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Money Worries
Christmas is a wonderful time of year for so many people. We get to spend time with family and friends, share stories, moments, food, and love.

But for a great number of people, the festive season also brings with it worry, stress and uncertainty. I’m talking of course about the financial struggle Christmas can impose.

Almost every year since 2008 the American consumer has increased spending on holiday gifts.

And according to a study by the National Retail Federation, Americans were projected to spend more money on gifts in 2019 than they ever have before.

Keeping up with this need to spend such a large amount of money for the Christmas holidays is totally unsustainable for some. And not only that, but the stress and anxiety to ‘fit in’ with the popular trend are deeply concerning.

So is the answer more borrowing and more debt?

Or is there a better way to solve your Christmas Financial worries?

Mindset Shift
One of the easiest ways to avoid this dramatic overspending is to fundamentally shift the way you think about Christmas. The festive period can be thought of as more than just an abhorrent first world splurge on consumer goods.

Remember the reason we celebrate Christmas in the first place and what it actually means for your family. It’s time to come together and reflect on the year that has passed. Lavish gifts are not required to get the full joy of this experience.

It is more difficult to implement this tectonic shift in thinking when you have children. Of course, you need to be mindful of their expectations, their friendship groups, and the limited number of years they have to enjoy the magic of the holiday from a child’s perspective.

But you can still achieve all of this by spending more frugally and making a conscious effort to not drain your savings.

Recommended article: 12 Days Of Spectacular Frugal Christmas Tips

Plan Ahead
Personal finances can be managed much more effectively with more time. Therefore, planning your Christmas and the gifts you buy is a great way to avoid excessive spending. The earlier you begin this process, the better you are able to spend within the framework of your budget.

And more often than not, with the use of tools such as cashback, the more money you are able to save. And saving money is the key to well managed personal finances. It is when we go beyond our budget that we run into problems.

I suggest you start thinking about a specific Christmas budget months before the event. Also, start segregating your savings so that you know you can afford what you need to spend.

After all, everyone wants to be able to enjoy the holidays as much as is feasibly possible. But under no circumstances should you splurge and think paying back at a later date is a good idea.

Recommended article: 13 Wonderfully Awesome Christmas Gift Ideas For Men

Long Term Plan
With long term planning in place and a new mindset instilled, your Christmas personal finances should be on the right path for years to come.

Christmas can be an amazing reflective experience and many people I know actually forgo gift-giving altogether. They use their time to help those less fortunate.

if we could all adopt this sort of mentality when thinking about Christmas, it would alleviate the financial pressures on everybody. This is not something that will happen overnight, but the change is already beginning to occur.

Being on this side of the Christmas financial equation could save you a fortune over the years, and make your Christmas experience less stressful and far more altruistic.

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?