Growing a business presents numerous challenges, even when it all seems to be going well.
One of these challenges is the ‘hiring hesitation’: The paradox of needing to onboard additional senior talent, taking on additional cost, and only seeing a corresponding increase in revenue some 60-odd days later.
That’s why a Business Line of Credit from the team here at ScotPac can be so important for small and medium sized enterprises (SME). You can learn more about our Line of Credit offering here.
With the right funding facility, your business will be able to:
- Make critical recruitment decisions when needed
- Manage cash flow effectively throughout the process
- Ensure your business operations can continue uninterrupted
What is the 60-day hiring hesitation and why does it stall growth?
Many Australian SMEs hesitate to hire the senior talent they need because it means that some working capital will be flowing out of the business immediately and anticipated capital flowing into the business can lag by some 60 to 90 days.
- Upfront recruitment and onboarding costs can be high
- Hiring and training can take time and disrupt productivity
- Revenue from new clients, projects or improved performance can typically take 2-3 months to materialise
This time lag can put pressure on access to necessary working capital. For project-based businesses and professional service-providing companies, this is even more of an issue.
So, how does a Line of Credit help fast-growing businesses? How can your business hire the strategic roles it needs without missing growth opportunities or mismanaging its cash flow?
How can a business line of credit help hiring senior roles without restricting cash flow?
A business line of credit is a flexible funding facility. It allows you to access working capital on demand up to an approved limit.
With ScotPac, for example, we offer lines of credit of up to $500,000 for eligible businesses.
What are the benefits of a line of credit?
- You only pay interest on the funds you draw.
- Being a revolving credit facility, you can redraw funds as you repay them.
- Funds can be accessed in as little as 24 hours, once approved.
- Applications can be made online and can be approved in as little as one day.
Between the speed at which funds can be accessed and the ability to save on costs by only paying interest on the cash you use, a Business Line of Credit is a well-suited financial solution to help cover the 60-day gap between hiring a senior member of the team and seeing the positive commercial impact on the business of that hire.
In other words, used strategically, a line of credit turns a stressful cash flow management situation into a working capital tool aligned to your revenue cycle and business needs.
When is a line of credit better than waiting to hire or using personal funds?
But is there a better alternative to a line of credit?
What about just waiting to hire the new employee until you have enough working capital to cover the expense? Or even using your own personal funds to invest further into your business?
For many owners, this is the default response. Some SME owners opt to delay hiring and thus stymie the growth of their business or fail to capitalise on expansion opportunities.
Other business owners raid personal savings or extend the home mortgage to fund their business’s needs. This adds more financial pressure to them personally and might seem necessary for emergency funding needs but fails to provide a sustainable long-term solution.
A business line of credit is the more sustainable and manageable choice.
- It provides controllable access to short-term working capital
- It allows you to separate your personal wealth from the business risk
- It maintains your business’s fundamentally sustainable financial foundation but helps reduce the gap between expenses and income
- It is reusable so you can use it continually for multiple hires, growth projects, or seasonal peaks in demand
By using a business-focused financial solution secured against business assets rather than personal assets, many business owners gain more control and flexibility over their growth strategy, without the personal stress.
How do I find out if a business line of credit is right for my next hire?
The lending specialists at ScotPac are always here to help. We partner with our clients to ensure that the financial solution, whether it is a line of credit or another product, suits their objectives, needs and situation.
You can speak with ScotPac’s team by giving us a call or you can submit an enquiry via our website. We’ll provide you with a custom consultation to find the best solution available.
Avoid the ‘Hiring Hesitation’: Contact ScotPac today for a working capital funding solution
We specialise in working capital and cash flow solutions for growing businesses, especially business lines of credit designed to give clients fast access to funding without traditional bank delays.
If you need to hire but are hesitating because of the gap between talent acquisition and increased working capital coming into your business, give us a call today.
