Positive Business Cash Flow

4 Tips on Maintaining Positive Business Cash Flow


​Whether you have an established business in Bristol, England, or any other part of the world, the long-term success of any company relies on one thing: Cash Flow. Proper metrics and figures are essential in any business to calculate the cash flow, and irrespective of how much money you’re earning per month, maintaining a healthy and positive cash flow is crucial. Now the question is, ‘How to sustain it and what do you need to do for that?’ Here’s the answer.

Monitor the Cash Flow Permanently


How do you check your business’ cash flow? How often? Monitoring it weekly is excellent, but if you do so daily, it’s even better as it helps you track your financial information efficiently. Moreover, you can use accounting software or hire an accountant to make the process simpler, generate quality reports, reconcile your accounts, handle your taxes, and so on.


Consider working with a freelance accountant as it will help you avoid taxes, and even though they may not be from Bristol, England, or nearby areas, they can handle your system online. Per Accountancy Age, you can expect an accountant to charge around £35 per hour per hour, although the cost can differ based on their expertise, skill, and how much work they need to do. Another option – if your business is in a tight spot – is working with a company specializing in cash flow finance facilities like Pinnacle Business Finance to secure funding.

Get Your Invoicing and Scheduling Right


Your clients may not pay you on time if you send them inaccurate invoices, and it makes a poor impression. Ultimately, this will negatively affect your cash flow. Ensure that all the necessary data on your invoices is correct, add a pricing breakdown, and make sure that you include all your payment details so your clients can pay you. This saves a lot of time, numerous questions, and fixing mistakes, and ensures that you have the money in your bank account as soon as possible.


​In addition, it’s essential to ensure you discuss the payment details early on when you sign a new client. Numerous entrepreneurs usually forget this due to the excitement of landing a new client and then waste precious time sorting it out later. Agree upon a payment date or make sure that the client knows when they have to pay.


Similarly, when staff are distracted by scheduling concerns, they won’t perform well for you. Many businesses in Bristol and beyond find permission-based shift scheduling is a winning strategy, as it allows for creating and publishing schedules quickly and cleanly while on the run. With popular software options like Quickbooks, you can take advantage of drag-and-drop capabilities, and you can control who can make changes and assign shifts. It’s a simple way to maintain morale and productivity, all in one fell swoop.


Clear Debts in Time


As Prowess recommends, it’s wise to try to pay off your debts as soon as possible to avoid the piling on of dues. Many businesses find it advantageous to address smaller debts first, as they are always easier to eliminate than larger ones. You can also offer discounts to those suppliers or vendors who pay their bills in time to encourage cash flow. Keeping that strategy in mind, charge a fixed rate to those who keep delaying payments, and for this process to work seamlessly, establish payment arrangements with your dealers and suppliers in advance.


Focus on Profit-Making


Small businesses are prone to suffer losses in the beginning. Still, after a certain point, those losses need to slowly convert to profits to keep the company running. There are two different ways to tackle this.


First, you can raise the rates of your most popular and best-selling products by a small margin in a way that doesn’t impact your customer’s purchase patterns but also leads to an enhanced cash flow. Second, you can stop the manufacturing process of the products that cost too much to set up if they don’t generate much money.

In a Nutshell


A positive and healthy cash flow is more vital than anything involving a business. Keeping an eye on your cash flow is also a key to your company’s success – a few mistakes or missteps in this area can put you in a money pit. Should you worry? No, because these tips can help you maintain a healthy cash flow, leading to your business expansion and success.


Pinnacle Business Finance focuses on business loans, invoice finance, card machines, and other commercial finance alternatives. The team is based in Bristol, England, and offers a first free consultation, so make sure to contact it if your business needs any of these services.


Debt Factoring Bristol

What Is Debt Factoring?

Looking At Debt Factoring?

You may be thinking what is factoring and how does it work? It’s a financial means of supporting cash-flow for the start-up and SME businesses. To maximise the benefit to your business there are a few pre-conditions. Invoicing B2B (Business to Business) is a must. Also invoicing once the work or service is completed. Debt factoring is a finance facility used to support cash-flow and grow a business. Commonly for a start-up business, there will be a set fixed bundled fee structure so it’s easy to calculate and controllable measure. A business finance broker like us will run through pre-qualifications to make sure your business can use factoring. It can be a flexible finance option and tailored to the individual business requirement.

The Impact of Debt Factoring On Cash Flow?

