be logged in to post a comment Login