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: Your profits are effectively going unused for the majority of the year, when they could be reinvested for growth. Borrowing through a working capital solution (preferably with no non-usage charges) over the short term to cover preparation for peak periods can help you to reinvest those profits more effectively throughout the entire year. 4. Optimising your supply chain
If your business experiences seasonal variations in demand, then optimising your supply chain to align with these variations will increase efficiency, reduce waste, and improve profitability. With the right borrowing arrangement, seasonal businesses can spread out paying for peak period necessities over a longer period. This allows them to stock key items in advance, increase efficiency through larger orders, and respond faster to industry trends. Business borrowing also allows you to pay your suppliers early, without creating or exacerbating gaps in your working capital. Your business can therefore approach suppliers from a position of strength, securing preferential terms and discounts that will further enhance profitability. 5. Improving customer terms
With the pressure eased on your working capital, not only will your business be able to secure preferential terms with your suppliers, but will also be able to offer optimum terms to your customers, improving your competitiveness without leaving your cash flow stretched.