Very rarely can new business owners foresee the importance of cash-flow and how this will impact growth in relation to turnover. Winning new large contacts can be fantastic. With large corporations, allowing smaller SME businesses a chance to grow. However, scrutinizing contact payment terms is imperative. This is because the large the corporation, the slower payment terms can become. So even though you may think, fantastic I’ve won new secured work. The impact on cash-flow to fulfill this contract or service can be costly. Anything over 30 days or even less depending on the industry can have an effect. So how do you mitigate against these factors? Debt factoring is used to release outstanding invoices as an upfront payment. An example would be your business invoicing £1,000 on 30-day payment terms. In the next 30 days wages, expenses, marketing, and other business expenditure continue. In addition, the customer or debtor is late at paying. This leaves you the business owner in difficulty. So, factoring or debt factoring can aid this. Once you have raised the invoice and sent it to your customer. The invoice finance company can release up to 90% of the value of it. Resulting in £900 minus pre-agreed fees are paid to you. On payment of the invoice the remaining balance it released back to you. If you are unsure or would like the security of funding, then credit insurance can assist. This mitigates against bad debts providing you the business owner with the financial backing. To grow and boost cash-flow within your business.

Why Is Turnover Important in Factoring

When setting up invoice factoring the financier will ask what your previous or projected turnover levels are. One of the simplest definitions of turnover is the total amount of sales during a time frame. Commonly turnover is calculated and assessed over 12 months. If you require new start business funding, then having a clear business plan and the cash-flow forecast is a must. If nothing else, it articulates your business projections. Otherwise, it’s just a great idea in your head which can become extremely stressful. So, having a business plan that has cash-flow and turnover levels in it is so important. Also, when you speak to a business finance broker, we will assess this for you. Pre-qualifying what the finance companies will want to see. Making the process seamless and stress-free. Most importantly getting the best debt factoring for your business. Hopefully, you now have a brief understanding of factoring and why it’s so important. Knowing why having basic financials such as turnover levels is so crucial.
Cash Flow Invoice Finance

How to Boost Cash Flow?

What Is Cash Flow

Before we delve into the fine art of cash flow and how this can grow your business, we need to understand what cash-flow is. Commonly within a business, your accountant, consultant, or support network may commonly mention cash-flow to you and how important this is. The reason being is that it’s the lifeblood of any business. So, cash-flow is the transferring of capital in and out of a business. Think of it as water running through the pipes and out a tap. Without cash-flow, you may have all the infrastructure but no capital available to you. A business can be loss-making but have healthy cash-flow. Therefore, not feel the impact of this. Now of course the aim of any business owner is to be profitable, have readily available funds, and have the ability to scale the business to achieve the desired outcome.


How to Assess Cash Flow?

When looking for investment into a business the financier or lender will analyse the business’s cash flow position. The way in which most financiers will do this is by looking at the debt servicing ratio. This is a simple equation as follows. Debt Service Coverage Ratio = Net Operating Income / Short-Term Debt Obligations. This is to make sure that the business can repay the short term borrowing or liabilities to creditors etc. Your business can be profitable but if it doesn’t have positive cash-flow then it won’t survive. The reason why this can happen is you have large amounts of capital tied up in outstanding invoices. If credit terms to customers are less than favorable, then how will you support have readily available funds? How will you pay staff, buy further stock or have free capital to grow your business?


How Do My Credit Terms Effect My Cash Flow?

When starting a business or scaling an SME business up, how do you maintain a positive cash flow position within your business? One of the many tools in your armory is to get your customers to pay within the credit terms. On the flip side, ask your suppliers to offer credit terms to you. As a consequence of this, you will not only have the ability to pay your suppliers in 30 or even 60 days’ time after the goods or serviced have been supplied. You will have your customers paying you in a timely fashion. This will leave you free money to operate your business. Maintaining a healthy cash flow position and be able to grow or acquire business’s as you go.


Finance Solutions Available 

Now as a business owner, financial director, or business advisor you are thinking I want to grow my business. How do I improve my cash-flow; in partnership with the points already raised? One finance solution to support cash-flow is invoice finance. This is accessible to all sizes of business not just corporate finance. As a start-up or SME business, it can be difficult to access funding. Invoice finance is there for a business who invoices B2B (Business to Business) once the goods or service has been delivered. Often smaller companies are put under greater strain when working for larger businesses.

