The Covid-19 crisis has led to an increase in late payments among French companies, according to a barometer published by Arc on October 20. These are mainly linked to a deterioration in their customers' liquidity and the deliberate blocking of invoices. Here's a closer look at 3 solutions that can help you get cash in a hurry, without getting into debt.
1. Lease-back: obtaining funds from your property
Companies in need of cash to reduce their debt can resort to lease-back. In this financial transaction, a company that owns an asset sells it to a lessor, while retaining the right to use it.
In concrete terms, the two parties sign a deed of sale accompanied by an 8 to 15-year leasing contract with a purchase option. The contract is signed with a financial institution. The estimated price of the property depends on the type of property and the seller's profile.
Lease-back offers several advantages. Firstly, it frees up cash flow, whether to conquer a new market, strengthen working capital or reduce debt. Another advantage is that the bank acquires the property concerned at a reduced rate of duty. Last but not least, all rents are tax-deductible.
2. Strengthen your cash flow with factoring
Factoring enables companies to obtain a rapid cash advance by transferring invoices awaiting payment. This solution is reserved for B-to-B activities and cannot be used to finance invoices issued to private individuals.
With factoring, a company issues invoices and sends them to its customers. These invoices are due in more than 30 days. When cash is needed, the invoices are transferred to a factoring company. The factor immediately pays the invoices, retaining a security deposit and fees generally ranging from 2 to 5%.
Thanks to factoring, VSEs and SMEs affected by the health crisis can access cash quickly, without imposing a burden on their customers. What's more, the risk of non-payment is transferred to the factor.
3. Optimize inventory management
Inventories correspond to all goods used in a company's operating cycle, either for consumption, sale as is, or at the end of the production process. Good inventory management is essential to avoid increasing working capital requirements.
To avoid turning their inventories into poorly exploited assets, companies can resort to "stock pledging", a practice which involves pledging stock as collateral in return for bank financing. This consideration can take several forms: an advance on goods, an overdraft, a discount, a commercial paper or a working capital loan...