If your business has all the funding it needs to keep trading successfully it may be in the happy minority among Australian SMEs, but this isn’t an ideal situation if you can’t invest and grow. Have you ever thought about the cost of not investing?
At OptiPay (OptiPay), we spend a lot of time talking about the importance of having enough money to cover your cash flow needs. This is because cash flow problems can rapidly escalate and are the biggest single reason that small businesses fail.
However, most businesses want to do more than just sit still. More even than just grow steadily. Small business owners are ambitious people: They want their businesses to reach their potential fast and would certainly want to take advantage of any expansion opportunities that present themselves. To do this effectively, businesses and entrepreneurs need intelligent, flexible funding that is easy to access when they need it most.
How Much Does Not Investing Cost?
Research by UK “challenger bank” Aldermore found that more than a million small and medium-sized businesses reported missing out on at least one new business opportunity a year because of a lack of funding. At £80,000 (A$148,000) per opportunity, that’s a lot of lost business, and the picture will certainly be replicated around the world.
If anything, the real amount of lost business will be higher still, because there will be opportunities lost that business owners never even knew about it. Calculating the true cost of all those missed revenues – to businesses and the economy – is practically impossible. But, as the Aldermore survey confirms, most business owners know of at least one chance that escaped them personally because they simply didn’t have the funds ready to invest.
The problem is not necessarily a lack of investment capital available. There is now quite a lot of money in the world economy looking for a good home, but it is no longer being offered in the same ways as before. Or, if it is, this is no longer convenient to modern businesses.
Businesses Need Flexible Funding that is Easy to Arrange
As this survey by accounting software provider Xero suggests, even many businesses that are eligible for a business loan from a bank are put off by the sheer bureaucracy involved in obtaining one. If the cash is needed quickly, the paperwork won’t just be off-putting: it will make the loan useless.
As with all things, the pace of business is accelerating, and old-fashioned business banking is not serving entrepreneurs who want to seize the moment on a given opportunity. Fortunately, Fintech has come to the rescue.
Australia is a world leader in Fintech and business Fintech in particular is thriving because it is helping to smooth the process of linking investment capital to growing businesses. It is particularly useful for SMEs because many companies have focused on ease and simplicity, saving busy owners the need to spend hours filling out complex forms.
Another area where Fintech is really making a difference is speed. Businesses can often get an answer on the funding they want the same day as they fill out the application. With some Fintechs, such as OptiPay, they could actually have their money within 48 hours or less of your application being approved.
Flexibility is just as important: with conventional loans – which is ultimately what many alternative business lenders offer – a business is tied in to borrowing a fixed amount for a certain term and to making a series of cash flow-sapping scheduled repayments. That’s why we believe invoice financing can be a better choice than a loan, especially for business owners looking to tap into growth opportunities as and when they arise.
With a flexible invoice funding solution, you choose how much cash to draw down against your accounts receivables ledger at any given time. This way you get the cash fast to invest in your most promising opportunities.
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