If you don’t have enough money to pay your employees on time, the consequences can be significant. If your staff is experienced and talented, and they’re kept waiting to get paid, you could lose them for good, damaging or even resulting in the closure of your business altogether. One solution is to apply for a short-term business loan, but is it a wise thing to do?
There are several different types of loans that could help to tide businesses over a cash flow problem. They include short-term loans, longer-term loans, and flexible credit. Deciding which one to choose depends on several issues, including things like cash flow forecasts, sales forecasts, the interest rate the lender will charge, and the repayment term.
Managing Cash Flow is a Global Concern
It doesn’t matter in which country a business is located; managing cash flow to best effect is a global problem. As regards cash flow, and the timely payment of B2B invoices, country location does have a bearing. According to the Intrum.com website, average payment times offered in Europe vary from 38 days (Ireland) to 50 days (Bosnia Herzegovina), while actual payment times vary from 52 (Ireland) to 66 (Finland and Denmark).
To ensure you’re in control of circumstances, you need to be able to make decisions quickly. Given the slowness of the traditional banking network when it comes to evaluating loan applications, that could be a problem. But there is another option you can take, and that is to approach alternative finance lenders. The best way of doing so is by via a loan tendering service.
Applying for Business Loans to Cover Payroll in Denmark
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Given that Denmark is one of the worst countries when it comes to B2B invoice settlement times, let’s look at the Erhvervslån loan tendering platform first.
You can apply for a business loan comparison, from DKK 20,000 to DKK 5,000,000, on the Erhvervslån site. The loan types available include short and long term, and flexible business credit loans. If your cash flow problem is being created by late customer payments, an invoice purchase loan could be your best option.
Because an invoice purchase loan is secured against the invoices you've raised, no further security is required. You can apply for a discreet or open invoice purchase loan scheme and be able to access the funds in your account within 48 hours. The Erhvervslån loan tendering site offers to provide you with a number of comparable offers from various trustworthy lenders within 24 hours of your application. It could be the perfect answer, providing you have sufficient invoice value to cover your payroll problem.
Seeking Business Loans to Cover Payroll in Sweden
The time gap between offered (46 days) and actual (63 days) B2B invoice payments in Sweden is 17 days. Sweden, too, has a network of loan tendering specialists that can help, and one of the best is the Företagslån online platform. They offer to compile loan offers for amounts from SEK 10,000 up to SEK 30,000,000 within 24 hours. They, too, offer invoice discounting loans of up to 100% of invoice value.
Of course, it's not just businesses that require loans from time to time in Sweden. So, too, do employees or consumers, and they also can make use of the services that loan tendering companies such as Lån offer.
Securing Business Loans to Cover Payroll in Estonia
Like the majority of other European countries, Estonia has introduced legislation regarding invoicing for public-sector transactions. However, the country's private business sector may also see similar regulations in the near future. It’s all part of the drive toward invoicing transparency and improving actual B2B invoice payment times.
When compared to standard invoices, machine-readable invoices can be processed more speedily and efficiently, saving time and money. E-invoicing software with machine-readable automation means faster payment cycles, which should lead to improved cash flow management.
However, even after E-invoicing legislation is passed, it doesn’t necessarily follow that customers will pay your invoices any quicker. In the meantime, if this is creating a cash flow problem, you might consider getting in touch with business loan tendering site Ärilaen.
The Pros and Cons of Business Loans to Cover Payroll
Applying for business loans to cover payroll might be your only option, but before you dive in, you should consider the pros and cons.
The Pros of Loans to Cover Payroll
You can find fast business loans easily and quickly via loan tendering companies.
You can use the additional funds for other purposes, such as inventory.
Tendering platforms can find lenders willing to approve applications from startups.
The Cons of Loans to Cover Payroll
Short-duration, low-interest-rate loans might need more time for approval. Having said that, this is where loan tendering platforms perform well.
Loans increase your business's debt.
Short-term loans might have steep set-up fees, even though the top loan tendering sites do not charge up-front fees.
One closing thought that you might find interesting is applying for a business, flexible credit line. Once set up, you can draw from it when necessary. It only requires you making one application, and means you only need borrow the precise amount of money that you need, thus aiding cash flow management.
