Funding for operating expenses (OPEX) within working capital i.e. for funding a contract or to pay a VAT bill, in other words a short term injection of liquidity could come through:

    a)      Trade Finance like factoring and/or securitisation of receivables

    b)      Supply Chain Finance like dynamic discounting and/or reverse factoring i.e. payables invoices

    c)        If you have some security then asset based lending might be a way forward.

    d)      Peer to Peer lending otherwise crowd funding/crowd sourcing may assist funding.


    Funding of Capital Expenditure (Capex) within Working Capital i.e. growth capital to purchase new equipment, premises, merger/acquisitions then longer term liquidity could be injected via:

    a)      Asset based lending

    b)      Self-issued Bonds

    c)       Private placements

    d)      Corporate venturing

    e)      Peer to Peer lending

    f)       Business Angels if at start – up stage

    g)      Venture capital although specific focus is required re sector, maturity of company and size of funding.

    However all the above could lead to a use of equity.

    The important aspect with regard to Integrated Reporting is to link this in the reports to the manner in which it is spent. Investors can then see the result of their funding.

    Emphasis is growing on many businesses to reflect the ‘thinking’ behind many of the decisions they make with regard to cash flow and how it is being managed in an efficient manner to safeguard investors cash and earn reasonable returns.

    To enable this to happen business needs to engage in measuring the contracts and projects that are going to eat into the operating cash of the business. Contracts that have high revenue streams, high risk factors and even poor cash flows are certainly the ones to focus upon. But also one cannot take the eye off marketing spends that could need project managing so that timescales and costs are not overrun and generate long term and sustainable cash flows.

    Furthermore CAPEX projects should be similarly accounted for as cash can soon haemorrhage from the business and the project not only generates cash issues but causes inefficiencies within working capital areas namely stock, work in progress and could escalate to impact debtors and creditors too.

    Whether marketing is a ‘cost’ or benefit or whether it should be ‘funded’ from internal cash and/or external investment ( ie.Working Capital) has long been a major issue and particularly when attempting a SWOT analysis in strategy terms.

    Personally I believe, that like R & D spends, these two areas need to be broken down into projects that have defined scopes, remits, owners and of course a detailed analysis of when, how and value of the intended spends and revenue streams.

    The analysis can then be done to establish if the spend can come from internal cash generated and/or funding from external sources.

    If revenue streams or an incentive from funds/grants re R & D, or indeed, tax implications that impact upon cash/investment then these too can be reflected in the project plan. But they need to be certain as political parties may alter tax thresholds, dates or indeed withdraw them totally.