There are many problems and pitfalls that can crop up when setting up a new business, and they often relate to your company’s finances. This is particularly true in the existing climate, where the impact of Brexit continues to damage small business confidence and has left nearly two-thirds of British start-ups pessimistic about their immediate futures after the referendum.
It is important to have enough starting capital to get the business off the ground but also having a lot of financial nous to keep it ticking over efficiently. There are many different ways banks can help your small business achieve this, with over 3 million businesses with under £1 million making the most of UK retail banks’ offerings. Here are three of the best ways your SME can use banks to its advantage.
- Invoice Financing
Installing a smooth cash flow process in your small business is essential, even more important than simply making profits. You need enough money coming in at the right times to be able to reinvest it in and grow your company.
At the beginning this can be tricky, especially when customers don’t always pay their invoices on time or have up to a month or more to pay them. Invoice financing is a service offered by many banks that allows your business to receive the money its owed from clients’ invoices up front at a small discount. Find out more here about business banking and invoice finance services.
- Business Loans
In order to raise plenty of starting capital to cover your overheads, investment funds and more, a business bank loan is incredibly useful. Different banks will attach various terms and conditions to their loans, but most can be used for businesses in many different sectors for a lot of purposes.
Search around to find one with the best interest rates and repayment terms that will suit your company. Hopefully you will then be able to use the loan to grow your business and be profitable enough to easily pay it all back in the future.
- Business Bank Accounts
Even when setting up the smallest of new businesses, it is incredibly important that you separate company finances from personal ones with a business bank account. One big mistake many entrepreneurs make is pumping too much of their own money into the company, which does not provide a realistic reflection of the company’s finances.
There are many bank account options available for businesses, so shop around again to find one with the best terms. Different criteria will apply to each lender, and having a separate account will make doing taxes a lot easier. Banks can help out SMEs in a number of ways, so take advantage of them when setting up yours.