A company’s cash flow is representative of the health of the company.
But what is a company’s cash flow? What cash flow problems can a company encounter? And above all, what banking solutions exist to solve them? Let’s take stock of the cash flow loan for companies.

The main thing to remember

• A company’s cash flow refers to all the company’s available liquidity, whether in cash or in the bank.
• Late payment by a customer, slowdown in activity… the company’s cash flow may become negative.
• To remedy this, a cash loan is a reassuring solution: there are cash facilities, overdraft authorization, and cash advances.

A company’s treasury

We speak of the corporate treasury to designate all available liquidity, in cash or the bank: it is in a way the “cash” available and which the company can use if necessary.

Cash flow is calculated from cash balances, bank accounts, and postal checks.
However, certain expenses are excluded from cash flow, including future expenses (such as salaries, rent payments,and purchases to be made) and unforeseen events, such as staff absences or renovations.

Cash flow is essential to the good health of the company: without cash flow, a company risks not (sur) living for long.

What is a cash flow problem for a business?

When the company’s cash flow is positive, everything is fine.
But if a customer’s invoice is late or if business slows down, the company’s financial balance can be put at risk.

A cash flow problem arises when there is a time lag between money coming in and going out.

To avoid any business failure, any cash flow problem must be anticipated as early as possible.

What is a cash loan?

Short-term professional credit, the cash loan aims to finance one-off or recurring cash flow needs for a company.
It is either granted with a contract signed with the bank or by a simple verbal agreement.

To benefit from a cash loan, it is necessary to demonstrate good management of the company’s accounts, even if significant cash flow gaps may occur.

The different types of cash loans

To deal with a cash flow problem, several banking solutions are possible:

• Cash facilities

To compensate for a temporary gap between expenditure and income (when the company pays salaries and contributions, and is waiting for its receivables to be paid), the business manager can negotiate overdraft facilities with his bank.
This very common cash flow solution allows the company to debit its account for a few days, until the account returns to positive.
This is often an agreement between the company and the bank, without a contract having actually been concluded.

• An overdraft

With its account in debit for several days or weeks, the company can benefit from immediate cash flow while waiting for a future inflow of money.
Be careful, the bank overdraft must be authorized by the bank and stipulated in the contract.
In addition, this solution will require the payment of bank charges: this is why it is recommended that the company negotiate the rate in advance.

• A cash advance or campaign loan

The cash advance or campaign credit can be granted to companies whose activity is seasonal (at Christmas for example, or only in the summer).
It is a solution to meet significant cash flow needs, and this is for several months: in concrete terms, an overdraft is authorized for several months, and the repayment of this credit or advance will be made throughout sales made during the period of intense activity.
With this type of loan, the bank takes a high risk: stable financial liabilities are therefore strongly recommended.