Tenable Solutions Limited,
Unit 3 Thornes Office Park,
Monckton Road, Wakefield,
West Yorkshire
WF2 7AN

Tel: 0844 855 0 225
Fax: 0844 855 0 229

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Saving your business through refinancing

We’re currently going through one of the worst recessions to hit the country in decades, (2009) and although there are certainly signs of recovery, it looks like it could be going on for some time yet. This worries a lot of people, and it has meant massive changes in the way we all look at our financial situations, especially businesses; however, the rules are still very much the same and it is primarily a matter of being more careful than ever and knowing all your different options. Numerous businesses are currently struggling with cash flow problems as their sales have been hit by the financial crisis. These businesses may be extremely profitable in a booming economy, but whilst the recession continues they simply have to try and survive. This is sometimes extremely difficult, especially given the difficulty of borrowing money in this current climate. The lack of available credit has left many businesses struggling to continue trading and some have already fallen as a result of running out of cash.

If your business is currently struggling, and no matter how hard you try you haven’t been able to borrow money from a bank, it’s time to start looking at different courses of action. It is pretty clear that as soon as you start seeing financial difficulty, it is important to act as soon as possible in order to avoid liquidation or bankruptcy. One of the most common ways of trying to get a business away from financial difficulty is called refinancing, which comes in a few different forms but could well save your business.

One of the most common methods of refinancing is called Asset Refinancing, whereby the business secures finance based on the value of the assets it currently owns. This can be anything from a shop to a piece of machinery, whatever the asset; you are leveraging the value of it in order to backup new financing options. This method works great if you have a number of valuable assets that you can use to negotiate with finance companies, but will not be preferable if you only have a small number of assets that do not amount to any significant value. It is important in this scenario to be completely confident that the money you raise from the sale of your assets can help your business to continue trading in the long term, and will not simply be used up within a matter of weeks.

Another form of refinancing is called Invoice Refinancing, which is generally used in the services sector but could also be used in the sale of goods. If you have invoices that have yet to be paid by your clients or customers, you can use them to receive short term financing in order to bolster your balance sheet. This financing is generally considered to be very short term and should only be sought if you are confident or receiving the full value of the invoices from your client or customers.

When finance is sought in order to complete the necessary work for a client, it is generally called Trade Financing. If, for example, your business is in the midst of a long term project which you have to delay due to lack of finance, it is possible to seek financing from an external source who will lend you the money on the promise of being paid back with interest when the project is completed and the client has paid in full. This is another short term fix that can help you if your business is service based or even if you are struggling with the production of goods.

Of course, these financing options can help massively and could ensure the long term stability of your business. On the other hand, you could be putting yourself into further debt which could put you further into difficulty. These options have saved numerous businesses in the past, and it is only a lack of professional advice that has kept others from using these different paths. If your business looks to be in financial trouble, seeking professional advice could be the best thing you ever did, saving your business and keeping it trading throughout the difficult times we are currently experiencing.

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