When operating a small or medium-sized business you are almost certain to fall into periods of shortfalls. Having financing solutions, however, may help you get operating capital or working capital and boost your cash flow too.
These include banks and other financial institutions. Getting a loan request declined, however, might put the hopes for your financing down. Having alternatives, on the other hand, might give you the power and the option to weigh the best, most convenient and probably the least costly option ensuring you get the most amount of profit in return.
The following are some of the alternatives to traditional asset finance.
Invoice finance is a method where you secure a loan with no other form of collateral apart you’re your pending payments from a customer in the form of unpaid invoices. This includes both invoice factoring and invoice finance.
Pending payments are then arranged to either be paid to the financer as in the case of invoice factoring or to you in invoice discounting. You are then required to pay a certain agreed amount of cash each month to the financier to repay the loan.
When sourcing for invoice factoring, a small or medium-sized company gives up its invoices to a third party in order to get some percentage of its value. The financier is then required to get the amount from the customer.
This method is of great benefit to the business that does not have enough staff to manage its debt and keep up with the growing needs of the business. Although this method is time-saving, customers get exposed to third-party creditors and might make them lose interest in making a purchase from your business in the long run.
At Momentum Credit, however, we allow up to 90-day invoice factoring and can offer up to 85% the value of an invoice. This also gets better as we deliver the cash within 24 hours after approval. This makes invoice factoring a considerable financing option.
Invoice discounting, although may appear the same as invoice factoring is a different invoice financing option. While the credit control is transferred to a third party in invoice factoring, here the credit control is not tampered with. This is ideal for business that requires confidentiality as the customer does not have to know that an asset financing option has been taken by the business.
Invoice discounting is where the financier gives a loan with the value of invoices at hand and gets monthly agreed payments until the loan is settled. Business with inconsistent cash flow may find a challenge when implementing this method as may not be able to honor the monthly agreements.
A logbook loan is another alternative asset financing option. This is because it is faster and does not require any other collateral apart from the car logbook. A logbook loan is also manageable and comes with the benefit of possession and use of the car involved.
Disadvantages of a logbook loan are, however, restrictions on the use of the car to only activities that do not require the logbook and risk of loss of possession in case the agreed monthly payments are not honored.
At Momentum Credit, we offer logbook loans of up to 50% of the value of your car. This can go up to 5,000,000.00. We also offer flexible monthly payments making it a one-stop solution to your working capital needs. To learn more about logbook loans click here.
Available working solutions, always provide alternative financing to your small and medium-sized business SMEs, as opposed to traditional loans that require collateral in form of physical assets, involve a lot of paperwork and are not guarantees of loan disbursement.
With the rise of small and medium-sized business SMEs, however, small and medium-sized business are able to fund and get cash in case of constraints. At Momentum Credit, we exist to expand your possibilities. This is by providing services in a simple, fast and reliable platform. For all Working capital solutions, contact us and we will always be happy to assist.