Ways for Your Business to Optimize Cash Flow

82% of small businesses fail due to cash flow problems. Therefore, it is highly important that your business’ financing, operations and investing activities are efficient.

So, what are some ways to optimize your business’ cash flow? Read on to find out more!

1. Lease assets instead of buying

Leasing equipment or any assets usually ends up more expensive than purchasing in the long run. In this case, leasing may seem counterintuitive given the need to protect your business’ bottom line. However, it is important to note that leasing enables your business to prioritize other capital needs and aids to maintain strong cash holdings for its operations.

2. Have better inventory management

Stocking too much inventory ties up cash that could be better deployed in other areas of your business. On the flip side, stocking too little inventory will lead to lost sales. Hence, it is important that you do inventory planning by forecasting your sales based on your business’ historical sales figures and cyclical trends. Additionally, it is necessary to have a system in place to keep track of the ins and outs of your goods. Next up, do up a list of your slow-moving goods to avoid placing order for more.

3. Conduct customer checks

It is essential that you conduct credit checks on your customers before onboarding. Credit score checks are generally low-cost, and this can be easily obtained via Lyte Finance! With these checks, you will be able to accurately forecast if a customer will pay on time or late. This helps your business to make good decision with regards to customer onboarding. If you choose to proceed despite unfavourable checks, we recommend that higher gross margins and interest rate should be put in place to compensate the risks taken.

4. Negotiate better supplier terms

Good supplier credit terms are essential in easing your business’ cash flow. Examples of such credit terms include longer credit days and early payment discount. To enjoy such credit terms, this typically requires a long working history or friendly ties with your suppliers. So… what are you waiting for? Start building close relationship with your suppliers right now!

5. Employ the use of invoice financing facility

Invoice financing is a short-term financing tool that allows businesses to advance money against their unpaid invoices. It allows you to get funds almost immediately and improve your working capital cycle. Do refer to Lyte Finance’s article on invoice financing for more details on how it can help your business.

To know more about invoice financing and credit checks, email us at [email protected]!


Invoice Financing for Your Business

What is Invoice Financing and how can it help your business?

Is your business experiencing delayed payments? Are your clients requesting for longer credit terms?  

Having an effective and efficient account receivables collection is the key to ensuring that your business has a healthy cash flow. If you are having issues with account receivables collection or looking to improve your cash flow, invoice financing might be just the perfect tool for your business! 

And so, what exactly is invoice financing and how does it work? 

Invoice financing is a short-term financing tool that allows businesses to advance money against their unpaid invoices. To give you a better understanding, let us take your through the invoice financing process as follows: 

  1. You (seller) sell a good or service to a customer (buyer). Then, you issue an invoice which has a credit term of 120 days. 
  1. You submit the invoice to Lyte Finance for verification. 
  1. Lyte Finance gives you cash advance of up to 90% of the invoice submitted. 
  1. Buyer makes full payment to Lyte Finance on invoice due date. 
  1. Lyte Finance sends you the balance of the invoice amount less service and financing fee. 

In just 5 simple steps, your business can enjoy the following benefits: 

  • Funds are available quickly 

Firstly, invoice financing typically has fast processing time, making immediate cash upfront possible. Upon the submission of verified invoices, funds are typically disbursed within several days. As a result, you do not have to wait for your customers to pay on invoice due date which ranges between 60 to 120 days, depending on your credit terms.  

  • Improve your working capital cycle 

Moreover, the longer the account receivables collection period, the longer your working capital cycle will be. The sale of your sales invoices will allow you to improve your working capital cycle and help unlock your tied-up cash which improves your ability to pay for expenses, repay debt and acquire capital upfront for business expansion.  

  • Ability to offer competitive credit terms to buyers 

Besides, invoice financing gives you the ability to offer your customers longer payment term as you are able to obtain immediate cash well before the due date. This will in turn enable you to work with bigger and reputable companies that typically request for  better and longer credit terms from their suppliers. 

  • Better financial presentation 

Lastly, invoice financing helps to convert your account receivables to cash quickly. Financed invoices are considered as contingent liabilities, an off-balance sheet item. 

Besides, you can help your business improve its cash flow, manage volatile payment cycles and acquire upfront capital to expand your business. 

Interested to know more? Reach out to us at [email protected] for a discussion! Alternatively, contact us here