Small Business Finance and Cashflow…It is the be all and end all for small businesses and people who tell you it isn’t probably haven’t run a business before.

The amount of small businesses we speak to in Yorkshire that tell us their order book is full, their phones don’t stop ringing and enquiries from their website are greater than they have ever been but they still struggle to pay wages each week or month, or even just the day to day bills.

That is what cashflow is.

Making sure you have a regular supply of cash coming through the door to continue to operate your business. Simple eh?

Well not quite.

Imagine this scenario. You win a contract to supply a major nationwide fashion retailer with 10,000 pairs of leather shoes for all their stores.

Fantastic. You can start planning that retirement in Bermuda and say goodbye to all your money issues as you have obviously made it.

Well…What if this happens (and it does, frequently)

You buy in extra materials for this new shoe order. You have to also buy new machines to cope with the extra demand and you will probably have to take on a number of temporary/casual staff to cope.

You produce the order and send it to the retailer and wait to get paid.

However, payment isn’t forthcoming. Instead of being paid in a few days of sending it, you have to wait. Hang on though, the retailer will probably send it at the end of the month so you will be ok until then just about.

But then disaster strikes. The retailer says that you didn’t read the small print and that their payment terms are 60 days….Yep, 60 days from the date you invoice them before you get paid.

In the meantime, whilst your business is struggling to stay afloat until payment arrives (but you will probably just about make it), another order comes in from another retailer for 15,000 shoes.

Whilst you may just about stay solvent until the payment from the first retailer comes through (paying staff, bills, etc for two whole months), there is no way on earth that you can also stretch to buying more materials and taking on staff again.

So unfortunately, you have to say no to that order and miss what could be a superb, golden opportunity.

That is what small business finance is all about.

You could change that scenario to similar ones such as supplying a supermarket, providing building or engineering services, stationary or other goods and services that require a capital outlay from the business.

It’s not difficult to see how and why many small businesses struggle to survive but what is the answer?

Well actually, a loan or finance is probably not the answer as that will only help you in the immediate term. Once you have a loan to cover cashflow shortfalls, you will probably never be able to get out of it as you will be in a vicious circle.

The answer is better planning and cashflow management, not finance and if you are an SME business in Leeds, Bradford, Wakefield or other parts of West Yorkshire, we can help you.

If you are interested in small business finance (SME), then get in touch with us today and see how we can help you.