If your current business is struggling with working capital, there are actionable steps you can take to improve the situation. In this article, we’ll cover a few finance and fundraising options available to you.
Consolidate existing Loans
If you have existing finance agreements, it makes sense to consolidate these into one larger agreement. This could reduce the overall amount you pay and will certainly make keeping up with your repayments easier. It is possible to consolidate multiple agreements from refinance agreements to Hire purchase agreements. However, this depends on your lender so ask them about the possibility to do so.
Seek a new payment merchant
Ecommerce businesses grow one of their largest ongoing costs are transaction fees or payment fees. 1.5% of each transaction is normal with online businesses. A new payment merchant could offer you a much better rate to reduce your expenditure. A small percentage reduction in transaction fees could make an enormous difference to your business. You can try negotiating with your payment processor if you process lots of transactions or expect to see growth in the coming year.
Liquidate excess inventory
Most ecommerce businesses struggling with Working capital are struggling because all their cash is tied up in inventory. If this is the case and you need rid, it makes sense to liquidate it to raise money and hopefully claw back what you paid for it. Put excess inventory on sale, list it on eBay, Amazon, bundle items with other products or do buy one get one free offers. Pricing strategies can be a god send when you have excess inventory to get rid of.
Make use of invoice discounting
Invoice discounting enables you to leverage the value of your unpaid sales ledger as a short-term solution to improving Working Capital. it involves leveraging money you are already owed. What invoice discounting does is advance you a proportion of the invoice amount. This is usually up to 80% of the invoice total which may be enough for your needs. If you are struggling with working capital because you have unpaid invoices, this is a relevant solution.
Release money tied up in assets
If you have valuable assets such as a P.O.S system, computers, or machinery free from finance, you can release their value by refinancing them. With such an agreement, a lender buys the asset from you and hires it back to you for an agreed term. This is not a loan; it is a simple purchase and hire back arrangement. You get to keep hold of the assets in your business. Come the end of the agreed term, assuming all fees are paid, ownership of the asset will pass back to you. To find out more about how we can help, call us on 0208 987 8004. We have helped hundreds increase working capital.