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Getting the cash flowing

I love it when the youngsters ask me questions and I can help out, either through experience, or from having the time to do some trawling through the web to find the answers for them.

Right now I’m looking at how I can help my younger brother get the cash flow issues sorted with his business. He is doing well, in three years he has gone from just surviving to supporting a few staff as well, but his trouble is that the gap between invoicing and getting paid means that he goes quite heavily overdrawn each month meaning that sometimes he doesn’t take any money from the business for several months at a time.

It’s a crazy situation as he’s properly successful, yet lives as if he’s broke all the time.

I’ve been looking at Touch Financial factoring advice and working out for him whether credit factoring, or discounting as it’s often called, would be right for his business. Basically it means that he gets his invoices paid almost straight away when he writes them, then the factoring business chases them up. He’ll pay a few per cent as a fee, but that has to be worth it, it’s probably less expensive than his overdraft anyway.

I expect that I’ll get roped in to actually getting it all signed up and underway, but he’ll pay me a bit so that’s OK.

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