This is because the credit terms for paying invoices can be 60, 90, or even 120 days after the work was completed. Leaving you the business owner with outstanding invoices on your sales ledger. Now invoice finance can release the outstanding money on your sales ledger and give you the ability to not only free trade with the larger businesses. But grow your business and have a positive position. The amount you have tied up in outstanding invoices plus future invoices you raise will be advanced against.


How To Access Finance?

The answer is simple. Go to either ourselves Pinnacle Business Finance as we have a wealth of experience within this industry. Alternatively, you can go to your accountant or business consultant who will refer you to a commercial finance broker such as ourselves to source finance for you. This will not only save you time, money and give you the ability to gain the financial backing you require.

The World Famous Clifton Suspension Bridge, situated in Bristol, UK.

What Is a Commercial Finance Broker?

What is the job of a commercial finance broker?

A commercial finance broker has an extremely important role in business finance in the UK. A finance broker should compare the market, saving you time and money with no preference to a single lender. They should be there to support and guide you through the process, answering any question you may have. Since the credit crunch of 2008, a wealth of alternative lenders have been there offering something different to high street banks.

Pinnacle Business Finance is experienced within invoice finance and business loans. Not only as a broker but as a lender too. This is because the team has worked within these sectors for financiers so understand the market requirements. The Pinnacle team will guide you through your funding journey.

 Why should I use a commercial finance broker?

This is a question that has been raised in the past. Would you try and build a house with no experience or knowledge of building? You have a business to run which is time-consuming in itself. Let alone having to go to the market and hoping that you strike lucky with a lender. Then not knowing if you have the most appropriate funding in place for your business. Comparing your funding options is crucial and a business finance broker will do this for you adding value along your funding journey.

Pinnacle Business Finance is rated 5 stars on Google. Evidencing the importance we put on customer service. We have a panel of over 70 lenders all bringing their own unique view on commercial finance and the funding facilities they can offer. We can negotiate on your behalf. Were there to support you to make sure you understand how the finance facility will work.


Where do I find a commercial finance broker?

You may have gone to your accountant looking to raise commercial finance. You might have been referred to a finance broker. Then again you can go online or ask for recommendations from another business owner you trust to see if they have used a finance broker in the past. There are many different places you can find a finance broker but getting the right one is crucial. Some brokers may specialise in 1 certain product as others have a broader more experienced role and have a greater product offering.

Pinnacle can source a wide range of commercial finance offerings for business’s not just invoice finance and commercial loans. This may include merchant cash advance, asset finance, or a commercial mortgage. Pinnacle finance has various case studies, google reviews, and testimonials which evidences our ability to get the job done at the highest standard.


How can a business finance broker help my business grow?

If you are SME business or new start business looking to grow and invest then a commercial finance broker can help. The reason why is because they not only will source the most appropriate funding for your business, they can tailor it to fit your needs. A good finance broker will demonstrate their experience and knowledge within the sector. Giving you the confidence that investing in your business is the right or wrong option at that given time.

Pinnacle sources commercial finance for you and will make sure you are happy with the funding offer. Frequently offering multiple funding options to you letting you decide on how you would like to proceed. Getting the commercial finance in place is vital to the success of your business. If you would like to find out more about how Pinnacle can make your business grow with commercial finance, then get in touch to claim your free consultation with a funding expert.

the interior metal manufacturing daylight the view from the top

The Ultimate Guide to Invoice Finance

It’s thought that a third of UK SMEs have limited or no understanding of how invoice finance works, so if you want more information on invoice finance, here’s a guide to how it can work for businesses, from the different types of invoice finance to the advantages and disadvantages of the process!

What is invoice finance?

Over 95% of private businesses in the UK are made up of SME (small to medium enterprises) with over 55% of them struggling with cash-flow. Invoice Finance is an asset-based form of lending which means that’s assets such as machinery or stock can be collected if there were to be a default on repaying the facility. Invoice finance aids with boosting cash flow and therefore commonly increases turnover.

The way this is done is the financier will advance money against unpaid invoicing on the sales ledger.  Typically, advance rates will be up to 90% of the invoice value. This is for B2B (business to business) registered in the UK from start-ups through to corporations. The largest corporations in the UK will use invoice finance on a confidential basis so the customers are unaware of the financier’s involvement. It can release large amounts of working capital for a business and open up the market for SME’s who are looking to work with corporates or grow the business. Think of it as a continual cycle of short terms loans to aid cash-flow.

What are the different types of invoice finance?

