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Small Business Cash Flow Management

Keep These 5 Things In Mind

MAKE IT EASY TO GET PAID
Offer multiple payment options, and make sure your customers are aware of these options. The less hassle it is for them to pay, the more inclined they II be to pay quickly.

OFFER FIXED RATE PAYMENT PACKAGES
One way of ensuring good cashflow is by offering periodic payment packages. This way you’ll be paid up front rather than in arrears, giving you peace of mind and enabling you to plan your spending & business development much more easily.

SET TARGETS AND STAY ON TOP OF THEM

• Cashflow forecasts are an invaluable management tool in monitoring and controlling your business’ financial performance. • Not only will this allow you to meet your financial needs and improve your results, but the process of attaining and exceeding these targets will improve your satisfaction in running the business.

SET CLEAR PAYMENT TERMS
It’s important to establish clear payment terms from the outset.
This way, you know when you’re going to be paid and when a payment is overdue.

APPROACH A FINANCER
Trade finance solutions offer tailored cashflow solutions to suit your business needs, & deliver them promptly.

 

More than 60% Australian SMEs rail due to cash Plow issues. Make sure you’re not one of them Contact:

cashflow finance

info@cashflowfinance.com.au

Ph: 1300 760 205

www.cashflowfinance.com.au

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What’s your strategy for growing your small business staff?

Perhaps the hardest part of developing a small business is building a strong staff. Your business model is simplest in the very beginning, when it’s just you and maybe a couple of collaborators building a product and selling it; eventually, though, your company will start to grow, and you’ll need to bring people on board who can help.

Perhaps the hardest part of developing a small business is building a strong staff.

Finding the right talent can be difficult. Who’s talented enough? Will they have a good grasp of your company’s long-term vision? Can they fit well with the people you already have? Answering all these questions is crucial for growing your business in a responsible way.

If you want your growth to go well, you need to recruit effectively. This isn’t just a one-time thing – it’s a constant, never-ending responsibility for an effective small business leader.

You can’t ever stop recruiting

When you have the right attitude to recruiting talent, you kind of end up treating it the same as cash flow – it’s a constant focus, fundamental to the day-to-day success of your business. According to Bankrate, companies are at their best when they’re always in recruitment mode, constantly looking for talented people who might help.

“The moment you’re done hiring, you should be keeping your antennae up for the future,” said Joe Kennedy, author of The Small Business Owners Manual. “That’s something that flexible smaller companies can do that bigger firms, often weighted down with policies and procedures, cannot.”

Even if you don’t immediately have a job open on your staff, you should still be on the lookout for recruits. That way, when you do discover an opening, you can spring to action quickly, and you’ll be ready to fill the role with a strong candidate from your talent pipeline.

Make the hiring process fun again

Recruiting might be a constant focus for your business, but that doesn’t mean it has to be a chore. In fact, some of the most successful companies are able to make recruiting fun by mixing in flexible new strategies that tap into modern technology.

Using mobile games is one way to make the hiring process enjoyable.Using mobile games is one way to make the hiring process enjoyable.

Australian Government research has noted, for example, that many businesses today are using gamification and recruitment videos as regular tools for attracting applicants. This way, the process is more fun than simply filing a bunch of paperwork like resumes and cover letters. This helps build a sense of candidate engagement and brand loyalty for the future.

In addition to looking for basic job qualifications, companies have also been able to engage candidates by asking them about their “soft” skills as well as “hard” ones. Someone might be talented in the workplace; they might also be adept as a swimmer or guitarist or pastry chef. Letting them share this side of their personality will help make the recruiting process more pleasant.

Of course, there’s one major caveat to all of this – none of this recruiting and hiring is possible if you’ve got a pile of unpaid invoices on your desk rather than money in the bank.

To make good hires, you need cash

There’s no way around this. If you want to continually add talented people to your staff, you need to have the working capital to pay them. This is tough to do if you’re struggling with cash flow issues as customers are sluggish to pay the money they owe.

Fortunately, there’s a solution to this problem, and it’s invoice finance. If you can’t collect the cash you’re owed, turn to an invoice finance provider and secure a backup source of funding. This way, you don’t have to worry about customers who might take weeks or months to pay up. Regardless, you can get the cash you need today.

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Collecting speedy payments is important for small business growth

If you’ve been running your small business for long enough, you probably have a steady process in place for nailing down customers and completing transactions. You deliver a sales pitch, make a deal, send them an invoice and then wait patiently for the money you’re owed to trickle in. It’s tried and true.

Some business leaders think that as soon as the bill’s in the mail, their job is done, but that’s not actually the case.

The only question, then, is how long that wait will be. Some business leaders think that as soon as the bill’s in the mail, their job is done, but that’s not actually the case. The specific details beyond that matter. There’s a difference between collecting your debts in 60 days and needing to wait only 15. The difference is that once you collect that money more quickly, you can invest in developing a bigger, more successful business.

So how can you speed up the process?

