An unexpected financial crisis can cause high levels of stress and require fast decisions and quick access to cash. Setting up a standby finance facility means businesses can be prepared should the unexpected happen.

Standby facility

Quick takeaways if you’re in a hurry

  • There are a number of scenarios, often outside a company’s control, that could lead to a future cash flow crisis
  • Fifo Capital Business Partners have years of experience helping businesses cope with cash flow shortages
  • A standby facility gives businesses the opportunity to prepare for a financial crisis without having to commit to the funding until it happens.

Read on: Use a standby facility and reduce stress

(estimated reading time: 7 minutes)

When your cash flow doesn’t match the needs of your business then you’ve got the recipe for stress. But there’s no need to succumb to worry about what might happen tomorrow. You could build the solution you need today, and then rest assured that you’ve got plans in place.

We take a look at a smart strategy for dealing with unplanned for cash flow problems.

Look forward

Whether you’re worried about your future cash flow position or you’ve not really given it much thought, it’s a good idea to explore the scenarios that could throw you off track.

There are a diverse range of situations that could impact the cash flow of your business. They are often challenging to predict and many will be outside your business’s control.

Perhaps a customer goes into liquidation and leaves you with unpaid bills. Maybe the bank reassesses your credit position and won’t increase your funding. Whatever the situation, it’s likely to leave you with an urgent need for an alternative cash flow solution.

You don’t need to wait until tomorrow to protect your business from unexpected cash flow challenges or finance needs. In fact, now is a better time to explore your options when the need is not urgent.

What is a standby facility?

A standby facility with Fifo Capital gives you the ability to plan for emergencies, and remove the worry of how you can get your business through them. There’s no obligation to convert the facility into finance, it just means that you’re prepared in case a crisis strikes.

The process is simple. Working with a Fifo Capital Business Partner you identify the potential risks to your business and the best product to support you should you need it. Then you get set up in the system and the Business Partner creates a standby facility for your business.

Getting access to the cash you need with Fifo Capital is fast, but once you’ve set up a standby facility it becomes even faster. That’s because the paperwork has been done, and your Business Partner has already worked out the best security options for your business. Nothing should hold you up when you choose to access the finance.

Creating a standby facility can really help your business in a cash flow emergency. Having it in place can make a huge difference to your stress levels. And because you’ve gone through the process of choosing the right product for your business in advance, you can be confident that you’ve chosen a finance product that meets your business’s long term needs.

There’s no obligation to use your standby facility and there’s no cost if you decide you don’t need it. All you’ll have to deal with is one less worry when you look into your financial future.

Different finance options for different scenarios

A conversation with a Fifo Capital Business Partner will explore the structure of your business and likely challenges you will face. Then you will probably find yourself considering one of the following options:

Invoice Finance
If you produce invoices in order to get payment from your customers you might consider invoice finance.

Invoice finance involves selling an unpaid invoice to a finance company. When you sell the invoice, the finance company pays you the value of it minus between ten and 20 percent (this varies by company). Then, when the customer pays the invoice in full to the finance company, they pay the remaining portion to you, minus their fees.

Invoice finance is often a preferred option because it’s easy to put in place and usually only requires the customer (referred to as the debtor) as security.

Short Term Business Loans
If your company doesn’t produce invoices, or you think you might be looking for a finance option that has a longer duration, then a short term business loan could be for you.

Short term business loans give you control over the size and duration of the debt. And with Fifo Capital you also have repayment options that allow you to manage how quickly you pay it back. It’s quick to set up a short term business loan, and they are structured to work beside your existing finance arrangements without impacting them.

Fifo Capital Business Partners specialise in finding flexible security solutions to make your funding requirements possible without impacting on existing security or credit arrangements. They also work in partnership with your existing finance providers wherever possible: they’ve learned from experience that the best solutions come from working as a team.

Protect your business from stress

If your cash flow is on track and your finances are looking good, you probably haven’t considered what finance facility you might need in the future. But taking action today could protect you from a lot of stress tomorrow.

Think of your company like a car. Consider the importance of the spare tyre. If you didn’t have a spare tyre there would be a risk of breaking down and having no way to fix the issue. Without a solution at hand you would have to accept whatever help you could find: costly roadside assistance; local mechanics; potential wait time for someone to come to your aid.

Being prepared for unexpected problems is vital. When your security status changes and the bank can no longer support your credit you’ll need a solution, fast. If you face an unexpected growth opportunity but you don’t have the funding to take it, your business may miss out. You need a ‘spare tyre’ in case the unexpected happens.

Invoice Finance, Cashflow Solutions and Business Loans

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