Lending Association

Cash flow in a rising rate environment.

If there is anything the last few months of rising inflation and interest rate hikes has taught us, it’s that there’s never been a better time to review your current finances – in particular cash flow. For some business owners, a healthy cash flow can allow you to take advantage of opportunities. For example, cash flow lending is helpful to businesses that provide longer term receivables and/or significant expenses or cash outlay. These businesses typically don’t hold a lot of physical assets, such as equipment, that would be used as collateral for a loan.

1. Let’s review your cash flow  

A cash flow analysis will help you identify how much money you and the business expect to collect and pay over a specific period of time. From here you can then look at your goals and see how the forecasts align with these goals. Looking at your current financial situation will allow you to determine where the gaps are and implement prevention parameters for any future economic (or personal) changes.

2. Budget and plan for future rate rises 

Planning and setting a budget on your spending will help mitigate the impact of further rate rises on your cash flow. Your accountant or advisor can help you reallocate your spending.  

3. If you’re a business owner, arrange regular payments with clients 

To forecast for the months ahead, having regular cash flow is essential in times of high inflation and rising rates. Segment your client base to determine those who can do upfront payments and invoice immediately or provide incentives for paying on time such as discounts.  

4. Cash flow strategies

The team at Lending Association work with over 60 banks and non-bank lenders – no two clients are the same so it’s important for us to be able to offer choice. We have access to thousands of solutions for our clients, depending on their requirements and goals. Cash flow strategies such as Trade Finance can allow flexibility for business owners to manage fluctuations in cash flow. Trade Finance is designed to give you access to funds when you need them based on the strength of your inventory and/or debtors.

Let’s review your current financial arrangements to ensure they meet your business and personal goals in the future. 

Disclaimer: Any information provided herein is of a general nature only. No consideration has been taken into your objectives, needs or financial situation. Before acting on this information you should consider if it is appropriate for your situation.