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Releasing equity from business assets to finance stability in tough times

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The rising costs of operating a business are having an impact on many across the North West, and beyond. From fuelling your fleet and keeping the office warm, to producing your own products or purchasing supplier goods, your costs have increased whilst your customers look to tighten their own belts. The knock-on effect is a slowdown of cash entering your business despite the fact that the usual expenses continue to exit your bank.

Whilst cash in the bank may not be a luxury all of us can afford, your business probably has tangible assets with equity. Assets that are holding onto cash which could, instead, be used to stabilise and expand your business over the next few years.

Below, we explain how to release cash from your assets and invoices. We also cover why you should consider this option to safeguard your business against the unpredictable climate we’re in. We hope you find it useful.

For more information please do get in touch with our friendly, Rochdale-based team here at Coria Commercial Finance.

Releasing equity with asset refinancing

Releasing equity from your assets is known as refinancing or ‘capital release’. It is a form of commercial finance that is fairly straightforward and can produce a swift injection of cash into your business.

The asset in question is valued and is essentially bought from you at an agreed amount by the lender, but without you having to give the asset away. You then buy your asset back over a set time period. This transaction allows you to release capital which can be invested into the growth of your turnover.

For example, you may choose to refinance a van which releases £10,000 of equity. This £10,000 can be used to install a new IT system which makes your team so efficient you make more sales and increase turnover, year on year, from that point on. That £10,000 becomes a smaller price to pay back the more your turnover increases.

The biggest advantages of asset refinancing are that you can stabilise cashflow, use the money to expand your business, and all the while, still use the asset in question - so there is no interruption to your workflow.

What assets can I release equity from?

You can release cash from several assets within your business including:

  • Vehicles

  • Buildings

  • Land

  • Stock

  • Plant and machinery

  • Equipment

  • Customer invoices

Using Invoice Finance to fund stability

Utilising invoice finance means you receive payment for customer invoices when they’re issued, rather than the 30, 60 or 120 days laid out in your payment terms.

When it comes to ensuring that what’s meant to land in your bank, does, and on time, Invoice Finance is invaluable for three reasons.

  1. Stablising cashflow: Predictable income from your biggest customers makes your cash flow more predictable, as well as forecasting and budgeting much easier.

  2. No chasing customers: Because your customers now technically owe your finance facility, and not you directly, credit control is a bolt-on service most businesses choose to include as part of their invoice finance.

  3. No nasty surprises: Including Bad Debt Protection in your finance package ensures you receive payment even if your customer cannot settle their invoices, for example, in the event of them going bust.

Using Invoice Finance to its full extent (i.e. with credit control and bad debt protection included) facilitates your business getting paid on time, without having to waste time chasing customers for amounts owed. Furthermore, as more companies struggle with the economic climate, bad debt protection can help to soften the blow of your most essential customers being unable to pay you. Overall, this leaves you more time to make sales, stabilise and expand your business.

How to start releasing equity with commercial finance

If you’re reading this, your internal costs have probably gone up and you want to be winning new business, at better margins, to increase your bottom line. But you have to be financially comfortable to take that next step in your growth.

Our commercial finance options offer short term relief alongside funding your long term profitability.

For a pressure-free chat with one of our finance experts, please get in touch using our online form.

Photo: team Coria Commercial Finance at our fundraising event in November!

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