There are 2 forms of invoice finance. Invoice factoring and invoice discounting which accommodate business differently. Let’s look at factoring to start off with. This can be accessible for start-up businesses and SMEs to reduce workload and give them the financial backing to grow. The finance company will collect in the outstanding invoices by administering credit control and advance money against outstanding and future invoices.

Invoice discounting is reserved for the larger more established business with a minimum turnover of £300k. The business would administer the credit control and a trust account is set up for payments to go into. This is an account that is set up by the finance company, purely to receive payments of invoices. Many people think of invoice discounting like a series of short term loans. The financier gets a figure or list of invoices that you have raised and then loans or advances money against these.  It’s the most simple and low touch form of invoice finance. When used to its full potential can dramatically increase turnover and grow a business.

What is selective invoice finance?

Selective invoice finance allows a business to control what particular invoices they would like funding on. The business can decide if they require funding on all the outstanding invoices or none at all. This can not only support seasonal businesses with busier and quieter times but those who are looking to grow quickly. The financier typically will have an online portal that allows a business to upload invoices and receive payment. This a very flexible form of invoice finance.

What are the advantages and disadvantages?

Previously a few advantages have been raised with the main one being a boost and support to cash-flow. This is because it negates B2B having to wait to get paid 30,60 even 90 days to get paid. Instead, having 90% of the value of the invoices released in 2-3 days. Furthermore, it allows the SME market to compete and trade with a wider and more diverse range of clients as they can sustain longer credit terms. This in turn will increase turnover allowing a business to scale up. Construction, recruitment, and domiciliary healthcare finance utilise factoring or invoice discounting commonly.

The disadvantages and considerations to make when using invoice finance are to be clear on how you will collect payment if you choose to administer credit control yourself. Also, manage how much funding you require at points throughout the year. An example would be £100k may be available to you but do you require all £100k all the time or is it more beneficial to stagger the funding required.

What do I need to get an invoice finance facility set up?

For an application to be considered by the financier and indicative terms presented they will look at the following. As a minimum for a new start business, the following will need to be ready. A copy of a bank statement, business plan, projections for 12 months, and any outstanding invoices will allow the financier to assess the level of funding required. For a more established SME, 3 months bank statements, a copy of any annual accounts, sales ledger, and a creditors ledger will allow them to get an initial insight into the financial performance of the business. Remember the more information supplied in the initial stages the stronger the application will be allowing for a more competitive pricing. The best practice is to gather all required information prior to applying.

Then when the financier requires this information not only is it accessible but current. Typically, it takes 1-2 weeks to get an invoice finance facility set up. However, this can be shorter depending on time scales.

Get in touch with Pinnacle Business Finance Today

Invoice finance can be a complex subject with lots of jargon and technical terms. We hope that our ultimate guide has helped to introduce you to the subject! For more help and information on Invoice Finance, please get in touch with the Pinnacle Business Finance team today.

cash flow

The impact of Late Payments on Cash Flow

The impact of Late Payments on Cash Flow 


 Covid-19 Loans 

During Covid-19 small businesses across the UK are striving to survive and keep cash flow positive. This can be particularly challenging when their customers are taking longer to pay and therefore stretching cash flow further. Employees are being furloughed to reduce overheads. Also, many SME’S are taking on board Government-backed loans such as the BBLS (bounce back loan scheme). The BBLS is for businesses that are looking to borrow between £2,000-£50,000 in as little as 24 hours. The government covering the first 12 months of interest payments. A business will be able to have access to the loan, up to 25% of their turnover as a lump sum payment. 

Pinnacle and your accountant can help you through the process of applying for a government-backed loan. The scheme is initially open until the 4th of November 2020 with 100% Government backing. The term of the loan can be up to 6 years keeping monthly repayment as low as possible, however increasing the overall interest payable.  

There are alternative business finance options available to UK businesses that will mitigate late payments and keep cash flow strong. The labour peer Lord Mendelsohn has introduced a Private Members Bill to the House of Lordsto tackle the issue of late payments for small businesses. This was proposed in January of 2020. Commonly with 30-day payment terms on an invoice if the customer exceeds this term, there is little to no fines incurred. This has repeatedly put a strain on cash flow for businesses. Especially in industries such as haulage, recruitment, and construction which rely on a positive cash flow position to pay staff, maintain vehicles, and buy materials.  


What Is the cost to SME businesses? 

