Market Clone Finance » Business Finance

Beat the Credit Squeeze With Flexible Business Finance

hanun — Mon, 23 Aug 2010 01:19:52 +0000

ctive steps a business can take to beat the credit squeeze including business finance, planning and taking a positive approach to meeting and solving the problems that might arise.

The credit squeeze is a fact of business life and is not just about money but confidence in the market too. There are always winners and losers in every business situation and confidence and business finance can beat the credit crunch.

1. Ensure the bookkeeping and financial accounts of the business are up to date.

Keeping the accounting records up to date is an essential first step to ensuring the business owner knows exactly where the business stands. Reviewing recent financial performance and taking positive action to increase sales and margins where possible and control costs by eliminating waste protects the business from surprises and downturns.

By having available the recent costs, views and action can be taken to reduce those costs and in some circumstances to increase business costs where the profit potential is highest. For example a detailed examination of advertising and promotion costs may indicate some campaigns should be reduced while the money saved invested in better performing areas.

Not all sales produce the same profit for the business. By concentrating efforts on the highest profit margin products and services the effect on working capital can be reduced which can take the pressure off working capital funding.

2. Preparing a realistic business plan can help the business plan ahead.

Many small businesses prepare a business plan when starting up especially if government grants or business finance is to be applied for. Failing to prepare an updated business plan during a credit squeeze can be a plan to fail.

During a credit squeeze a business can find itself operating in an unstable market where the rules and actions of the past might not be evident in the future. Banks increase the cost of borrowing, customers save money by leaving the market and sometimes failing to pay or at least taking longer. Suppliers tighten their grip by increasing prices and demanding tighter payment periods.

Business takes steps to protect income, cash flow, liquidity and in extreme cases survival. That is why failing to meet these new challenges is a plan to fail.

Prepare a business plan on the basis of the recent history and extend the financial results forward following the recent trends. Input into the financial forecast the opportunities that can be exploited to increase business and take a realistic view of the potential negative factors that may be suffered.

The business plan should include both a written view of the next twelve months ahead and include a profit and loss account reflecting the optimistic view and the most negative view with contingency plans should the worse scenario become a fact. A cash flow statement calculated from the business plan to show the effects on liquidity is a vital tool.

3. Improve financial flexibility to increase the business finance options.

Arrange the business finances with more than one bank and increase the number of financing options. A single bank may not offer the size of overdraft or loan facilities or the competitive rates the business requires. View the financial market as a competition between suppliers for your business finance and utilise several to spread the finance between them.

By maximising financial flexibility options for bank accounts, loans and overdrafts and financing asset purchases the effect on business progress can be minimised. Consider leasing agreements, invoice factoring and other specialist financial institutions in addition to the main bank account provider. Cash flow and working capital requirements are crucial.

4. Go out and get more sales.

When sales go down it is easy to become depressed. Fight it and remember how the business obtained new sales channels and customers in the past and exploit the opportunities in the future. Focus on the unique selling points of the business and its products and revitalise campaigns to increase sales.

Consider sales and product diversification into both related and other areas. There are always new opportunities including new products and markets, selling existing products to a wider audience including increased geographical presence. It may help to list all sales activities in sales channels and look for more sales channels in which they company can operate.

5. Ask for professional advice and assistance.

Increase the level of communication with each professional advisor including accountants, financial advisors, solicitors, bank managers and business advisors and any managers of financial institutions. The more the merrier and by keeping in touch more opportunities and more favourable responses will be possible.

There is no such thing as a silly question when the future of the business and its employees are at risk. Discussing options with a variety of professional advisors increases those options and if increased business finance is required for growth or survival in the future, the higher level of personal dialogue will ease that route forward.

