For companies, financing is an engine that also leads you to think about how to grow your business seeking the best loan access conditions, which ultimately translate into increased productivity, greater access to technological innovation and the possibility to enter and remain in international markets.
Now, there are two ways in which you can channel the financing of your company. One is that you allocate it for working capital or current assets, that is, to finance the daily operation of your company within a financial or cash cycle.
The other is that you channel it for fixed assets, that is, long-term assets or useful lives that are required for your activity and that are generally long-term loans because your investment is very high.
Advantages of a credit
If you already have the formula for how to grow your business through credit, you should consider what the advantages and disadvantages of hiring it are. These are the advantages:
-Stabilizes the cash flow of companies: Businesses receive resources when they have shortages and they are returned with a cost (interest rate) when they complete their financial cycle.
-Negotiation tool of the company with its clients and suppliers: the credit constitutes a support to negotiate optimal conditions of volumes, prices and terms.
-It serves to finance the expansion and modernization of companies (fixed assets): Due to the cost it represents, it could not do so with its own resources, since companies would have to accumulate cash for a long time.
By contracting a loan, in addition to recapitalizing your business, you can obtain benefits such as:
– Reduce your tax burden. The interest that you pay for the credit can reduce the amount and taxes that you will have to pay on the utilities.
– Good payment behavior. You can obtain better conditions, in addition to creating a good background to access larger amounts.
– Access various financial services. By obtaining a bank loan, you will be able to access other products, and even complementary services that boost your productivity.
– With the appropriate loan and the correct orientation, the companies will be larger, consolidated and more productive.
Before looking for a loan, it is necessary to carry out a real projection of the business, in order to determine the objective of the investment and propose different payment scenarios to avoid debts and give the ideal destination to the capital.
-If you don’t, the contracting of the financing will go to other attentions and you will lose its initial objective.
– Assuming a debt represents a significant step in your business; measure your income well in advance so that the expenses are sufficient to pay on time.
– A delay in the payment of the financing can greatly destabilize the finances of your business and worse, it can deny you access to future credits.
A short-term loan can help you keep your business strategies afloat, attracting new clients that will boost your income, but plan it very well before accessing it so that it does not become a nightmare and cause you losses.
Bandenia Challenger Bank, Letter of Credit Consultancy in Abu Dhabi