Regina O'Shaughnessy No Comments

What is this supermarket chain doing to help small businesses in Australia?

As a small-business owner, you know how frustrating it can be to have outstanding invoices in your accounts receivable. When you don't get paid for goods or services you've already provided, it can halt your business productivity, or mean you have to pay people without the available working capital.

One solution to help your business flourish when it isn't being paid is to use debtor finance. Coles supermarket has come up with another, more specific solution as well.

What is Coles planning to do to help small businesses?

The supermarket giant has pledged to pay their invoices within 14 days.

Specifically for suppliers that provide Coles with at least $1 million worth of products each year, the supermarket giant has pledged to pay their invoices within 14 days.

"Coles relies on small Australian businesses to deliver thousands of different products for our customers every day," said Coles CEO John Durkan to SmartCompany in a March 3 article.

"By providing a little extra support, we want to help their businesses to flourish so that together we can keep providing our customers with great quality and value."

The new initiative will be in place from July 1 and Coles believes it will benefit over 1,000 of their suppliers. This will be a major boost to the health of SMEs in Australia, and could set the tone for the rest of the big businesses to change their tune.

Big businesses have a lot of influence over their smaller suppliers.Big businesses have a lot of influence over their smaller suppliers.

According to Dun and Bradstreet research from Q4 2016, businesses with more than 500 employees are the slowest at paying their invoices, averaging 18.2 days past the due date. These companies are influential in more ways than one. They could be the biggest customer of a supplier, and that supplier relies on their payment to function as normal. When big businesses put off their payments, they can severely impact the health of smaller Australian businesses.

"Cash flow is king for small businesses, so for a big player like Coles – one of the country's largest supermarket retailers – to take affirmative action on this is a welcome move that will make a big difference in the lives of hundreds of small businesses," stated Australian Small Business and Family Enterprise Ombudsman Kate Carnell.

While this is certainly a step in the right direction, Coles is not the first big business to commit to paying invoices faster (but the 14-day deadline is the fastest so far). Earlier in the year, Telstra committed to 30-day turnarounds, which is a maximum credit term. While it's great that the telecommunications giant has pledged to be better at paying invoices, 30 days is still a long time for some smaller suppliers to wait.

How can Cashflow Finance help?

We also don't take your real estate as security – that's the role of your invoices.

If 30 days is too long for you to wait for payment, or even 14 days, your business would benefit from debtor finance. Rather than having to wait more than two weeks for money you're owed, you can have funds in your account within five days.

We also don't take your real estate as security – that's the role of your invoices. Your clients are the security, so if we think they're sound financially, we will be one step closer to accepting your application.

While 30 days is a good start for Telstra, and 14 days is a great precedent for Coles, small businesses need these sorts of regulations in place for all businesses around the country. It's virtually impossible to run a profitable business when you don't get paid what you're owed on time – especially if you don't make use of debtor finance services.

For more information on how debtor finance can help your business to succeed, make sure you get in touch with the team at Cashflow Finance today.

Regina O'Shaughnessy No Comments

Slow payment times in Australia mean debtor finance is a necessity

How long do you have to wait for clients to pay invoices? It could be weeks, depending on your credit terms, or even months. Research from Dun and Bradstreet Australia for Q4 2016 shows that payment times vary from state to state, so where you base your business could change how long it takes you to receive the money you're owed.

If you're noticing that some aspects of your business suffer when clients pay their invoices late, you need to find a solution to keep your operations running smoothly. Debtor finance from Cashflow Finance is that solution. We can take your unpaid invoices and provide you up to 80 per cent of the total, so you can keep your business ticking along. We can handle the debt collection for you, so all you have to focus on is the relationship with your client.

What state is the worst for late payments?

We can take your unpaid invoices and provide you up to 80 per cent of the total, so you can keep your business ticking along.

The ACT is the slowest at paying invoices, with a state-wide average of 19 days past the due date for all business invoices, according to a Dun and Bradstreet report from February 28. Tasmania is at the other end of the scale, averaging only 11.7 days past the due date before invoices are paid. Across the whole country, the average late payment time is 14.4 days.

