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Managing working capital with short-term cash flow finance

Managing working capital with short-term cash flow finance

Short-term cash flow finance is the final means of managing working capital, which we will delve into. Fintech financiers generally provide a lump sum to offer an immediate solution for cash flow requirements.

Traditionally, lenders will assess a business’ ability to repay a loan based on historical data. In contrast, lenders in this space draw on algorithms based on the inflows and outflows of a business’s main trading accounts and several other factors to determine whether they will or will not provide cash flow.

The loan terms are generally only a year, and higher costs and interest rates may be associated with short-term cash flow finance.

A business can also begin paying off the loan from the get-go, designed to be paid out by the end of the agreed term. While this can reduce the likelihood of any additional costs of a lump sum surprising a business at the end of the term, it also does not allow for interest-only repayments to address any irregular or lump-sum repayments down the track.

However, short-term cash flow financing is quick. Businesses can process applications within minutes and access funds within a few business days. No security is required to access the funds, making the process seamless for businesses requiring urgent cash flow.

Businesses must consider whether the repayment structure aligns with their cash flow. If you need clarification on whether short-term cash flow is suitable or want to know more, chat with Duo today.