Greasing the wheels for easy payments

If you’re passionate about ensuring smooth cash flow into your business, you should probably take a close look at your collection process and search for ways it can be improved. According to the Queensland Government business and industry portal, there are usually a few viable possibilities.

Confirming account information is definitely one constructive step. If you have customers on the books, but with any of their details recorded inaccurately, it can set you back. A mistake with someone’s name, phone number, address or email can cause unforeseen delays and make it difficult to collect debts quickly.

Poor communication in general is another factor that often leads to trouble with collecting debts. If you’ve made a change to someone’s invoice but haven’t explained it clearly, or issued a late fee to someone without spelling that out in advance, there’s always the possibility of a dispute that can drag your business down. If you simply communicate your intent clearly, everyone will be much better off.

What happens when they’re late?

Staring at a pile of unpaid invoices on your desk can be stressful. The longer it takes for people to pay what they owe, the more you have to worry about your company being jeopardised.

Write to your customers and remind them to pay what they owe.Write to your customers and remind them to pay what they owe.

That’s why, according to the American Express OPEN Forum, it’s good to be proactive and take action when customers are late to pay you. This should start with a courteous follow-up and gradually intensify from there. A quick email to remind a customer of their debt is a good first step; from there, a call can reinforce the point.

It’s best to avoid getting overly emotional or threatening if you don’t think the debtor is acting in bad faith. There’s a difference between merely being late and attempting to shirk a debt altogether, and customers deserve the benefit of the doubt at first. Having said that, if invoices start to get really late, it might be time to threaten legal action.

How invoice finance can be of help

Regardless of whether your debt collection efforts ultimately succeed, you’re still likely to need a little financial help in the meantime. This is where invoice finance can play a key role. With invoice finance, you can get cash up front to cover your company’s expenses while you wait on customers to pay what they owe later.

Everyone wants to collect debts quickly and move on, but the reality is that collection is often a long, frustrating process. Fortunately, invoice finance makes it shorter and easier. You can get the money you need within a day or two, smoothly and reliably. This helps you focus on improving your business rather than stress over the status of your latest invoice.

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What happens when your company’s cash flow starts to stagnate?

One of the key goals of any developing small business is to build strong relationships with return customers. Once you have a good rapport going with your client base, you can start to rely on them to make multiple purchases and help sustain your business over the long haul.

There are a lot of moving pieces in business, and sometimes, they move more slowly than you’d like.

Unfortunately, however, relationship-building and deal-making comprise only half the battle. The other half is actually collecting the money your customers pledge to you – a process that many take for granted, but sadly, it’s not automatic. There are a lot of moving pieces in business, and sometimes, they move more slowly than you’d like.

If a client is hesitating to pay you the money they owe, it can have a very disruptive impact on your business. Without the capital you need to turn around and cover your company’s expenses, it can be difficult to keep your company afloat. This is a problem you need to address quickly if it comes up.

How can you address cash flow shortages?

Consider your options for addressing the problem the minute you find that something is amiss with your cash flow. According to the Queensland Government’s business and industry portal, there are two main ways to hand it – deal with the cash shortage, or reduce your need for cash in the first place.

As for the former, there are a couple of ways to get your cash flow moving again. One is to get more demanding with clients, continually telling them they have to pay what they owe in a more timely, reliable fashion. Another is to increase your prices so that each sale results in a greater profit. This way, you don’t have to collect as many payments.

On the other hand, you could just cut costs so you’re less reliant on cash. For example, rather than purchasing new properties or materials, you could lease them so you owe less money up front. This reduces the immediate impact on your cash holdings. Alternatively, you could put off projects like expanding your staff or offering raises to your employees.

Get the money you need, faster

Of course, there’s only so much you can do to limit your company’s reliance on working capital. Everyone needs cash to stay in business. That’s just a fact.

If you have customers pledging to make payments but putting it off, one possible course of action is to adjust the timing of your debt collection process and give clients a narrower window to follow through. If some customers are trying to get away with waiting 60 or 90 days before a payment, consider tightening that up and insisting on 30 days or even 15.

Cash flow trouble can lead to the demise of your business.Cash flow trouble can lead to the demise of your business.

According to research from Dun and Bradstreet, 90 per cent of the small businesses that close each year are doing so because of problems they’ve had with cash flow. You don’t want your company to be one of them, so finding a more aggressive approach to billing might be necessary.

Invoice finance can keep you afloat

If you’ve still got unpaid invoices lingering on your ledger and you need cash quick, one possible course of action is to get help in the form of invoice finance. With invoice finance, you don’t have to worry about waiting weeks or months for people to pay you what they owe – instead, you can get the cash you need within hours.

Sitting around waiting for payments simply equates to killing time, and time is money in business. If you get paid faster, you can then turn around and invest that money in the future of your organisation. With invoice finance guiding the way, you can advance your enterprise to the next level.

