working capital financing

Good cash flow planning helps ensure that your business has enough cash to meet operational needs, such as paying salaries, suppliers, taxes and debts. It also helps identify and capitalise on growth opportunities, such as investing in new equipment, expanding into new markets or launching new products. Good cash flow planning is also indispensable to avoid or mitigate risks such as cash shortages, liquidity problems or insolvency. It is an essential process for any business, from small start-up to large enterprise!

Working capital is an important topic in the financial world, especially for companies striving for growth and stability. But what exactly does it mean and why is it so important? In this article, we dive deeper into the definition of working capital and the role it plays in a company's financial management.

Dstrezzed is a menswear brand targeting the modern adventurous man who values comfort and quality. The company was founded more than a decade ago by Eric Aarden, and now his son Teun also joins the company. They are supported by a strong management team.

In today's times, the average entrepreneur has enough on his or her mind. Aftermath of the corona era, the war in Ukraine resulting in sharply increased energy and raw material costs. Not to mention the uncertainty of how the new cabinet's plans will affect business. Here, we almost forget the tightening labour market and sharply increased personnel costs. And then you also have to make sure your business is or stays well-financed.

In today's times, the average entrepreneur has enough on his or her mind. Aftermath of the corona era, the war in Ukraine resulting in sharply increased energy and raw material costs. Not to mention the uncertainty of what the impact on business will be of the new cabinet's plans (if we can even call it that). To this, we almost forget the labour market tightness and sharply increased personnel costs. And then you also have to make sure your business is or stays well-financed.

You prefer to work as efficiently and effectively as possible. Always have a good overview of your customers, your limits, your coverage and your claims. But how do you easily ensure that you are always up-to-date on your customers' creditworthiness and payment behaviour? 

How good! One of our relations has won the contract to carry out a project in New Zealand at a large maintenance company for large aircraft. The project has the scope of several million euros and the lead time is more than a year. Our client is an SME that does not have the financial capacity to fully pre-finance such a multi-million euro project. Although part of the contract price was paid in advance, this client had to provide a bank guarantee in return. This provided some security but did not provide the necessary liquidity. When you think of working capital financing, you quickly think of a current account credit, 'standing in the red', or factoring. We found a completely different solution for this client! 

Working capital is the money your business needs to meet day-to-day financial obligations. For example, to pay suppliers, purchase goods and parts necessary for the business or project. Companies that manufacture capital goods (think machinery) and, for example, construction companies often need to provide financial guarantees as security that they can meet their obligations, take on a project and when they receive advance payments. In the current market, we also see prepayment guarantees being required when goods are ordered abroad (think China or Vietnam, for example).

We are regularly asked what the application process for a factoring contract looks like. And how long it takes. Logical questions, which we are happy to answer in depth. Not a reader? No problem, because the process always starts with an introduction, where we go through your requirements and questions. We then also immediately check whether your company's activities are in principle suitable for financing via factoring. What do we ask for?

Figures from the UWV show that more than €1 billion of the €3.9 billion inappropriately received NOW funds remain to be repaid. There are about 64,000 Dutch entrepreneurs who have not repaid anything by now. While they had to start repaying their tax debt accrued in corona time from 1 October 2022. The tax authorities have started their reminders to reclaim wrongfully received NOW schemes.