When I started event organizer business in 2006, I haven’t experienced the difficulties on running the business like this day. A few years ago, client made down payment easily so that our main issue was only about the execution process. Nowadays, the bigger our clients, the longer term payment they will make. We cannot expect to receive down payment directly since only a few client can make payment within a month. Usually, it takes 2 or 3 months to make it or even worse, it takes 6 months.
We often hear “Cash is King” in business field. It means, no business can run smoothly without enough money or in this case is cash, particularly for event organizer where we have to pay the cost production of each event first. Hence, managing cash flow for the company is very important in order to make everything is organized and done perfectly. If we say Cash is King, then Cash Flow is King Kong. Many event organizers should experience the bankruptcy due to cash flow issue. Lack of cash flow management becomes the main problem here since the fund for upcoming projects are much more than the fund we own. Then, the solution is we need other channel to increase the fund so that the business can grow and survive.
Followings are some channels to get funded for our project based on my experience:
1. Friends or personal investor
You can contact your friend and offer them to be your personal investor to your project. The benefit when you choose your friend as the fund channel is the fast process and sometimes there is no administration letter needed. But, the weaknesses of this channel are the interest is higher than usual, the money is not always ready and the amount is not as big as you expect.
This is the most common channel but it always works. The interest when you select bank to get fund is around 12-15% per year and you can get the fund based on you need. However, the higher money you get, the higher collateral/guarantee for the bank. Moreover, the verification process needs longer time.
3. KTA (Non-collateral loan)
This is pretty common as well for us to get funded faster since there is no collateral needed and the process is around 1 week only. But, the interest is quiet high since around 30-40 per year and the maximum limit is 300 million.
4. Credit Card
Who doesn’t know this type of card? You may select this channel since it is the most practical since you can make payment for venue, hotel and other vendors which have EDC machine. But, you should pay more attention to the interest of credit card and the limit of credit card is around 1 billion for Black Card.
5. Crowd Funding
This becomes new in financial field where we can apply for loan based on Purchase Order or Invoice which will be input to the platform/application, and the fund will be available by the crowd in the application. The interest of this channel is quiet low but still higher than the bank. The amount can be adjusted by our needed without any collateral. Still, there are some weaknesses of this channel, such as the curation process is tight, withdrawal fund needs many verifications and it means takes more time including from the client.
Fund is important to grow our business but we have to remember the debt will decrease the margin. Therefore, we have to always pay attention to client’s invoice and ensure they make the payment in time altough we have financial institution as our backup. Last but not least, selecting vendor which offer to receive payment based on the term will help us to manage the cashflow.
Cakrawala Event Organizer