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Preparing your business to accept payments smoothly and consistently

When it comes time to launch a new business, you have to plan all sorts of underlying frameworks to ensure you’re able to consistently keep your operations humming along. For example, you need a process for making your product that is reliable and repeatable. You also need procedures for spreading the word marketing-wise and delivering sales pitches to potential customers. If you don’t figure all of these things out, your profitability is sure to suffer.

Have you figured out exactly how you’re going to collect money from customers once you’ve made sales?

There’s another area where careful planning is key, and that’s cash flow. Have you figured out exactly how you’re going to collect money from customers once you’ve made sales? Simply sending an invoice and hoping they pay might not be enough. The payment process is often prone to breakdowns, and you have to be highly organised and prepared to work through them.

The following is a guide to preparing your business for smooth payment processing.

Getting customer accounts set up

If you want to ensure smooth cash flow into your company’s accounts, you need to begin that process immediately upon making your first sale. The moment a customer agrees to purchase your product, you should set the gears in motion. Set up an account for the buyer in question and get all the logistics squared away.

According to the Victoria State Government, it’s wise to give each customer an ID number and then attach as much specific information as possible to that ID – client contact names, emails, phone numbers and the specifics of how they like to make payments. Organising all this information will make it far easier to follow up with people later.

Once you have all the necessary account info on file for your customers, you can start to define the exact terms of their payments. Decide on the ground rules for collecting payments from clients – businesses typically give a grace period of 15 or 30 days – and use that as a backbone for your overall bookkeeping process.

Defining payment terms clearly

Clear payment terms are the lifeblood of any organisation. If you make it simple and straightforward for customers to know your expectations payment-wise, everyone’s life should be easier. People will know when to deliver your cash, and you’ll be able to plan ahead, preparing to reallocate that money for improving various aspects of your business.

Define your expectations for customers and their payments.Define your expectations for customers and their payments.

That’s why it’s so important to let customers know immediately what you expect from them. This doesn’t just apply to timing – you also want to specify what forms of payments you accept, such as cash, checks, credit cards and so on. The Department of Industry, Innovation and Science correctly notes that if your company fails to establish these terms quickly, you risk running up a pile of unpaid invoices and jeopardising the fiscal sustainability of your company.

Debt collection might seem like a hassle, but in the long run it’s a legitimate strategy for reducing risk at your business. The goal here is not just to maximise profits, but to collect the money you’re owed quickly so you can keep growing your business without skipping a beat. Why settle for any sort of delay in that process?

Lining up a backup cash flow plan

When it comes to ensuring smooth cash flow, you can never be too safe. You might think you can trust your customers to pay up on time, but it’s hard to be 100 per cent sure, which is why it’s smart to have a backup plan ready. One such plan is to have invoice finance just a phone call away.

With invoice finance, you’ll never have to worry about waiting weeks or months for customers to deliver the money they owe. You can collect a big chunk of the cash you need within 24 hours of picking up the phone. Talk to us today about how this access to working capital can help lead you to business success.

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Getting your SME ready for the busy retail period

It may be October but for many SMEs that are thinking ahead, it’s beginning to look a lot like Christmas. The end of year retail period is one that many businesses are factoring in when it comes to preparing their finances for the peak period.

According to Roy Morgan, Australian consumer confidence has reached its highest level since late 2013. As well as this, business confidence is steadily on the up, according to the NAB Business confidence index. With both consumer confidence and business confidence in Australia on the increase, the end of year retail period will bear plenty of fruit for SMEs in the retail sectors.

According to Roy Morgan, Australian consumer confidence has reached its highest level since late 2013.

While it’s easy to point towards the positives and potential returns ahead, it’s imperative to retain a sense of perspective as there are challenges facing businesses in this period.

Securing finances to avoid falling short

The most important thing to consider when planning ahead for the end of year period is accounting for the potential pitfalls that can mean a shortage of cash.

Despite the high level of consumer activity there is no guarantee that stock will move as anticipated. While this is standard practise for SMEs in the retail sector, there are incremental costs that come at this time of year.

The Christmas period brings with it financial challenges as well as potential ROI.The Christmas period brings with it financial challenges as well as potential ROI.

Many, if not all, retailers take on casual staff and pay additional holiday wages so need to ensure they have the necessary cash flow to cover these extra costs. With higher stock intake comes a higher number of invoices. If the stock isn’t moving to quite the level it was forecast to, the worry of unpaid invoices can be very real.

It’s important, therefore, for SMEs to plan ahead and understand that there are opportunities available to ensure there is a sufficient cash flow to cover all eventualities.

Cover your cash flow gaps

Should the aforementioned shortcomings occur, it’s imperative for business owners to be aware of the options available to help bridge the financial gaps that may arise.

While there are a number of options available to secure short term finance, the least stressful is invoice financing. It’s the ideal solution for SMEs around the end of year period as it provides a fast, stress-free finance approval that can be settled within a minimum timeframe in an uncomplicated manner.

At Cashflow Finance we understand that every business operates in its own manner. With this in mind, we have designed our facilities to provide the best financial solution for any business situation.