Running a small business is hard, especially now during load shedding. One of the biggest challenges that face small and medium-sized businesses is cash flow – how does one keep the lights on when cash flow is tight? For business owners, managing business operations is hard enough, but throw in power outages and financial admin; and it can feel impossible.
In this post we will introduce how a revolving capital facility can help SMEs take advantage of opportunities, to not only keep their business operating but also generate a positive ROI in the long term.
Cash flow management
How does an SME owner manage business cash flow effectively?
More Sales? The ideal is always with the aim of increasing sales while managing costs. This is also most certainly easier said than done. With the constant drive to increase sales while juggling costs, one really needs to know how to balance reserves and flow of cash to keep above the invoice dips and manage supplier demand and credibility.
Capital Facility? Having access to our evolving capital facility or be it a bank overdraft or an alternative lender credit facility, can be a lifesaver
Bank overdraft vs a Capital Facility
What’s the difference between a traditional Bank Overdraft Facility and an alternative lender Capital Facility?
When does alternative funding make sense?
Capital lending facilities can serve a specific purpose and may work well for some but not every business needs them. So, how do you know if this is a good choice for you?
1. You need a quick turnaround
- Some business deals arrive quickly and that’s great news for you, but you need to act fast! And when it comes to fast; alternative lenders, like Lula offer extremely fast access to capital, when compared to traditional lenders.
2. You are not being approved by a bank
- Traditional lenders have traditional credit models, which do not suit all businesses. Lenders like Lulalend can assess a business’s ability to repay a loan in minutes using their machine learning algorithms and alternative sources of scoring data.
3. The costs are not clear
- When assessing a business opportunity, you need to have a clear idea of what the costs are to ensure you are making money. Loan initiation fees, early settlement penalties, and ongoing account costs are often “hidden” costs that can make traditional lending not as cost-effective as they appear.
- Lula’s fees are completely transparent – there are no initiation fees, no early settlement penalties, and no account fees – you only pay when you access your facility
4. Margins can support the costs (Positive ROI)
- When making any business decision that requires using a capital facility, you should check that your income and margins can support the cost of that funding. Here are a few simple examples:
The advantage of using an alternative funder like Lula is that you can calculate your investment costs with 100% certainty before you commit to a deal so you can ensure your ROI is positive. In addition, as soon as your deal is done, you can park the Lulalend revolving capital facility – at no cost! – until the next deal presents itself.
Apply in minutes online and get business funding in your account, fast! Isn’t it time you made sense of cash flow?