All businesses need to raise cash at some point. Sometimes, this additional cash is needed to help the company to expand, at other times it is to help the company to weather a lean time or deal with a cash flow issue. Good accountants can help you to get the finance that you need at the cheapest possible price.
Amongst the sources you can use to raise finance are: overdrafts, short or medium term loans, venture capitalists, investors, shareholders, mezzanine debt, hire purchase, leasing and family or friends. Each method has its own pros and cons, an accountant can help you to understand what those pros and cons are. Most importantly they can work out the cost of each option to your business.
Instead of borrowing money you can sometimes finance growth or set up costs by obtaining grants from local development agencies, government funds, the EU, or local commerce communities. Even when grants are not available from these sources, you can still qualify for loans with very favourable terms and conditions from these sources.
Changing your cash flow is another way of raising extra cash during lean times. Using hire purchase or leasing to spread the cost of buying or running new equipment is a way of injecting a one of sum of cash into your business or spreading your overheads.
If you are owed money by customers you can sometimes improve your cash-flow by raising money using invoice discounting or invoice factoring. This is quite a complicated and specialist way of borrowing money, so you will need the help of an accountant to help you to raise money this way. Mezzanine debt is another option that your accountant can help you to explore, however this form of loan is expensive.
Once you have settled on the best way to borrow money for your business make sure that you use your accountant to explain the terms and conditions of the loan or funding. At the same time re work your business plan and change all your accounting reports to show the new funds and the costs involved in paying them back.