Title: 8 reasons why business borrowing is smart - Pay4
Headings: 8 reasons why business borrowing is smart
8 reasons why business borrowing is smart
09 Nov 8 reasons why business borrowing is smart
Is business borrowing a sensible option for you?
DSCR = Net Operating Income / Total Debt Service
Good debt and bad debt
Leveraging debt
When business borrowing is smart
1. Facilitating growth
2. Seizing opportunities
3. Managing seasonal fluctuations
4. Optimising your supply chain
5. Improving customer terms
6. Helping to secure future credit
7. Keeping equity in your business
8. Clearer, more disciplined financial focus
Sensible borrowing for a smart strategy
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Content: This means giving up both current and potential value, often to fill a shorter term requirement. If you expect your business to be successful, and are averse to relinquishing control to other investors, then business borrowing is likely more suited to your needs. In short, business borrowing to finance growth will likely bring greater rewards for the company founder than if the founder decides to share the profits among many owners. 8. Clearer, more disciplined financial focus
With a focus on maximising the value of all resources, incorporating business borrowing into your financial strategy encourages you to maintain good financial discipline. In contrast to a business with excess cash floating around, a business that utilises debt keeps focus across the organisation on justifying each and every purchase, process and production method. This is not necessarily a reason to enter into borrowing per se, rather a positive side effect of incorporating business borrowing into your financial strategy and company culture. A business that utilises a flexible, growth-focused working capital debt solution may also enjoy a clearer picture of their finances and forecasting. With the right finance solution in place, the cost of debt is usually clear and easy to understand. With peaks and troughs in expenditure levelled out, debt obligations fixed and working capital gaps closed, a business can maintain a sharper, more efficient financial focus.