Cash Flow Lending

By Ram - Feb 29 2024

Cash flow is the money coming in and out of your business. It is one of the parameters investors and lenders use to determine the business’s health and growth chances. Every business strives to maintain a positive cash flow. However, a positive cash flow might be elusive for some businesses because of increased demand or prolonged invoice-clearing times.

A negative cash flow doesn’t necessarily mean the business needs to improve, but it does make it hard to cover its running expenses. One of the ways you can plug the cash flow hitches is by using a unique financing option called cash flow lending.

What is Cash Flow Lending?

Cash flow lending is short-term lending granted to companies by banks and other financial institutions. It increases working capital, allowing the business to meet its short-term expenses and pay its bills.

The business can opt to use a cash flow loan for various purposes, such as:

  • Purchasing inventory or operating equipment
  • Hiring and training staff
  • Fixing short-term liquidity issues common in seasonal businesses
  • Paying bills to maintain liquidity
  • Renovating or modernising the business premises
  • Growth and expansion undertakings

Besides banks, businesses can now access cash flow lending from factoring companies like Key Factors, which provide more favourable and flexible business terms.

Unlike traditional cash flow lending options that work similarly to loans, cash flow financing companies allow businesses to access funds by leveraging their unpaid invoices and, in turn, get a cash advance of up to 80% of the value of the invoice. The balance will be sent to the business once the customer clears the invoice, less the financing fees.

This option means the business isn’t technically getting a loan and saves itself the trouble of adding to its monthly overheads by adding monthly loan payments.

Benefits of Cash Flow Lending

The benefits of cash flow lending differ depending on where you source the funding. In this case, we highlight the benefits of cash flow lending from factoring companies such as Key Factors.

It doesn’t require collateral

You don’t need any collateral to secure cash flow lending for your business. Instead, the business uses unpaid invoices as leverage. This allows the business to maintain all its assets, which it can use to exploit other emerging opportunities.

Available to businesses with bad, little or no credit

Getting approved for any loan requires the business to have a credit history. The better the credit, the higher the chances of getting loan approval. Cash flow lending or financing also considers businesses with low or bad credit and even provides the business with an opportunity to build its credit by ensuring you pay your suppliers and other bills on time.

Wide applications

There’s no limit to what you can use the funds you get from cash flow financing. You can use the money to pay wages, pay your ATO obligations or even meet operating expenses. The flexibility of using the funds means you stay on top of your most pressing financial needs.

Easy approval and access

When sourcing cash flow lending from banks, a lot of paperwork and waiting is required. With Key Factors, you can access the application information online, complete the forms and get a response within 48 hours. Once approved, you don’t need to follow the same application process every time, saving you time and allowing you to focus on your business.

How Does it Work

The process of cash flow lending from Key Factors is rather straightforward. It starts with businesses offering their services or goods to customers as usual, raising the invoice they send to their customers, and waiting for payment. After raising the invoices:

Send us a copy of the invoices

You will complete the approval process and send us a copy of the invoice or invoices you want to finance. Once you’re approved, verifying the invoice takes a relatively short time, and we give you feedback within a few hours.

Funds in 4 hours

Funds for approved invoices are available in your account within four hours. You get up to 80% of the invoice value in your account, less the fees, and the rest is paid out when your customer settles the invoice.

It’s a quick process that allows your business to access funds when needed and doesn’t have the same bottlenecks as sourcing the funds from banks.

Benefits of Cash Flow Lending with Key Factors

You can source cash flow financing from other lending institutions or Key Factors. By choosing to work with us, you enjoy various benefits of our services and our experience in financing businesses spanning decades. These benefits include:

Pay as you use

At Key Factors, you only pay for the services you use. We offer selective invoice financing that allows businesses to control the invoices they choose to finance for cash flow lending and only pay fees for the invoices they finance. The advantage is that businesses determine their fees and can minimise this by financing lower-value invoices.

No lock-in contracts

Our cash flow financing services are fully flexible. Once you complete the approval process, you decide which invoices you want to finance. You can finance as many or as few invoices as you want at any given time. No lock-in contracts require you to finance a given number of invoices within a given period. This allows businesses to control their fees and only finance when necessary.

Quick disbursement of funds

Instead of waiting for days or weeks when you need money now, Key Factors will have funds for approved invoices disbursed within four hours, giving you access to money when needed.

Conclusion

Lending can be a lifeline for businesses struggling with maintaining a positive cash flow. It helps the business access funds when it needs them the most.  It matches like for like, by way of incomings to outgoings, which reduces overheads, and the business is open to how it chooses to use the money.

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