It’s a cliché but it is certainly true that cash flow is the lifeblood of businesses and when it starts to dry up, your company’s financial pressures will inevitably mount up.

So what can you do when your business is in need of a cash injection? Let’s take a look at some of the more popular options available to UK companies right now.

1 – Asset Refinancing

Cash flow problems can be a source of particular frustration but if your company owns one specific item of worth, or even a number of assets that are of relatively high value, you might be able to raise cash through asset refinancing. This essentially means selling the rights of ownership of your high value assets in return for cash and access to those same assets for a specified period of time.

Asset refinancing is available to companies in any industry sectors but it is particularly useful for those whose businesses involve use of heavy machinery or fleets of vehicles. Clearly, selling your most valuable assets isn’t usually a desirable option but when cash flow is perilously tight, refinancing can be a very viable avenue worth pursuing.

2 – Invoice Factoring

An often overlooked asset that your company might be able to leverage in order to raise funds is your invoices that are due to be paid by your clients or customers. The idea is that your company essentially sells aspects of its sales ledger in order to access cash more quickly.

The factoring scenario has the obvious downside- the selling company does not receive all the money that would otherwise be due from clients, with fees needing to be paid and the buyer always looking to secure a bargain. However, if your company is in dire need of upfront cash then this loss – generally around 10% to 15% – may well be worth taking.

3 – Invoice Discounting

Invoice discounting functions in much the same way as invoice factoring, with the key distinctions centred on the way in which the relevant amounts owed are recovered. With factoring, the creditor takes over responsibility for seeing that your invoices are paid in full and in good time, whereas with discounting that responsibility is retained by the company that’s selling its earnings.

With either invoice discounting or factoring, a key advantage from a company director’s perspective is the simplicity with which these processes can move ahead and cash can be accessed. Unlike business loans, leveraging invoices does not require the involvement of any personal or company liabilities because no money is actually being borrowed in the typical sense.

4 – Bridging Loans

If your company needs cash for a particular purpose, such as to buy a property or an item of equipment that’s essential to your future prospects, then a bridging loan might work as a financing option for you. There tends to be a high application success rate for these kind of loans where a clear and immediate need for finance can be illustrated.

Whatever your situation might be as a company coping with cash flow concerns, it’s important to realise that you are far from the only business ever to face similar circumstances. Very often, the key to overcoming these kinds of issues is understanding your options as clearly as possible and getting reliable advice on how best to proceed from experts on the subject.

John Baird from Scotland Debt Solutions is a leading personal and corporate insolvency specialist. He knows what it takes to help individuals and businesses in times of financial distress.

BOE Magazine