 Pinnacle Business Finance is a member of the FSB (Federation of Small Businesses). A report was generated by the FSB back in 2016. This gave some headlines figures on the impact of late payments on the economy. A staggering 37% of small businesses reported having cash flow difficulties and resulting in 30% running into their overdraft. In addition to this, nearly 23% of all insolvencies in the UK were due to late payments. The estimated cost of this to the economy was 2.5 billion! 


What cash flow solutions are available? 

 One funding option available is invoice finance. There are 2 facilities which can be utilised to tackle cash flow using invoice finance. These are factoring and invoice discounting. These finance facilities are used to mitigate late payments and free up capital which is tied up in outstanding invoices. Furthermore, if a business has particular customers who are late at paying and require funding on these, then selective or spot factoring can be used. This is where the business picks and chooses what invoices or customers they want funding on.  


Credit Line facilities? 

 A credit line facility can also be used to tackle problems with cash flow and increase turnover levels. A credit line facility is a set amount of funding that a business can borrow and pay back over a flexible term. This operates like an overdraft and provides an SME or corporate venture the ability to access large amounts of funding as required.  

Invoice Finance Coin

Tomorrow’s Pay, Today: Leveraging The Power Of Invoice Finance

Businesses which invoice once they have completed work for clients and have to wait 30, 60, even 90 days to get paid. Often they run into cash-flow issues. You can’t charge your customers until you’ve done the work for them. But you need to buy resources, pay wages, tools, and materials to complete their job. This often leaves business owners spending money from their own pockets and a shortfall in cash-flow. 

Invoice finance can solve this problem for you. But how exactly does it work?

What Is Invoice Finance?

It can be thought of as a type of loan which revolves around the invoices you issue. The amount of money you’re able to borrow is typically based on the amount of money you have in outstanding invoices. Typically 80%-90% of all the outstanding invoices you have can be released as an upfront payment. An example would be if you have £100,000 of outstanding invoices you are owed then up to £90,000 can be paid to you as an upfront payment!

Using a method like this is a great way to ensure that you get hold of your required finance nice and quickly. Your lender will be using your invoices to vet, rather than focusing on all of your financial performance. There are many different types of facilities available. Pinnacle will tailor the one to fit your requirements.

Who Needs Invoice Finance?

There are many sectors of businesses that can benefit from a tool like invoice finance. Construction companies, domiciliary healthcare, haulage, recruitment, and a host of other industries use invoice finance companies. If you find yourself needing to cover the costs of the projects. You require finance to cover other parts of your business, invoice finance is always an excellent choice. It can really transform a business’s cash-flow and allow turnover to grow. Take on larger projects and scale-up.

Why Choose Invoice Finance?

Invoice finance companies offer a range of benefits to small and medium-sized businesses through to corporations. These loans are very secure and give you the financial backing you need to boost cash-flow and grow your business. The facility can be tailored to fit the business and reduce administration. It is very hard for invoice finance to snowball or become unmanageable. You won’t be allowed to borrow more than you can get back in invoices.

How Can Pinnacle Business Finance Help?

Here at Pinnacle Business Finance, we have a wealth of experience when it comes to managing an invoice finance facility. We’ve worked with countless businesses to ensure that they secure the correct type of commercial finance to enhance their business. We have found this type of loan to be one of the most popular.

Our dedicated team is always happy to offer support and guidance about our invoice finance services. We also offer business loans, merchant card terminals, asset finance, and a range of other financial products that can be used to give your business the financial backing it needs. If you’d like to know more of how this could potentially work for you then get in contact on 0117 2510048 or email info@pinnaclebusinessfinance.co.uk.


South West Care

Improving Your Care Support Career In the South West

There are few things more crucial to a family than being able to look after one another. The old look after the young, and the young look after the old, but things have started to change in recent times. More couples are sharing the weight of parenthood than ever before. Both sides of a household being more likely to work, especially in the South West. While this enables people to live fulfilling lives, providing a good upbringing for their children, it can also limit the time people have to look after their older relatives.

Care facilities used to be able to bear this burden, but the number of 85-year-olds in need of care expected to increase to about 2.7 million by 2040. Plenty of younger people also requiring this support, the strain on these services is too much for them to cope with. In many cases, this strain is placed directly on the shoulders of the people on the frontline. Care workers are regularly subjected to unfair overtime rules, zero-hour contracts, and little in the way of career progression.

This is something you can overcome with your own career, and Pinnacle Business Finance is here to help you. While this is mostly geared towards those in the South West, it can also apply to other regions. First, though, let’s take a look at the cause of these problems.

