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Achieving financial fitness for your business

Jon Maycock - Commercial Director of Propel Finance - Professional photo

There’s no time like the present for businesses looking to plan and prepare for a financially sound 2021. Here, Commercial Director at Propel Finance, Jon Maycock discusses ways you can help set your business up for a sound future.

Over the coming months, many organisations will be under pressure to protect their cash and consequently should prioritise measures to preserve their existing lines of credit.

Regardless of whether they work with an established clearing bank, challenger or fintech, these businesses will be looking to future-proof themselves by keeping much needed capital within the organisation in order to facilitate growth or be positioned to handle any potential bumps in the road ahead.

In the current challenging financial environment, it makes sense for businesses to take the opportunity to unlock the hidden reserves of capital tied up in their existing assets via an asset refinance solution.

?Given the extraordinary circumstances of the pandemic, cash flow forecasting will be key for businesses throughout the year.

A time to keep pushing ahead

To stay ahead of the pack in 2021, it will be necessary for companies to invest in new equipment which can lead to greater productivity, efficiencies and a competitive edge.

Businesses can support this by spreading the costs with asset finance, which has come into its own as a leading funding solution in the current challenging environment, enabling firms to keep on going during the crisis and even thrive.

Asset finance provides immediate access to the most efficient equipment, plant and machinery and vehicles available, helping organisations to realise their opportunities for growth.

Because leasing or hire purchase do not require a major upfront cost, businesses can invest in much needed new equipment without touching their cash reserves or impacting other funding arrangements.

Additionally, many businesses are finding that equipping for productivity and performance provides a crucial competitive edge, particularly as the pandemic has driven an increased focus on digital enablement.

With remote working likely to continue into 2021 and beyond, the need for continued investment in both software and hardware is a business imperative. In turn, finance providers are also seeking to redefine the user journey to enhance the asset finance experience and give rapid access to urgently needed finance, enabling more SMEs to finance equipment quicker, easier and more conveniently.

Plan ahead to repay loans

An integral part of the financial planning process for 2021 should include cash flow forecasting making sure that loan repayments are fully covered. By doing so, organisations must be sure to take expert advice from their accountants or business advisers.

Once the costs have been mapped out, a cash flow forecast showing on one page exactly what is coming in and what is going out will help to make clear how much working capital is needed to run the business day to day, week to week and month to month, including the loan repayments.

For organisations whose business is seasonal or cyclical, this can dramatically affect cashflow and this also needs to be reflected in the cash flow forecast.

Most business owners, by their very nature, look for opportunities and therefore are typically optimistic about when and how many sales that they make.

Remember that it pays to be conservative in both revenues and expenses, so discount last year’s revenues.

It also often takes longer to get the sales than initially thought, especially if the organisation sells products to larger businesses that may need to go through a set of internal processes before they commit to purchase.

With this in mind, moving expected income towards future months as appropriate will help the business to plan for any unforeseen problems.

Create a contingency and think ahead

A sensible approach is to maintain a cash cushion necessary to break even, necessary stock payments should also be included in this.

Once the forecast is ready, it will enable the business to create and consider ?what if scenarios, asking questions around what working capital requirements may look like if the business is to grow at different rates, or if the current rate of new business is reduced, to ensure that all the organisation’s objectives and commitments are met at all times.

By taking all these actions together it will be possible to put the business on a secure footing to confidently meet the challenges that 2021 may bring.

About Jon Maycock

Commercial Director at Propel Finance, Jon has 20 years” experience in the SME lending market across a range of commercial & leadership roles.
He holds a proven track record in scaling asset finance businesses through direct, intermediary and vendor channels; with a passion for delivering great results for customers through great people and with great technologies.



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