How can a business handle an urgent need of cash flow

It is quite common for a business to be in need for cash especially in a situation where you urgently need it and the unavailability of the same can adversely affect your business. Problems in cashflow can result in a host of issues in the business ranging from problems with payroll processing within the stipulated time to inability to capitalize on opportunities that could ensure growth and competitiveness of your company. It is important, therefore, that you always have an arrangement in place and a financial backing for your business for any foreseeable issues / exigencies. This article may help in acquainting you with the financial solutions that can ease cash flow problems for your business. Primarily, a business loan is one of the most opted for alternatives to fighting cash flow issues.

Immediacy of the need

One of the most important things at play when you are looking to solve a cashflow problem in your business is to recognize the very nature of the problem that your business faces. This implies that you must analyze the urgency of the need; whether you require cashflow within a day or a week’s time, or if it is an upcoming necessity in a few weeks’ or months’ time. It will do you good to know that there are different financial solutions and business loan options for varying degrees of cashflow emergencies and the smarter option is to always seek advice from your financial adviser to be able to choose the most appropriate option.

Short-term business loan

One of the key factors that make short term business loans a viable option for cashflow needs is that they are pretty easily approved by the bank. In addition to that, in case of such a business loan, the money is wired to your bank account within 24-hours or one business day of your application. But you need to be aware that these loans, while having a higher rate of interest, also have a lesser cost of capital than other long term loan options.

Credit of small business line

Another option to consider in case you do not require funds for your business immediately is the business line of credit wherein it is possible for you to make repeated use of credit that you apply for from the bank/ financial institution. The advantages of this are:

  • You only have to pay interest on your existing outstanding balance.
  • You can put to use the total credit line extended to you as long as you replenish the same within due date.
  • When you pay your balance, your available credit steadily increases.
  • You can borrow from your credit limit in future as and when you need it.

To conclude, it is important for you, as a responsible business owner, to be mindful of the upcoming expenses and investments that your business would likely need so as to ensure that a steady cashflow is always available and financial arrangements have already been made for when the need arises. It will keep you on top of your game in the market and allow you to grab newer opportunities for expansion.

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Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.