The Problem With Care In The South West

Anyone who has had the pay the price of care will tell you, this sort of service doesn’t come cheap. Those who can’t afford to pay for their own care will often get help from their local council. Although if you are unlucky enough to have a home or savings when you go into care, this could be taken to cover the costs. This is thanks to strict budgeting constraints that have been placed on this sector. Councils only being able to afford to pay for care for those in the greatest need.

While some people are paying for the care they receive, this money barely covers the costs of a care home. This means that these places are usually understaffed, with the gaps being filled by agency workers on zero-hour contracts. Training is also an area in which a lot of care homes and other support facilities struggle. Of course, though, with some county and district councils being threatened with bankruptcy, it’s hard to see how this is going to improve. Instead, more and more of the care homes which used to be government-owned are being placed under private possession.

When a place like this is privatised, it will usually still receive money from the government. The shareholders which own the business will want to save some profit out of this. The management of the company will also receive bonuses. Between 2017 and 2018, the Department of Health and Social Care had a budget of £125.15 billion. Just £15.32 billion of this being saved for things not under the NHS banner. This may sound like a lot, but it is a tiny amount considering that it has to cover so many areas.

So, in short, the government can’t afford to provide the care people desperately need, but they also can’t be seen not to be giving it. This means that the weight of the short budgets will always fall onto the shoulders of hard-working carers. Whether you work for an agency or directly under a care facility, you’ve probably felt the cuts in recent times, but we’re here to offer a solution.

Using Domiciliary Care

There is a huge demand for private care at the moment. Depending on the area, some of those in need have to wait for months or even years before they can access the care they need. Around 15% of people aged between 65 – 69 find at least one daily activity difficult. This is a huge demographic on its own, and this is before you consider the other age groups which need daily support.

By working as a self-employed domiciliary care worker in the South West, you can bring the care people to need straight to their door. This can make their life a lot more comfortable, whether they have decades left in them or are at the end of their life, and you can make a very good career in the process. There are several different types of domiciliary care;-

  • Live-in Carers: Live-in carers will stay in the home of their service user. Usually spending one week at work, followed by a week off. This cycle will continue with two or three carers and is only for those who need the most stringent support.
  • Daytime Carers: Daytime carers will stay in the home of their service user during the daytime. Providing them with the company, personal care, and making sure that they are safe and sound. This sort of role will follow hours similar to a normal job.
  • Short Visit Carers: Some people only need help with a few things each day, and many people like to limit the care they receive as much as possible. Performing short visits can enable you to have more service users, making your job more secure.

You don’t have to restrict yourself to one of these areas. You can do all of them at different times if you like. Each of these options offers a good hourly rate. Working for yourself will give you some freedom to request a higher wage than you’d get working for a big company. You won’t have to deal with the overheads of a big business. This enables you to get paid more without having to overcharge the vulnerable people you work with. Alongside this, you will also gain the benefits which come with working for yourself. Rather than a company trying to make a profit from you.

How Can Pinnacle Business Finance In The South West Help?

As a financial broker working with businesses of all types. Pinnacle Business Finance is well-placed in the South West to support you on your journey towards starting your own domiciliary care business. Our expert team can help you to get started with your business. Whilst also helping you with the financial side of things.

A business loan will give you the chance to get set up. Potentially with a professional website, some business cards, and all of the equipment you will need. Invoice finance will make it easier to cover the recurring costs of things like wages. Growing a business always requires some investment. We understand that this can be difficult to muster when you’ve been working in the care industry. No matter your circumstances, we will always do as much as we can to support you. We encourage anyone thinking of a career change like this to get in contact using the details found on our website.

Food and drink

Food and Drink – The South West’s hidden secret?

Food and Drink – The South West’s hidden secret?

The food and drink industry has to be the secret weapon in the SME arsenal of the southwest.  At Pinnacle Business Finance, we must confess, we do rather much have a “sweet spot” for food and drink businesses. Putting the puns aside, SMEs in the food and drink industry has a rather unique ability to scale up very quickly. The Food and Drink Federation estimates some 30,000 people are employed in the southwest alone. We see a different statistic, we at Pinnacle Business Finance see the untapped potential of these businesses. Access to business finance from simple card terminals to supply chain finance can unlock growth. A trusted finance broker can be key in giving you the support your business needs.

