Tag: Cashflow

How Crucial is Business Cashflow Management to Surviving Inflation?

What is business cash flow? Is cash flow the same as profit? How crucial is business cashflow management? These are the questions on the minds of a lot of business owners.  Keep reading. We have answers.

Managing Business Cashflow is Crucial

Let’s start here. You must manage business cash flow. There is no way around it. This is even more important during inflation, as you never know how far your cash will go by tomorrow. No, cash flow is not the same as profit, but it is just as vital.  In fact, without business cashflow management, profit can become non-existent.

Here are some tips for managing cash flow so your business can be thriving and profitable.

Profit First

“Profit First” is a book by Mike Michalowicz. It’s a great read that lays out an innovative new way to manage cash in your business. The profit first mentality suggested that owners take their profit from cash deposits before expenses, rather than paying themselves with what’s leftover. Of course, that is a pretty severe break from what is historically  normal. Typically, businesses pay expenses first and consider whatever is left to be profit. With the profit first approach, predetermined percentages of cash deposits transfer into various accounts before expenses are paid.

A Cash Pool Helps

Paying expenses last is scary for sure, especially when inflation is on the rise. However, reserves and a cash pool can help. The key is to have a business credit portfolio. This allows access to cash when you need it in the form of a cash pool, without damaging your personal credit. Access to cash is vital when you never know how far your cash might go from week-to-week. How do you create a cash pool with a business credit portfolio?

Using Business Credit to Build a Cash Pool

Using business credit to build a cash pool is key to cash flow management.  There are 3 parts:

  • Cash on hand
  • Amount available to spend on vendor credit accounts
  • Amount available to spend on business credit cards

Vendor accounts allow your purchases on credit. Typically, they are net accounts rather than revolving. The total of all available credit on business credit cards goes toward this “pooled” amount as well. Credit cards can help protect your business, as they may limit exposure with online purchases. In addition, most have fraud protocols that can help protect you from having to pay for fraudulent charges. In contrast, using a debit card leaves very few options for recovery.

Money Management Tools

Managing funds can be overwhelming. There are a number of tools that can help streamline the process. These include companies like Brex, Divvy, Expensify, Ramp, and Lola.

Obviously, it is useful to choose a tool that also helps build business credit. There are not a lot that will do this, but some will.

Brex Business Money Management System

Brex integrates with your company’s existing accounting software. It allows for expense tracking, helps pay bills, and offers more control over spending.

The easiest way to use Brex is to open a Brex Cash account. Everyone with a Brex cash account gets a corporate card that works just like a debit card. It draws from your Brex Cash balance daily as you spend, then reports those draws as payments to Dun & Bradstreet, helping build your business credit score.

Since the Brex cash account balance is the security and the limit, there is no underwriting. They also offer a more traditional card with limits that can go up to 20x higher than that of typical corporate cards. They base approval and credit limits for this card on business financial information, including available cash, spending patterns, and more.

The entire balance will be paid monthly, so it is more like net financing than the cash card, but more flexible as well.

You can get cards for your team members and set individual spending limits, which helps manage spending.  There are also virtual card options for online spending.

Divvy

Another option that helps build business credit is Divvy. It is similar to Brex with just a few differences. For example, Brex charges $5 per card for additional cards except premium accounts, which get unlimited cards. Divvy offers unlimited free cards. Other differences include:

Other options for money management tools include Ramp, Lola, and Expensify. They each offer a number of benefits with various pricing options, but at this point they do not report to the business credit reporting agencies.

Business Cashflow Management is Vital, Especially When Inflation is Rising

If you do not manage cash flow, you are doomed from the start. Even if you have all the profit in the world, you cannot survive without cash. Having access to a cash pool is helpful when interest rates and prices are rising. Wondering how to start building a cash flow pool for your business. The answer is to sign up for a free business finance assessment with a Credit Suite expert today!

