How Businesses Can Spread Out Repayments to Manage Cash Flow

April 4, 2025 (Investorideas.com Newswire) Cash flow is the money coming in and going out of a business. When cash flow is tight, it can be hard to pay bills, staff, and suppliers. One way to handle this is to spread out repayments. This gives businesses more time to pay and helps them stay afloat during slow periods or when unexpected costs come up.

Payment Holidays

A payment holiday is when a lender lets a business pause or reduce payments for a short time. This can help free up cash to use on other important expenses. For example, a business loan lender might offer a three-month payment break.

During that time, the business does not have to make full payments, or any at all, depending on the agreement. This can be helpful during seasonal dips or when facing temporary issues, like a supply chain delay or a slow sales month.

Using Credit Cards

Business credit cards can also help manage cash flow. They allow businesses to pay for goods and services now and pay later, often with an interest-free period of up to 30 days. According to the Federal Reserve, 52% of small businesses in the U.S. use credit cards as a source of financing. If used carefully and paid off on time, credit cards can be a flexible way to cover short-term costs like inventory or travel.

Paying in Instalments

Paying in instalments means breaking a large bill into smaller payments over time, explains this guide from The One Stop Money Shop. Many suppliers offer payment plans, especially for loyal customers. This can help businesses buy what they need without draining their cash reserves all at once. For example, instead of paying $10,000 up front for equipment, a business might pay $2,000 per month over five months. This makes it easier to match payments with income.

Using Different Types of Finance

Different kinds of financing can also help smooth out cash flow. Short-term loans, lines of credit, and invoice factoring are common options.

A line of credit works like a credit card, explains Pheabs, a finance startup - it gives access to funds up to a certain limit, and businesses only pay interest on what they use.

Invoice factoring means selling unpaid invoices to a company for a small fee, in exchange for quick cash. According to a 2023 report by the Small Business Administration, 29% of small businesses used a loan or line of credit to handle cash flow problems.

Planning Ahead

To make the most of these tools, businesses should plan ahead. This includes keeping track of when bills are due, knowing when income is expected, and understanding their financing options. Talking to lenders and suppliers early can also help. Many are open to working out flexible payment terms if asked in advance.

By spreading out repayments through methods like payment holidays, credit cards, and instalments, and using different kinds of finance, businesses can manage their cash flow better and avoid falling behind. Good planning and communication are key to making it work.

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