Case Study: South East Vs South West

In 2017 the Food and Drink Federation report stated that the South East Food and drink industry was worth £1.9bn, slightly above the south west at £1.6bn. The staggering difference was that the south east exported £1.7bn, nearly 90% of its value. Needless to say, the benefits of exporting for any business are vast. The South West was a meager £0.8bn, 50%. We wanted to highlight this stark contrast in the hope to raise awareness among the food and drink community here in the south west.

It is no doubt that many businesses are caught off guard when it comes to their business finance. We often see highly skilled business owners so passionate about their product that they don’t get the right business finance in place. Of course, this is right, you wouldn’t ask a finance broker to bake your bread! Naturally at Pinnacle Business Finance, we understand this, and that is why we help find the business finance for you.

Supply Chain Finance can help businesses pay suppliers. Many businesses suffer from seasonality or large orders. This has a big impact on cash flow and suppliers need paying long before the payment arrives in. The gap between the payments is the cashflow conundrum. By accessing supply chain finance, businesses can access the finance on a pay as you go. It can cover the payment gap perfectly. Invoice Finance is a natural fit and can work seamlessly alongside.

Many small food and drink vendors have no idea about card terminals, much for the same reasons discussed earlier. Our article on card terminals provides further information on this. Card Terminals can boost turnover by as much as 300%, just by making it easier. The cost of a merchant card terminal vary, but at pinnacle business finance, we can support. As with any good finance broker, presenting you the options is key.

We pose this simple question, imagine if the south west food and drink industry accessed these innovative forms of business finance? It is clear there is considerable potential for southwest food and drink businesses in terms of export. A commercial finance broker versed in the industry could act as a trusted partner. It is clear access to business finance is a quick win and would support the ambitious South West SME.

cash flow loan

Why is a loan for cash flow rarely the right option?

To continue our series of blogs on commonly asked questions, the team at Pinnacle Business Finance suggested we write a post on cashflow finance. Our team includes 2 invoice finance experts with many years of industry experience. They often troubleshoot cases where small businesses are on to their second or third business loan, with no idea where the money has gone.

The answer is simple, it’s because they have used the wrong tool for the job. Extra payments, bumper interest, fixed funding, and little protection are all the root causes. The article aims to give a broad understanding of why invoice finance can support cashflow over a series of commercial loans.

As an expert commercial finance broker, we make sure we understand the businesses we visit and speak to. A common response to the requirement for funding from a small business is cash flow. Unlike many commercial finance brokers, we don’t stop there, we talk it through. One such case led us to understand a business that was using business loans to buy stock. It meant long after the order was fulfilled, they were left with an additional daily payment that was crippling the business. When a new order came along, they had to take further borrowing. The cashflow problem therefore was getting worse each time.

The previous commercial finance broker had simply got them a business loan. They didn’t understand the cash flow cycle of the business. We suggested an invoice finance facility that would allow them cash when they needed, with no cost when they didn’t. It released more cash as they raised more invoices, allowing them to get the stock, but it didn’t leave ongoing payments. Like any safety net, it was there when they needed it!

Sadly, the story doesn’t end for this small business. The commercial finance broker hadn’t explained the fees. After we sat down with this client, they were paying a staggering 31% on the cost of borrowing over the year. Ultimately it cost the business financially and hadn’t solved the cash flow issue. The selective invoice finance facility will only cost the small business around half of the interest they were paying. It will also release the cash they need when they need it, with no ongoing commitments.

Having funding that grows with you is key and most importantly doesn’t leave you with big liabilities if things go quiet. One business didn’t understand the key of cashflow and was left feeling the heat. They had borrowed around £30k in business loans and relied on topping them up before the festive season. Unfortunately, one of their customers went under owing them £50k, around 20% of their annual turnover.

The cashflow was hit! If they had taken out bad debt protection with an invoice finance facility, they could have been protected. Instead, the newly topped up loan was now having to be repaid and the business had just lost 20% of their turnover. The small business had to be restructured, and the whole pain could have been avoided. You can make a house out of paper, but it is no use when it rains!

It’s evident that getting the right solution is key, especially if that issue is cashflow. Invoice Finance can provide more than just funding, it can provide protection as well. Using business loans are often expensive if they are used in the wrong way. Ensuring you have funding that is secured will protect you in most scenarios. Pinnacle Business Finance can take the time to guide you in the right direction.

If you found this article useful, please share it and comment below. The team are on hand to answer any questions or indeed support your business.