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How To Increase Working Capital

Business News

What is an RCF?

If you have short term or variable funding requirements, a Revolving Credit Facility (RCF) could be the right solution, giving you access to cash when you need it most. An RCF works in a similar way to an overdraft allowing you access to funds up to a pre-determined limit and you pay interest only on what is used.

How does it work?

Most growing companies require cash, others have seasonal sales trends or timing difference between payments and sales receipts that need funding. Funds may be needed to pay for stock and work in progress, or the costs of marketing a new product or service and occasionally a debtor who is a slow or a non-payer. All or any of these can cause plans to be delayed.

An RCF works in the same way as a bank overdraft and allows growing companies to smooth out the peaks and troughs. The loan amount can be withdrawn, repaid and redrawn again any number of times.

Interest is charged daily and there is no long-term commitment, so it provides complete flexibility for the borrower.

You can use an RCF to:

  • help to pay for stock
  • fund work in progress
  • develop or market new products
  • fund short term operating cash flow problems

The Benefits

  • No unnecessary time spent on the distraction of constantly managing cash flows
  • No long-term commitment
  • Almost immediate availability of funds
  • Clear and transparent charges
  • Maximum flexibility
  • Directors’ peace of mind

How much does it cost?

Interest rates on Revolving Credit Facilities vary and new products come to the market all the time. Rates will be determined by the credit rating of the business and if any security is being offered against the facility.

50% of SME businesses give up on applying for finance after being turned away by their high street bank, without realising there are many other options available to them. We have helped many businesses and property developers successfully implement RCF solutions from £15,000 to £250,000. Client’s feedback is that they love the speed, flexibility and ease of use of the RCF.

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