The need for financing and choosing how to finance your company is a constant in the life of any business and this, in its just measure, is a sign of economic health.
Whether you are an entrepreneur or the financial manager of a company, you will be forced to make a series of financing decisions, sometimes difficult.
In the market, there are multiple fundraising solutions but not all are valid for your business model.
How to finance my company and through what means?
To answer this question, first we have to consider the following:
- All financing generates a cost.
- This cost will vary depending on the source we choose to obtain funds.
Experienced accountants at www.gsmaccountants.co.uk recommend the following:
Analyse in detail the type(s) of project you want to carry out and for which you will need external funds. Once you have done this, establish the amounts and limits in relation to these three factors:
- Necessary Capital: How much money do I need?
- Term: How much time do I have to deal with the project? And for the subsequent return of the amount received?
- Interest rate: What kind of prices are there in the market and how much am I willing to pay?
The answer to all these questions will help you to know how to finance your company and what is the best means.
Most common means of financing
The first thing we have to consider is whether the need for funds is for the short or long term. The most common is that there is a combination of both.
Let’s see the most common …
- Advance of invoices or commercial credits
The advance of invoices will allow your company to finance itself in the short term, this means obtaining immediate liquidity.
Do you have a series of customers who delay the payment of their bills each month and this is beginning to have consequences for your business model?
Making use of the advance of invoices or invoice factoring can be the solution.You will be able to anticipate all the invoices that you have pending for collection until their expiration.To do so, you have two options:
- Go to the classic banking and financing entities: In this case, they will carry out a study on the credit profile of your company and your personal profile, which will take some time. In case of being granted, fixed conditions will be imposed for all the invoice advances you make, also supporting specific commissions.
- Online financing methods: They will be fast and flexible. They respond to your request in a maximum of 24 hours. Free of commissions and guarantees. For each invoice, a different interest rate will apply for which a professional investors’ pool will bid, and the holder can choose the price that suits them best.
- Invoice discounting
This will allow you to have an amount of a credit, the amount of the invoice will be discounted, usually in the form of a percentage depending … Read More