What this data suggests, however, is that no matter where in the country you do business, you're going to have some clients that pay their invoices late. Those are invoices that you've provided goods or services for, and your overheads don't just go on pause and wait for your clients to pay. You still have to cover the operating costs and rental payments and staff wages or salaries, all while waiting for money you've earned.

"The recent up-tick in late payments appears to reflect a slowing in the overall rate of economic growth and the general sluggishness of the business sector," said Dun and Bradstreet Economic Adviser Stephen Koukoulas.

"There is a well established trend that larger firms (over 500 employees) are the slowest to pay invoices with smaller firms tending to be the fastest. That said, the overall trend showing a moderate increase in late payments over the past year has been evident across firms of all sizes."

Big business are the worst on average for late payment times.Big business are the worst on average for late payment times.

No matter who your clients are, there's a chance they will pay their invoices late. You could rely on a small number of big clients to keep profits in your business up, but bigger companies (those with more than 500 employees) showed the worst late payments, averaging 18.2 days past the due date. Bigger businesses can have a large influence on the success of smaller suppliers, and they should have the economic stability to pay on time.

How can debtor finance help?

The best industry for late payment times was agriculture, averaging only 9.6 days over the due date.

The industry you operate in and the size of your clients don't matter – in Australia, it's likely that you will be paid late. The best industry for late payment times was agriculture, averaging only 9.6 days over the due date. That's still a long time to have to wait for your invoices to be paid, and it could turn into a serious financial burden.

By opening a ledger with Cashflow Finance, you could enhance your business cash flow and ensure you always have enough money to operate as normal – or even push for growth. Debtor finance could be the financial saviour for your business, and you don't need to put up your business real estate as security. Your invoices are the security, so there's no risk to your company's health.

For more information about starting a ledger with us, get in touch today.

Regina O'Shaughnessy No Comments

Tightening up your company’s payment process to ensure a steady profit

Every company in the world, no matter what specific line of work it's in, is united by one common goal – to make a steady profit. The goal in business is to allocate your spending wisely, bring in revenue and hope the latter amount outweighs the former. If you can keep your company in the black year after year, it's clear that you're doing something right.

Money is always moving into your business and out, and it's hard to get a clear snapshot of where you stand.

It's not always easy, however, to look at the numbers and quickly size them up to determine whether you're making a profit or not. At the typical place of business, things are always in flux. Money is always moving around – both into your business and out – and it's hard to get a clear snapshot of where you stand.

Essentially, what this means is your company needs two different kinds of balance sheets. One should show the expenses you're paying out and the revenues you take in, and the other should spell out the specifics of when and how all that cash is collected.

Bringing clarity to the balance sheet

Every company needs to have a balance sheet listing its expenses and revenues. After all, without this basic information, it would be impossible to gauge the overall financial health of your business. You need to look at the money moving in and out to ensure you're making a steady profit.

Unfortunately, the challenge doesn't end there. An additional problem is the fact that not all of your debts will be paid on the same schedule, and there's always the chance that you run into trouble with cash flow. That's why, according to the Victoria State Government, it's wise to have an additional balance sheet that shows when funds will be moving in and out of your accounts during each set time period.

With this information in hand, you can calculate not just your company's net profit, but its net operating cash flow as well. If the amount of cash you're taking in is less than the net profit on your original balance sheet, that means you're not collecting cash at the same rate you're paying it out. This could potentially grow into a larger problem.

Turning unpaid invoices into paid ones

There are fewer things in business more stressful than staring at a pile of unpaid invoices on your desk. An invoice might represent the promise of revenue, but until you can get customers to pay up, it's not worth the paper it's printed on.

Forecasting your company's sales and cash flow is always important.Forecasting your company's sales and cash flow is always important.

According to The Guardian, one way to tighten things up in this area is to put clear payment terms into effect. If you require that customers pay you what they owe within a set time frame, it's much easier to coordinate money matters.

"If you don't start off knowing what your payment terms are, it is difficult to know when you are going to get paid," said Suzannah Nichol, chief executive at the National Specialist Construction Council. "If you don't know when a payment is overdue, how are you going to manage your cash flow?"

