Every business needs working capital to thrive and grow. But cash flow can easily become stretched due to unexpected costs, late-paying customers, and periods of rapid growth.

Business owners used to turn to bank loans and credit cards from traditional lenders to access funding. But these financing solutions typically involve restrictive loan debt and strict lending criteria.

Fortunately, there are many ways to raise capital without taking on loan debt or worrying about repayments. If you want to improve your cash flow, consider using the following business financing strategies.

Liquidate Surplus Inventory

On average, 80% of profits are generated by 20% of business inventory. Not only does excess inventory take up space, but it also ties up capital that could be re-invested into your business.

This is a particular concern for retailers and wholesalers. Releasing the capital tied up in excess inventory can be an effective way to raise funding from within your business.

You can run clearance sales to sell off surplus inventory at a discounted price or consider combining slow-moving items with high turnover products in a bundle deal. If you need to raise capital quickly, you could consider using a surplus stock buyer to liquidate excess inventory in bulk.

Encourage Clients to Pay Faster

Slow paying customers are an issue for every industry sector in Australia. Over the course of the COVID-19 pandemic, average invoice payment times extended even further:

Image Source – Creditorwatch

You can increase working capital by encouraging your customers to pay you faster. For example, many businesses offer an early payment discount to encourage your clients to pay sooner. You can also add late charges to your payment terms as a disincentive.

Invoice Finance

If your business experiences cash flow gaps due to extended payment terms or slow-paying customers, Invoice Finance can be a fast and effective way to raise capital. Instead of waiting 30+ days after raising an invoice for your customers to pay, you can receive up to 95% of the invoice value as an immediate cash advance. Then, when your customer pays the invoice, the remaining balance is transferred to your account, less fees.

Invoice Finance can be a great way to release capital already in the business, rather than selling equity or taking on loan debt. This type of financing is generally much more flexible and accessible than traditional bank financing. You can choose from a confidential Invoice Discounting facility or a full-service Debt Factoring solution that includes collection and account management services.

You can find out more about the different types of Invoice Finance by reading our guide Invoice Discounting vs Factoring.

Asset Finance

Asset Finance is a flexible funding solution that can be used to support working capital needs. There is a range of asset funding options that enable you to release capital from the assets your business already owns.

For example, if your business owns property, equipment, or vehicles, you can use those high-value assets as collateral to access immediate funding. This type of funding is also known as asset refinancing. The lender will inspect the asset and provide a valuation. When you receive the cash advance, you temporarily transfer ownership of the asset to the lender. You will still be able to use the asset, and the ownership will be transferred back to your company when the finance is fully repaid.

Although this type of financing does not involve loan debt, you will need to make regular repayments over the arrangement term.

Merchant Cash Advance

A merchant cash advance is a form of cash flow lending that enables a business to access an immediate cash advance based on expected credit card sales. The amount you can borrow is determined by the value of your average monthly sales taken by card.

The cash advance is repaid automatically, so there are no set monthly repayments. When a customer pays by card, a percentage of the sales value is automatically sent to the finance company. The lender will continue to take a percentage of card sales until the principal and interest are paid off.

This type of financing can be helpful for seasonal retail businesses with fluctuating sales volumes. However, the rates of interest can be high compared to other financing options.

Read our guide on The Pros and Cons of a Merchant Cash Advance to see if this solution could be suitable for your business.


Crowdfunding is a way for startups and more established businesses to raise capital. You can offer potential investors an exclusive benefit or product in exchange for funding, or you can offer equity in your company.

It’s become increasingly popular over the last decade, but crowdfunding is not a suitable financing option for every business. Businesses with an innovative product or service and high growth potential tend to do best on crowdfunding platforms.

You’ll need a great marketing campaign to generate interest, and be prepared to wait for a long time before you achieve your funding goals.

Government Grants

There are a number of government grants available to Australian small businesses, entrepreneurs, and exporters. You can essentially get free money to help you grow your business. There are no repayment terms. If you qualify, you could access the funding you need without selling equity or taking on debt.

However, the application process for government grants is often long and difficult. You can expect tough competition, and you will need to prove how you will use the money in your application. In addition, there are usually strict restrictions on how grant funding can be spent.

You can find out about grants and programs for small businesses on the Australian Government Business website.

Angel Investment

Angel investors are individuals that are willing to invest in growing businesses in exchange for equity. The goal for an angel investor is to help a business scale so that the share value increases and they can sell their equity for a profit at a later date.

Many angel investors can also provide connections and mentoring to help the business succeed. This type of business financing typically takes place during the early growth period of a company. You’ll need to be prepared to give up equity in your business and be comfortable with a third-party influencing decision making.

To find an angel investor, you’ll need to be prepared to wait until the right investor comes along and be constantly networking. You’ll also need to have a great pitch and business plan.

Vendor Financing

If you experience cash flow gaps because your payables are due before your receivables, you could increase working capital by negotiating longer payment terms with your suppliers. This type of financing can be most beneficial for businesses that have long sales cycles.

Another way to increase payment times is to use Supply Chain Finance.

Supply Chain Finance is a form of financing that can benefit both the supplier and the buyer in a business transaction. Using a combination of Trade Finance and Invoice Finance, a Supply Chain Finance facility can fund cash flow gaps of up to 180 days. It facilitates early payment for the vendor and longer payment terms for the buyer.

Family and Friends

Friends and family are a source of debt-free capital for many entrepreneurs. For example, Jeff Bezos started Amazon with equity financing from friends and family. In 1994, Bezos held 60 meetings with friends and family to help him raise an initial $1 million to launch the e-commerce company.

If you decide to raise capital this way, it’s important to be professional about the funding arrangement. Make sure everything is documented, and have the agreement reviewed by a legal professional.

Finding the Right Working Capital Solution for Your Business

Accessing capital can be one of the biggest challenges you face as a business owner. But there are plenty of options to help you get the funding you need without taking on loan debt or tying your business down to lengthy repayment terms.

If you need some help determining which option is right for you, contact our team of friendly business finance experts today. We’ll help you get the capital you need with a simple and straightforward funding solution.