Working capital funding neatly separates business borrowing from personal borrowing. In other words, you can borrow money for your business without putting your home or other personal assets up as collateral.

It is ideal if you’ve won new contracts and need to pay for gear and staff before any revenue is generated from those contracts. Also, if your business is growing but cash flow is tight, working capital funding can make things easier.

This kind of funding is also immediate – there’s no lengthy procedure to go through to access funds, which is great if you need money right now. As for how much it costs – you only pay for money you use. Fees are calculated on cash advanced, not on the total amount of credit available. By comparison, an overdraft facility will often attract a line fee. This fee is based on the amount of limits available even if they are not fully utilised.

Working capital funding is a helpful tool to facilitate growth. If business is good but cash flow is tight, talk to your partner at Finance New Zealand about the various options available that can help.

This newsletter is intended to provide general information on working capital funding, invoice finance/factoring, business overdrafts and stock loans, and should not be taken as advice.