Here’s what you can do now to improve cash flow and liquidity
What should I do now?
You’re not alone.
CEOs and CFOs are all asking the same question.
Covid-19 is challenging every business to operate in a tremendous time of uncertainty.
- How long will it last?
- What will it mean for our working capital and liquidity?
- Will credit markets seize up?
These are questions no one can answer.
But having said that, there are things you can do to prepare.
Here are some questions we can answer. Also, here’s how we can help support you with getting funding options on the table during the Covid-19 outbreak.
Rest assured, we will update you as and when we get more information.
1. Can I still access funding? Are private debt funds even lending?
The good news is the answer is yes. But obviously, it might take a little more time than usual to get answers and secure funding.
2. Should I wait to borrow, or take action now?
Given the extra time it will take to secure funding, now more than ever before, we recommend planning ahead and to not leave it to the last minute to seek funding.
3. What options do I have available?
Private debt funds and in particular venture debt specifically caters to the needs and perceived risks associated with tech companies.
You can use private debt facilities to top-up replace and complement existing finance facilities.
In times of uncertainty, you can use private debt to:
- Extend your cash runway
- Enhance liquidity and improve working capital
- As a cushion to protect your company against potential delays, a strategic pivot, or if you need more cash than initially planned.
Elsewhere you can strengthen your business financially by refinancing your existing debt. Because when you refinance your debt you can:
- Secure more favourable terms
- Free up cash flow to generate more working capital
- Free up capital to reinvest into your business
- Have greater operating flexibility
- Reduce your cost of capital
- Get fast access to cash
4. What about the cost of capital?
The paramount concern of any lender is risk.
So if you have a solid business plan, and up and until now operate in a market with plenty of room to grow, then you have a good chance of raising the funds you need at a reasonable price.
6. Should I even be considering taking on debt during a crisis?
The answer to this question depends on an individual business.
If your business model is robust and you operate in a market with plenty of room to grow, then it’s worth getting options on the table.
You could consider taking advantage of low-interest rates and getting capital in place for when the economy and the market recovers.
During this crisis, banks may lose their appetite for risk. Therefore it may take months to secure the money you need.
However, as I’ve mentioned before, many private debt funds take a specific interest in the tech sector and structure loans accordingly.
To get their attention, talk to a specialist private debt fund broker. Due to the amount of transactions sourced, structured and closed, a broker will have good relationships with funds with capital to deploy.
How is Fuse Three operating during the lockdown?
Thanks to the tech sector, in particular, SaaS businesses, it’s business as usual for Fuse Three, albeit from a different location.
Of course, we’ve asked all our staff to work from home. Fortunately, we already employ remote workers, so they’re used to it.
Finally, we expect more change over the coming days and months. But like you, we’re an agile company and as such, we’re equipped to carry on supporting you.
We’re in this together.