Commercial Finance Funding Help And Working Capital Advice

admin — Tue, 09 Mar 2010 01:18:04 +0000

e been some disappointing and unexpected actions taken by commercial lenders in response to recent financial events. This changing environment for business finance funding is likely to produce several new problems for commercial borrowers. To assist small business owners in their efforts to keep up with these imposing challenges, The Working Capital Journal is one of several commercial financing information resources which should be reviewed regularly. The working capital finance industry has primarily been operating on a regional and local basis for many years. In response to cost-cutting that has permeated many industries, there has been a consolidation that has resulted in fewer effective commercial lenders throughout the United States. Most business owners have been understandably confused about what this might mean for the future of their commercial financing efforts, especially because this has happened in a relatively short period of time. Of course, for some time there have been ongoing complex problems for commercial borrowers to avoid when seeking commercial loans. But what has produced a new set of business finance funding problems is that we appear to be entering a period which will be characterized by even more uncertainties in the economy. Previous rules and standards for commercial financing and working capital finance are likely to increasingly change quickly, with little advance notice by business lenders. Business owners should make an extended effort to understand what is happening and what to do about it due to this realization that substantial changes are likely throughout the United States in the near future for commercial finance funding. At the forefront of these efforts should be a review of what actions commercial lenders have already taken in recent months. The Working Capital Journal is one prominent example of a free public resource that will facilitate a better understanding of the responses by business lenders to recent economic circumstances. By publicizing actions taken by commercial lenders, this will contribute to these two goals, both of which are likely to be helpful to typical business owners: (1) To highlight controversial bank-lender tactics with a view toward reducing or eliminating questionable lending practices. (2) To help business owners prepare for commercial finance funding changes. Sources that currently include The Working Capital Journal are actively encouraging business owners to describe and report their financing experiences so that they can be shared with a broader audience to assist in this effort. Some of the most significant commercial financing changes reported so far by commercial borrowers involve working capital loans, commercial construction financing and credit card financing. A notable situation of concern is that predatory lending practices by credit card issuers have been reported by many business owners. Some specific businesses such as restaurants are having an especially difficult time in surviving recently because they have been excluded from obtaining any new business financing by many banks. One of the few recent bright spots in business finance funding, as noted in The Working Capital Journal, has been the continuing ability of business owners to obtain working capital quickly by business cash advance programs. For most businesses accepting credit cards, this commercial financing approach should be actively considered. Business cash advances are literally saving the day for many small business owners because most banks appear to be doing a terrible job of providing commercial loans and other working capital finance help in the midst of recent financial and economic uncertainties. For example, as noted above, restaurants are virtually unable to currently obtain commercial finance funding from most banks. However, if a restaurant accepts credit cards in their business operations, they are likely to be able to obtain needed cash from merchant cash advances and credit card factoring.

How to Avoid Small Business Financing Mistakes

hanun — Fri, 09 Jan 2009 18:41:37 +0000

Commercial loan mistakes can have severe financial consequences. However, with proper time and effort, the business finance problems described in this article can be overcome successfully.

Unanticipated business financing mistakes are often difficult to avoid because they involve complications that are not easily understood by many commercial borrowers. There is often a tendency for borrowers to ignore or overlook factors that can produce long-term financial problems with complicated commercial loan situations.

What benefits will you realize when you avoid a common business financing mistake? Commercial borrowers should expect to avoid potentially devastating business finance problems and secure improved commercial loan terms by taking some extra time and caution when they are obtaining a new business loan or commercial mortgage. The stakes are high and this will admittedly require a concerted effort by business owners in order to successfully avoid commercial financing mistakes.

This report will address two approaches for avoiding mistakes with business financing. Both are considered to be of somewhat equal importance, so it is strongly suggested that business owners devote time to both approaches.

You should make an initial evaluation of the need for long-term or short-term business financing. It is essential to consider all possibilities before you commit to a commercial loan. With a long-term business loan, borrowers are likely to incur substantial penalties if they need to refinance in the first three to five years. With short-term business finance agreements, business owners could be faced with the need to obtain new financing that will replace an existing loan at an inopportune time.

The biggest potential mistake could occur if a borrower is not aware of the terms in their commercial financing. Even though a commercial borrower might have what appears to be a long-term commercial mortgage, many traditional lenders include recall terms that allow the lender to require early repayment of the commercial real estate financing under specified conditions. Lack of knowledge about such loan terms can prove to be a serious mistake. Here is a recommended solution to help avoid this specific problem and other related problems: Commercial borrowers should look for resources which will provide relevant solutions for a business owner contemplating business purchase or real estate refinancing.

Working with an experienced business finance lender and advisor is an absolute must. Following such advice will not be as easy as you probably imagine due to the recent chaos in the residential real estate mortgage field. This unexpected financial turmoil has resulted in an increasing number of residential brokers and lenders seeking to become active in the business financing field. What this means is that there are now substantially more inexperienced financial advisors attempting to advise business owners about how to obtain a commercial mortgage or commercial loan.

Obviously there is a high probability of serious mistakes occurring if an inexperienced loan advisor is used, and these mistakes are unfortunately likely to be of a critical nature because of specialized business loan requirements. Here is a suggested solution: Business borrowers should thoroughly discuss financing alternatives with a commercial financing expert before buying or refinancing a business investment or commercial property.