Having money on hand is very important.
When working for a company and your income is somewhat stable, you do not think much about these cash flow issues.
However, cash flow issues are fundamental if you are a sole proprietor or running a company.
Concerning the financing assistance I provide, I will look at company bankruptcy and what to do about it.
When does a company go bankrupt?
When does a company go bankrupt?
Is it when sales decrease?
When sales decrease, and the company starts to lose money?
All of these lead to bankruptcy, but they are not the answer.
A company goes bankrupt when it runs out of cash on hand.
The basic concept of bankruptcy is “a situation in which a company cannot continue its business due to cash flow problems.
This is a situation where the company cannot pay for what it has bought.
Also, a promissory note, often used in Japan, is dishonored twice.
If a promissory note is dishonored twice, the bank’s transactions are suspended, making it impossible to operate the company.
Money on hand is justice.
Now, no matter how much deficit you incur or your sales decrease, you will never go bankrupt if you have money.
Though some may say, “What are you saying?”, it never goes bankrupt with cash.
However, have you ever seen a retail business with no people in it not go under?
In those cases, they often have cash or income from other businesses that keep them from running out of cash.
Justice in having money on hand means that borrowing money from the bank is essential before a problem arises.
Can you borrow money before you are in trouble?
Banks are often said to “lend you an umbrella on a sunny day and take it away on a rainy day.”
It is true.
Borrowers may feel that banks are….
However, a bank is neither a city hall nor a charitable organization, and they will be in trouble if they cannot collect their money.
Therefore, they lend to those who can pay back but not those who cannot.
The solution to this is to borrow while you can.
Even if you pay interest, this is a good measure before you cannot repay the loan.
Is it difficult to borrow money in the first year?
So, is the first year a sunny or rainy day?
The first year is seen as about a cloudy day.
We don’t know for sure that sales will not increase.
That is why they look at it as a cloudy day.
And they think of that cloudy day as a cloudy day that looks like it will be sunny, not a cloudy day that looks like it will rain.
This means the first year is an excellent time to borrow, even without a track record.
It is not difficult to borrow money in the first year.
The first year is the time to borrow money.
It is difficult to borrow money later on.
What about after the second year?
Japan Finance Corporation (JFC), one of the government-affiliated financial institutions under the jurisdiction of the Ministry of Finance, will look at the second year roughly the same as the first year. Still, it is essential to note that you must have a track record for the first term.
If you enter with a proven track record, what will happen after that will be predicted.
In the end, it is easier to borrow in the first term if you consider whether it is easier to borrow or not.
Also, if you manage to get through the second term and enter the third term, you cannot borrow.
In this regard, we would like to borrow early on to normalize our cash flow.
This is because it is surprisingly common for companies to want to take out a loan after the third fiscal year due to a lack of funds.
Plan from the beginning
Think about it and plan your cash management from the beginning.
In the long run, funds for borrowing and interest on cash flow are necessary expenses for regular management.
Naturally, they can be expensed or deducted from expenses.
Let’s make an allowance for funds as soon as possible if necessary.