For many businesses in the modern economy, cash flow is a constant concern. There are schemes which promise to provide businesses with options to maximise their investment opportunities, to increase their flexibility or boost their bottom line, but they all come at a cost; invariably, there is a high interest bill attached to these schemes, which small businesses will struggle to afford. Though business loans might come in many different flavours, they’ll always end up with a significant cost to the borrower.
Loans Could Become More Expensive
In 2016, the Bank of England revised its estimates for growth in the near future, and though their estimates do not necessarily reflect an exact prediction of future trends, they do indicate a general increase in inflation throughout the coming year. A higher inflation rate is typically countered with a higher interest rate, which incentivises saving instead of borrowing. Good news for those with money in the bank, but for businesses looking to free up a little extra cash this could be negative.
Contra Dealing as the Alternative to Business Loans
Contra dealing has a major advantage over traditional business loans, in that it doesn’t inherently have a price tag attached. Any business can make a deal which suits them, trading unwanted or excess stock and services for valuable assets. In fact, contra dealing can often allow businesses to eliminate the middleman; if you’re planning to upgrade your business with an expensive loan, why not see if you could simply find the right services on a contra dealing platform instead?
Accounting for Contra Deals
For small businesses, complicated debt structures can quickly become too complex to keep track of; big corporations often have obscure layers of debt, managed by a team of specialist accountants, but for a small business managing repayments alone is tough enough already. Contra deals are one of the simplest ways in which a business can transfer assets – whatever services or goods have been traded are simply treated as if they were sold for cash value, and the cash used to pay for the goods or services received. Keeping the books simple is a godsend for owners of small businesses, and lets them focus on the day to day management of their company.
Is Contra Dealing Right for You?
Not every business will need contra dealing as an everyday tool. However, the ability to quickly and easily shift stock is an invaluable option, and every small business should keep an eye on opportunities to make use of contra dealing.