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Short-term vs long-term financing

Posted on August 17, 2016 by admin

Maintaining healthy cash flow can be challenging; between ongoing expenses and bills, poor cash flow can severely impact your customers, staff and bottom line.

Business owners need to understand the differences between short and long-term financing when developing a cash flow strategy.

There are various sources of finance available and each source of finance is useful for different situations. Choosing the right source and mix of financing options is crucial for good cash flow, so it is important to first determine your needs and then match a financing option to meet those needs.

Financing options are often classified into two categories based on time period: short-term and long-term. Below are the key differences:

Short-term financing
Short term financing (working capital financing) relates to the finance needs that arise to finance current assets – for a period of less than one year. Working capital is used in the business’ day-to-day trading operations. Short-term financing can help you to pay suppliers, increase inventory and cover expenses when you do not have sufficient cash on hand.

Depending on your business’ requirements you might consider using one of the following options:

Overdraft: extends your cash resources and protects your business’ credit rating.
Line of credit: funding when you need it, to be paid back when you have surplus cash – offering flexibility, value and control.
Business credit card: a convenient, fast payment method.

Long-term financing
Long-term financing options can help you invest in overall improvements to your business, for a period of more than 5 years. Capital expenditures, such as upgrading equipment, buying additional vehicles and renovating are funded using long-term sources of finance.

Businesses can use one of the following options:
Leasing: structuring a lease to match the useful life of the asset. This will help to preserve your cash and working capital for other uses.
Term loans (from financial institutions, government and commercial banks): allows you to accurately forecast your monthly cash flow through regular monthly payments.

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Tips for incorporating career mentoring into your business

Posted on February 28, 2020 by admin

A career mentorship program involves partnerships between employees to develop professional skills and gain industry knowledge. Due to their requirement for a collaborative effort, career mentoring programs are often seen as powerful development tools for cultivating both leaders and employees within a business.

Whether you are a small business owner or a multinational corporate leader, the implementation of a mentorship program will always be profitable for businesses as not only does it create a harmonious workplace culture, it also helps to attract and retain employees.

As straight-forward as career mentoring sounds, there are a few key tips to keep in mind when building a mentorship program for your business:

Make sure your mentoring program is clearly defined:
To create a successful mentoring program, both mentors and mentees should have a concise understanding of their roles and what they would like to gain from the mentorship. By succinctly outlining the purpose of the mentoring program, mentors and mentees are more likely to keep organised and communicate respectfully with the guarantee of mutual rewards.

There should also be short-term and long-term goals established for all parties involved, including the business. These goals could be the narrowing of particular skill gaps or creating a more open workplace culture. By having these goals set in stone, both mentors and mentees and have a clear direction to work towards.

Personalise the match-making process:
Often times, businesses will match a mentor and mentee together depending on their skill-set and position within the company. While on paper, this may appear to be an efficient process, but the lack of chemistry between a mentor and mentee may prove to be devastating for the workplace environment.

As a result, be sure to involve both mentors and mentees in the match-making process and take into account personality traits. You could do this by asking employees to take a personality test to ensure compatibility in career goals, personal interests and preferred communication methods.

Be involved as a third-party:
Lastly, it is the responsibility of the business to check-in on the progress of mentorship programs in order to understand how mentors and mentees can grow together and what improvements can be made to the program. Remember to always refer back to the long-term goals established and consider the feedback provided by mentors and mentees from the program.

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