Come up with a set time frame for collecting debts – for example, 30 days – and stick to it. You'll be happy you did.

Having a reliable source of funding ready

Unfortunately, sometimes all the rules and frameworks in the world aren't enough to ensure smooth cash flow. When customers aren't paying what they owe, it can seriously constrain your company's ability to invest in other areas of your business. If this looks like a problem for you, it's time to find a backup plan – namely, invoice finance.

With invoice finance, you no longer have to worry about payment terms. People might take 30 days to pay you the debts they owe, or they might take 60 or more. Either way, you can get the cash your company needs in a quick and painless fashion. You can then use it to keep your business running and get more sales trickling in.

Regina O'Shaughnessy No Comments

Drawing up a sales strategy to propel organisational success

When you're in the early stages of getting a business off the ground, it's important to have a systematic approach to making and marketing your product. How will you manufacture it in a way that's affordable, quick and ensures you break even with each copy you sell? How will you send your marketing message out to the masses and build your brand's reputation? If you don't have a clear plan, you're bound for trouble.

An effective sales campaign is one that targets the right consumers, locks in transactions and has staying power.

It's similarly crucial to have a system in place for making sales. An effective sales campaign is one that targets the right consumers, locks in transactions and has the staying power to keep revenue flowing for years, not just keeping your company afloat from week to week.

On top of that, you also need some assurance that your cash flow will be healthy enough to sustain operations. All in all, there's a lot to think about if you want your company to remain profitable.

What goes into a good sales strategy?

The first step toward getting working capital into your company's accounts is having a rock-solid sales strategy that will drive consistent results. According to the Department of Education, Employment and Workplace Relations, this is a long-term process, and it should begin with drawing up sales targets and then coming up with a detailed plan to achieve them.

For example, if you're looking to sell 50 units of your product in your local area within the next month, how much manpower and effort will you need to make that happen? Which members of your team are responsible for which portions of that overall goal? Come up with a plan of attack that details every employee's obligations and holds people accountable.

Implementing this plan will require a wide variety of skills. You'll need a staff that's willing to monitor data, revisit and revise strategies and have tough conversations when things don't go according to plan.

Finding a routine you can trust

The hope is that eventually, your staff settles into a comfortable routine and sales start to become automatic. Entrepreneur Magazine recommends having a reliable process for each sales call that's likely to appeal to your customers. This should be predicated upon clearly stating your purpose and telling clients exactly how your product can make their lives better.

Check up with customers and ensure their needs are being met.Check up with customers and ensure their needs are being met.

Over time, you should keep following up and making sure customers stay happy. Are they still getting all the benefits from your product they were promised? Are all their needs being met?

And perhaps most importantly from your perspective: Are customers paying you what they owe in a timely fashion? After all, hitting your sales numbers is only worthwhile if you have the smooth cash flow to show for it.

Secure invoice finance if you need help

Your business is only as successful as the cash you're able to collect quickly. If you can't get your hands on the money quickly, your sales won't do much to drive the long-term improvement of your business. For this reason, it makes sense to have a backup plan, just in case your cash doesn't flow the way you hoped. Fortunately, invoice finance can be that plan.

When you make sales, there's no guarantee of customers paying up straight away. They could take days, weeks or even months. With invoice finance, however, you no longer have to worry about the timetable. You can get cash up front, delivered within hours, which you can then use to invest in your future. Why wait? Get the money your company needs right away.

Regina O'Shaughnessy No Comments

How can you address cash flow problems at your business?

From time to time, almost every business encounters difficulties with managing cash flow. You're making more than enough sales to keep your company in operation, but it's still not sufficient – perhaps customers are lagging behind with their payments, or for some other reason, the money's just not moving.

If you don't have cash in your accounts, it's impossible to invest in the future of your business.

When this situation comes up, it's essential to respond quickly. After all, if you don't have cash in your accounts, it's impossible to invest in the future of your business. You might even struggle to make basic payments such as your employees' wages or the rent on your facility.

