Manage Your Cash Flow Better With A CA Loan |
Posted: December 7, 2017 |
Cash flow significantly affects a business. In the case of smaller businesses, the lack of availability of funds is one of the biggest reasons they fail. This situation, where a business simply runs out of funds can cause it to shut down faster than any other factor. Cash Flow Problems for a CA:
You too can face this problem by running your own firm as a chartered accountant. Cash will be coming into your account from the clients or companies that purchase your services. While cash will be going out of your business in the form of various expenses such as rent, taxes and so on. Now, if you come into a situation where more cash goes out than what comes in, then you can be a problem. You are at a risk of being overdrawn. Hence, you will be required to find some way of covering your overdrafts. This problem with your cash flow can usually fall into 2 categories, the ones that arise while starting a business or the ones that can arise due to seasonal changes i.e. fluctuations in how well your business does over various periods in a year. In such situations, your CA loan can prove to be helpful in managing the cash flows. Flexi Loans: Certain banks and financial institutions provide a flexi loan facility along with the CA Loan given to a borrower. Herein, you are given a flexi loan account in which you are allowed to deposit and withdraw funds up to a certain limit. What this means is that you can withdraw funds up to a certain limit, and you have to pay an interest only on the amount that you have used and not on the complete credit given to you. As a result, this can considerably help in saving on the interest you end up paying.
These funds now will help improve your cash flow, making cash easily available to you when needed the most. Also when more cash comes into your business at the time when payments are received, you can even choose to prepay on the CA loans. What’s more is that the amount you have prepaid can again be re-availed. This can be done at any point during your loan tenor, as long as the amount is within the credit limit and there is very minimal eligibility and documentation required for CA loan. In this way, you can get funds for your business or choose to prepay, as per your needs. Additionally, certain financial institutions make all your transactions much simpler with the help of an online portal. These make it possible for you to easily withdraw amounts or prepay on your CA loans. Besides this, it is highly recommended that you find ways to properly analyse your cash flow. A cash flow statement can prove to be useful in this case. This can even be generated with the help of the certain accounting software. You can also have an annual budget in place taking into account all the expenses you are certain to pay every month. On the other hand, having some other investments that generate revenue can also be helpful. Because having different means of income can really help ease your cash flow concerns. For any business, the cash flow will always be something that needs to be carefully taken care of. But it is clear that with a certain financial plan in place, it can be easier to manage your cash flow. It is up to you how best you can utilise services such as flexi loans and other tools in order to keep your business growing. Also Read: Things To Consider Before Applying For a CA Loan
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