BAY OF PLENTY BUSINESS NEWS JANUARY 2020

BAY OF PLENTY BUSINESS NEWS January 2020
19
Cash flow
and mortgage
security
A new year is for new beginnings, and if
this is your year to get started in business,
good for you! The best advice for any
start-up is: make sure your cash flow is
managed well. One of the main reasons
businesses fold is that they run out of cash.
But if you are smart about how you spend
your start-up capital and keep a close eye
on your cash flow, disaster can be avoided.
Learning how to effectively
manage your
money can truly make or
break a business, as cash is the
lifeblood of any venture.
Controlling cash can be
streamlined by bringing in technology
to assist with anything
from accounting reconciliation
to supplier management.
Depending on the size
and scope of your operations,
you can start off with a simple
spreadsheet or better still,
invest in an appropriate software
package.
For most businesses, experiencing
unexpected highs and
lows in sales is a reality, and
both can have a serious impact
on your cash flow.
If money becomes an issue,
because you need to invest in
new equipment, hire more staff
or involve a third-party supplier,
Paula Lines, Commercial
Lawyer at The Law Shop.
for example, you could consider
taking out a business loan.
You can turn to your bank
or see one of the many finance
and lending companies for this,
but do not rush things as it is
hugely important to get it right.
If you’re thinking about
purchasing assets or expanding
your business, or your
business needs an overdraft to
cover shortages, one thing is
certain - the lender will want
security.
“If you own your own
home, you may be able to borrow
against it for the capital to
buy or start up the business or
an overdraft for help with cash
flow.
If you can borrow against
your house, you’ll be able to
get home loan interest rates
rather than business rates and
you may get a longer-term,”
explains Paula Lines, Business
Law expert and Director of The
Law Shop.
If you’re thinking about purchasing
assets or expanding your business, or
your business needs an overdraft to
cover shortages, one thing is certain -
the lender will want security.
“A mortgage over a house
is a more attractive option for
a bank, as it’s usually easier
for the bank to sell a house if
they need to rather than trying
to sell business assets, which
may not have a huge amount
of value outside that particular
industry,” she says.
“Whether you can do this
will depend on how much you
already owe secured against
the home.
“It also puts your home at
risk if your business fails, so
you need to be absolutely sure
that it is a good option for you.”
Over the years, The Law
Shop has worked with all
major banks as well as specific
business lenders.
Whatever your reasons for
business borrowings, Paula
and her team can help you with
obtaining the funds you need to
keep your business thriving.
Call 0800 LAW SHOP
if you would like to discuss
your situation with the team.
They understand the securities
that lenders require and can
explain everything so you are
fully aware of your options and
obligations, and understand all
that’s involved.
PAULA LINES
LL.B | Director
ROTORUA
1268 Arawa St
Rotorua
TAURANGA
Virtual Office