How business funding can help with a company’s budgeting

There are several financial tools available which can assist a company with its budgeting. Providing access to capital, improving cash flow, managing costs and enabling good investment strategies are just a few of the benefits that can be experienced.

Here are our top 4 funding tools:

Business loans

• Capital for growth – the funding of major purchases or expansion without affecting working cash flow. Helps to improve long term financial planning.
• Fixed repayments – with set repayment terms a business can better manage its cash flow and have an accurate recording of ongoing expenditure.
• Working capital – a loan can cover the short-term needs a business may face during slower periods or downtime.

Asset finance

• Asset purchases – facilitates the purchase of equipment, machinery or vehicles needed without large upfront costs. Funding options include both lease purchase and hire purchase.
• Preserving cash flow – instead of having a one-off large capital investment, asset finance spreads the costs of assets over time, helping to make budgeting more predictable.
• Tax savings – on specific forms of asset finance there are tax advantages which can be taken advantage of, which include reduction in expenses and deductible interest.

 Invoice finance  

• Improving cash flow – upon issuing an invoice, companies can receive immediate payment which will stabilise cash flow and avoid cash shortages. This makes it easier to fulfil regular financial commitments such as payroll and supplier payments.
• Predictable income – companies get immediate cash into the business without having to wait for the traditional 30-, 60- or 90-day payment terms. This helps provide much more certainty with budgeting and forecasting.
• Reduces risks of late payment – invoice finance will help companies to better manage the risks of late payments, especially in sectors where there are long payment cycles. This again supports better budgeting and planning scenarios.

Commercial mortgages

• Long term investment – rather than leasing a property, a business can take on the ownership of a property thanks to a commercial mortgage, reducing longer term costs and adding a very valuable asset to their balance sheet.
• Fixed or variable repayments – similar to a business loan, a commercial mortgage can be arranged with either a fixed or variable repayment terms, making it easier to forecast and budget over a period of time.
• Property appreciation – as the property value increases over time, this will have a positive impact on the businesses financial health which can help with budgeting and potentials further investments or expansions.

All four of these business funding options can help with budgeting. With a fixed payment plan the company will have the predictability and ability to control expenses on an accurate scale. Cash flows can be better managed as the funding means there are no risks of depleting capital. A business will have more flexibility and invest in new initiatives or growth plans. Finally, by spreading out costs over a set period, business finances can be better managed.

If you have any questions in regard to budgeting or would like to know more about any aspects of business finance, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.