Cash flow loans used to be too complicated to consider. That’s all changed with a new product that links to Xero.
Xero have announced that they are partnering with a Wellington start-up called Fuelled to launch a new lending service for small businesses. Fuelled has been made possible with changes to regulations in 2014 allowing alternative finance providers.
Fuelled advance business customers up to 90% of any eligible invoice for up to three months. Interest rates run at between 9 and 15 per cent along with a transaction fee. Fuelled claim the costs are similar to a business loan from a trading bank.
Businesses select which invoices they would like to lend against and the loan is secured against those invoices.
There is no minimum lending amount and no set up charges. There is just a simple, transparent fee.
Borrowers grant permission to Fuelled to access their Xero account where they are able to see their current financial position. Obviously the team at Fuelled can see a good deal of information on the business and they are quickly able to assess the risk.
They can access your Profit and Loss Account and Balance Sheet, invoices and payment history.
They can’t see any inventory information or personal employee information (if you are running Xero payroll).
There is no need to inform your suppliers or customers that you are using Fuelled.
Importantly, no personal guarantees are required. Typically funds are advanced overnight without the need for banking covenants.
You can find more information on Fuelled here.
As with all financial products, it’s very important to read the terms and conditions.
This article should not be read as an endorsement of the product. There are all manner of ways to improve cash flow. The most important are enforceable terms of trade and getting your debtors to pay on time. We have some really useful tips on that here.
If you want specific cash flow advice, please contact us directly.