At launch, companies often have less revenue than expenses. And nowadays, many payments are made directly online with a credit card or debited from a bank account.
The company's shareholders thus bring a certain amount of money, that can for instance be proportional to their capital shares, in order to pay the fees implied by the incorporation of the company and the investments by wire transfer or by cheque.
The shareholders will be refunded as soon as the company will have enough cash flows. With Alf, the refund usually takes place 3 months after the incorporation and depending on the availability of cash flows.
The shareholders' current account is thus one of the three main initial methods of financing one's company.
These cash advances granted by a shareholder can also meet the need to pay sums due by a company.
The shareholders current account is an equity financing method for the company. Indeed, it helps the company avert using any other source of funding, which is convenient, because they usually are more expensive.
The shareholder thus has a claim on the company. this claim is refundable by the company. The Articles of Association of the company must mention the terms and conditions for the refund).
Get to know more about Alf's services for companies visiting our FAQs