If you're in this predicament yourself, it's time to diagnose the problem and address it quickly. Are your customers to blame, or do you have other issues?

What's the problem with your cash?

Are you having trouble getting the funds to flow smoothly around your office? You might think you know precisely the cause for this problem, but it's not always as clear as you think. According to the Victoria State Government, there are a few different potential problems that might be to blame:

  • Not getting paid on time: This is the most obvious one. If customers are agreeing to sales but then not paying for them on time, it could seriously impede your business. Securing timely payment is key.
  • Paying your own debts too early: Having good relationships with suppliers is crucial, but there is such a thing as paying them too early. If you're spending money that you need right away for investing elsewhere in your business, it might be a mistake.
  • Too much stock (or work): If your business has a large inventory, it might be that you've got too much of your product and you can't sell it all fast enough. This is a liquidity issue. Likewise, in a service industry, too much labour and not enough payment can present issues.

Adjusting your strategy on the fly

Are you looking to accelerate your company's cash flow and get working capital in hand right away? If so, there are a few worthwhile strategies to consider.

Look for ways to improve payment processing for your business.Look for ways to improve payment processing for your business.

One is speeding up the payment process. Rather than giving your customers 30 days to pay what they owe, you could shorten than to 15 or even ask them to pay up front. You can also shore up payment processing issues by allowing forms of payment that work quickly and seamlessly, such as credit cards.

If none of that works, it might be time to make serious adjustments to your company's business model. For example, if you're not making enough revenue from your current sales, you may have to raise your prices to earn more in the future.

We can provide the cash you need

The other way to get the cash you need to keep your business going is to opt for invoice finance. With invoice finance, you get cash upfront that you can use to cancel out your unpaid invoices and get back to business. This way, no customer payment issue or inventory overstock will keep your company from collecting and spending the money it needs.

When major cash flow issues arise, it can take weeks or even months to get your company back on its feet. That's never a problem with invoice finance. Instead, you can get over 80 per cent of the money you need within 24 hours. This means you can get to work tomorrow on improving your company, no matter what external factors try to bring you down.

Regina O'Shaughnessy No Comments

Projecting your cash flow and planning ahead for business success

One of the clearest indicators of the success or failure of any business is its cash flow. If you're not only making sales, but also collecting debts in a timely fashion and using that capital to actively improve your business, you should be in good shape moving forward.

The more you know about your ledger, the better you can plan ahead for future developments.

Awareness of your cash flow situation is key. The more you know about your ledger, the better you can plan ahead for future developments. This is why many executives have begun embracing the process of cash flow projection, which helps them anticipate changes in their businesses' solvency long before they happen.

If you can plan ahead where cash flow is concerned, you can position your business to do great things.

How a cash flow projection helps

If your company is dealing with a pile of unpaid invoices and you're unsure how the future might look with respect to cash flow, it makes sense to prepare a budget that projects when money will be moving in and out. According to the Australian Taxation Office, this can benefit your business in a wide variety of ways.

For example, this can give you a snapshot of your company's cash position at any point in time you desire. If you're planning to hire an employee but can't decide whether to do it in two months or in four, a cash flow projection can help you see when you'll have the most capital available to do it. Whatever expenses you have in your company's future, they'll be easier to plan for.

What if solvency trouble lies ahead?

If you go through your forecast sheet and discover that issues with solvency lie ahead, it's time to be proactive and take immediate steps to improve cash flow, according to Inc. Magazine. One way to do this is to tighten up your credit requirements with debtors. If you've been giving people 60 days to pay what they owe, it might be time to slash that window dramatically.

If you don't have enough money on hand, do something about it.If you don't have enough money on hand, do something about it.

The other option for improving solvency is to reach out for external financial help. This may come in the form of invoice finance.

How invoice finance might help

If you need to get your hands on working capital quickly and bring your business up to speed, the most reliable way to do it is to acquire cash through invoice finance. Why rely on your customers to pay you when you can get money more quickly and easily this way?

With the money you get through invoice finance, you'll be able to turn around and pay suppliers faster, thus fuelling the growth of your business. The better your cash flows, the more success your company will ultimately have.