The post How Crucial is Business Cashflow Management to Surviving Inflation? appeared first on Credit Suite.

How to Get a Credit Based Loan with No Cashflow or Collateral!

Do you need business funding but lack the cash flow and collateral that most lenders require? In other words, you need a credit based loan. But, is that even a thing?

Are Credit Based Loans a Real Thing?

Honestly, no. Still, bear with me. When we talk about credit based funding, we are talking about funding for your business that is based on credit only.

In contrast, most traditional loans are what is called “full-doc” financing. Meaning, while creditors may take business credit or personal credit into account, other factors weigh heavily on the decision.

For example, potential borrowers are required to hand over financial statements, tax returns, check stubs, and more. As a result, the process can be much longer and more complicated.

Credit Based “Loan” Options

Yet, if the idea is that any credit is, at its core, a loan, then there are credit based loan options available. Now, these funding options do not necessarily take personal credit into account, though some may. The point is, they are “no-doc” financing options. You do not have to provide documents like:

  • check stubs
  • financial statements
  • tax returns
  • or and other documents

Some examples of credit based loan options include:

The Credit Line Hybrid

A credit line hybrid is a form of unsecured funding. Also, our credit line hybrid has an even better interest rate than a secured loan. The best part is, it’s a credit card stacking program, and many of the cards report to the business credit reporting agencies. As a result, you can build business credit and fund your business at the same time.

For approval, you need a good credit score or a guarantor with good credit. Consequently, the minimum personal credit score is a FICO of 680. Yet, you will not have to supply any financials, and you can get a loan of up to $150,000. It’s important to note, some of the cards in the program may report on your personal credit.

Business Credit Cards

Business credit cards are universal-type credit cards, like MasterCard. In fact, they can be used pretty much anywhere. Even better, some of these cards have rewards programs as well. However, It’s important to review rewards programs thoroughly. Unfortunately, some may not be relative or attainable for your specific business.

Currently, business credit cards are the main source of credit-only based business funding. Generally, you will need to have at least 14 accounts reporting to the business CRAs. Additionally, they may require a minimum time in business or minimum number of employees. Here are a few examples, but there are many business credit card options out there.

Alpine Bank Visa Platinum Rewards

Alpine features:

  • No annual fee
  • One point per dollar spent
  • Decent APR, comparatively
  • Low spend amount to earn bonus

Amazon Prime Store Card

Of course, Amazon is such a versatile marketplace that this card can be useful for most any business. It features:

  • 5% cashback on Amazon purchases
  • No annual fee

Sadly, limits seem to be low. Also, there are reviews of this card on the Amazon website. Certainly take the time to check them before applying.

Bank of Hope Business Rewards Visa® Credit Card

Bank of Hope card Features include:

  • No annual fee
  • Triple points on gas
  • Double points on travel and dining
  • One point per dollar on all other purchases
  • Easy to meet minimum spend for bonus points for most

Chase Bank Ink Business Cash®

Chase Bank Ink Business Cash top features include:

  • Fairly decent interest rates
  • No annual fee
  • 5% cash back on the first $25,000 you spend on certain business products, i.e. office

CitiBank Costco Anywhere Visa® Business Card

First, you must be a Costco member to get his card. It offers:

  • 4% cash back on eligible gasoline purchases, including buying gas at Costco limited the first $7,000 per year
  • After that, get 1% cash back
  • 3% cash back on restaurant and eligible travel purchases
  • Earn 2% cashback on all other purchases from Costco and Costco.com
  • 1% cash back on everything else
  • There is no annual fee

A Credit Based Loan Can Help You Get Funding Without Cashflow or Collateral!

Fortunately, credit based funding is a legitimate way to fund your business needs without the need for collateral or meeting cashflow requirements. As noted, the most common source of this type of funding is business credit cards, or programs like the Credit Suite Credit Line Hybrid. As you can see, there are plenty of possibilities. The trick is, you just have to find the one that will work best for your business.

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