Managing Liquidity with Smart Financing Products

Financial Support
27 Jul 2022

As an operational SME, maintaining liquidity might be an issue over the time period. The liquidity ratio of a small business helps in determining the stability and strength of your company. 

Working capital finance is needed to pay off creditors, purchase inventory, and maintain the payroll steady during the off season. You can choose from a variety of financing options, though. For instance, you can opt to finance the acquisition of business fixtures, fittings, and equipment through an industrial hire buy, leasing, or a short-term finance option.

 Before deciding on the form of funding for your company, you might need to learn more about the eligibility. Your needs might differ according to the financing you might be looking forward to.

Working Capital Financing

The main financial requirements for running day-to-day business operations are to finance working capital. Several facilities can be obtained to cover working capital needs, such as payment of salaries, purchases, utilities, etc. 

Short-term finance options like overdraft, po financing and bill discounting can go a long way in running the working capital smoothly. 

One of its strongest features of working capital loan is that there are no limitations on how you may use the money. Most businesses utilize the money to settle their present liabilities, which may include payroll, short-term debt, vendor payments, and other obligations. Others need a quick infusion of cash because the seasonal sales increases result in higher inventory expenditures.

Even if SME is not extremely cash-strapped, you could run across unanticipated situations where you need to have extra cash on hand.

 By taking out a working capital loan, you may make sure you have enough money to cover your expenses or carry your business through a period of rapid growth.

Asset Acquisition / Business Expansion  

For your firm to run, you need assets. These assets may comprise moveable property, such as factories, retail establishments, and buildings. They may also comprise other types of property, such as machinery, equipment, and vehicles. The financing options are presented in the form of machinery loan,term loan, asset finance and capex loans in case you are looking forward to expanding your business via asset creation or an asset acquisition. So loans with terms and  leasing options might work out for you in this case. 

Trade Financing

In addition to working capital financing and term financing, financial institutions can offer financing for SMEs engaged in domestic and international trade, such as import and export or local purchases of goods, materials, or equipment. The following are a few of the common trade finance options that financial institutions offer in the realms of trade financing. 

  • Bank guarantees, 
  • export credit financing, 
  • bought bills of exchange, 
  • trust receipts, and 
  • letter of credit. 

Therefore, managing liquidity to sort out some specific areas of concerns with respect to financing should be a well-thought-out plan for your SME. Oxyzo Financial Services just does that for you with the best of the assistance available. 

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