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How invoice finance and trade finance can work together simultaneously to help your cash flow

When looking at the viability of your small or medium-sized business, one of the most crucial areas to look at is your cash flow and how you are managing it. Cash flow management is an essential aspect of any business, but it is significant for SMEs. To manage your cash flow correctly, you must be looking at maintaining your inflow of cash and keeping that flow consistent. While also keeping a close eye on the outflow of money when paying suppliers, subcontractors and employees. These two are linked together to create your overall cash flow, and one can quickly impact the other.

If you can’t make payments on time without taking money from other parts of the business, this will be directly impacting your inflow of cash. This is known as a cash-flow gap. A cash flow gap is a large discrepancy between the inflow and outflow of cash. Suppose you have suppliers or subcontractors that need to be paid. In that case, however, the money you owe them essentially exceeds the amount you have coming into the business; this is a perfect example of a cash-flow gap. Often during this time, business owners become stressed, and as a result, they can make reckless financial decisions and dip into working capital to get ahead.

This is not an ideal way to deal with this situation. If you do this, you will have no capital left to assist the business in development and growth. However, luckily many options can help you ensure that you always have your cash flow management handled and don’t suffer from cash flow gaps. Using invoice financing and trade financing options together can provide an effective alternative.

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Invoice Finance helps to deal with the side of inflow. It is a simple form of finance that allows your business immediate cash flow to cover outgoings, especially when you are still waiting on invoices to be paid by customers and need to fund the gap during this time. It is a great way to get on top of everything so that you can put yourself back on track to a healthy cash flow. On the other hand, Trade Finance will address the outflow of cash, specific to when you need to pay suppliers but don’t have the revenue coming in at that time to cover it. This is where your finance will pay the suppliers to preserve your supply chain and keep everything running.

Business owners who have a plan in place will often use the available options and even use them in tandem, such as using invoice finance and trade finance simultaneously. While every business is different, and not every option will work for everyone, planning and attempting to manage cashflow issues before they get out of hand is ideal. If your small or medium-sized business is looking into finance options to help keep everything on track, then look no further than Grow Finance.

Grow Finance tailors its solution specifically to small and medium-sized businesses. The team at Grow Finance can discuss all of your business needs with you and then present you with the best finance options for your specific requirements. If your SME is looking to learn more about Invoice Finance and Trade Finance, get in touch with the Grow finance team today, call 1300 001 420, or visit our website to find out more.




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