Securing business finance that avoids banks

1 min read

“Cash is king” is a phrase according to which money (cash) is more valuable than any other form of investment tool.

According to Investopedia, this trusted phrase also refers to the cash flow of a business; meaning strong cash flow allows a company more flexibility in regards to business decisions and potential investments.

A company may have all the revenue in the world, but without the ability to generate cash, it can easily fail.

And without positive cash flow, any company, no matter how promising its business model, will go bankrupt.

Sales growth requires working capital to finance stock and debtors.

Of course, a business can resort to bank borrowing, but securing such a facility from the banks these days is a very difficult task and requires the pledging of collateral in the form of personal guarantees and mortgages of assets in addition to making a significant down payment, which in turn requires the company to have access to cash.

Invoice discounting

Businesses often find difficulties in maintaining high enough cash inflows to cover their expenses because of delayed invoice payments from clients.

“Every business person knows that cash flow is critical to future growth and survival; however, many are reluctant to take prompt action resulting in difficulties, which may lead to unpleasant eventualities,” said Shavasb Bohdjalian, Director of Eurivex Trade Finance.

Bohdjalian added that businesses should not be distracted from client risk evaluation, collection and credit insurance issues and instead should focus on driving growth.

“Cash flow or working capital issues can be solved by specialist firms providing invoice discounting services,” said Athos Kyranides, Consultant at Eurivex in charge of trade finance operations.

Eurivex Trade Finance, a 100% subsidiary of Eurivex, a Cyprus Investment Firm regulated by CySEC offers alternative working capital funding solutions for Cyprus and overseas companies.

In sharp contrast to the banks, Eurivex does not require personal guarantees or tangible securities in the form of mortgages and floating charges on businesses.

The seller gives credit of up to 120 days to its buyers and after assigning the credit invoice to Eurivex, it secures immediate cash.

The assigned invoice is the only collateral required.

A company that does not have strong financials can still apply to Eurivex if the quality of its debtors is good.

Once its customers get approved credit limits, the business presents its invoices pertaining to pre-approved clients which are discounted immediately.

The business thus receives instant cash of up to 85% of the invoice value and the balance of 15% less the agreed fees upon settlement of the invoice.

Such financing arrangements are also useful for businesses looking to reduce their risk as Eurivex combines financing with credit insurance through an arrangement with Euler Hermes whereby the credit invoices issued to buyers are insured against settlement default.