In this article we discuss the cash flow problems many Australian businesses face in January due to late invoice payments. We provide our tips for minimizing your cash flow gap and to improve your stress levels. Read this article to avoid googling “unsecured business loans” at 2am on the 5th of January!
The silly season is well and truly here, and businesses across Australia are madly making the most of this seasonal peak to maximize their revenue for the calendar year. Whilst this is well and good, for most businesses you have to spend money to make money, so their outgoings are proportionally up at the same time.
As a business owner, you spend a fair bit of time thinking about the question “How am I going to access funds for growth?” Sometimes opportunities to grow by acquisition pop up unexpectedly. Or you may win a new and bigger customer when the operations account is looking lean. Not all businesses are cash flow positive every month. Nor do they always have reserves put aside to invest at short notice.
Are you a business owner that gets to the end of the month and wonders why your operating account is looking a little lean? You know your business is profitable because your Profit and Loss statement tells you it is. So does your accountant.
Profit and positive cash flow do not always go hand in hand. Elements of timing, accrual accounting practices and slow to pay customers can contribute to cash flow problems.
Many business owners will at some point consider using their home as a means of financing their business. Whilst this may initially seem like a cost effective strategy, is it really the best way to fund your business?
The big question is, should you use personal assets to fund a business? Would you put your house on the line for a bet or a listed company's shares? NO. Then why would you do it for the business? Business assets should be funded by separate business loans.
There are many finance options available on the market. This can be confusing at the best of times, but even more so when you are a small business owner. How do you maintain good cash flow in your business and earn enough income to support your family all whilst ensuring the safety of your personal assets?
Invoice Finance, also known as Invoice Factoring or Invoice Discounting, is the quickest and safest way to increase the funds available to your business and improve your cash flow on an ongoing basis.
Do commission based structures damage the quality of your customer service? It seems they certainly may.
A report in the Australian Financial Review, quoting Stephen Sedgwick, who recently undertook a review of payment and incentive systems within banking, found that staff members were begin pressured to reach certain sales targets. The meant they were obliged to offer products to their customers just to reach the target, rather than to meet the customer need.
Back in July we wrote an article called “Late Payers in the Australian Market.” It was about big businesses delaying their payments to smaller business, effectively damaging their cash flow and making it very difficult to remain financially viable.
Many small businesses we speak to are concerned about the unstable state of the economy and the late debtor payment issues that have been recently making headlines. There has never been a more nerve-wracking, yet more exciting, time to grow your business. However, cash flow seems to be one of the hindrances to this growth.
Big businesses using their market dominance to crowd out smaller businesses by delaying the payment of their invoices is something we touched upon in an earlier blog post. 30 day terms are being extended to 60 days and even 90 days in some circumstances, and this can be tough for the majority of small businesses who feel the brunt of the unfair terms.