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What could the arrival of Amazon mean for small businesses?

On April 20, the giant retail wave of Amazon turned to face Australia. One of the largest retailers in the world, Amazon will be setting up shop on our shores in the near future, and the business is currently looking at warehouse space for its 93,000 square metre fulfilment centre, according to a Smart Company report from April 20.

"We are optimistic that by focusing on the things we believe customers value most – low prices, vast selection, and fast delivery – over time we'll earn the business of Australian customers," Amazon said in a statement.

Small businesses could be quivering in their figurative boots, but they don't need to be. The introduction of Amazon means another huge, online retailer to compete with, but smaller retailers won't be disadvantaged – so long as they invest in technology to speed up production, for example.

So, small businesses are being forced to invest in technology and streamline processes that allow them to access a wider customer base. In order to do this, they'll need working capital, and Cashflow Finance can help.

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What could the introduction of Amazon mean for Australian businesses?

The company announced it would create thousands of jobs for people living in Australia, and add millions to the national economy. In 2016, Amazon founder Jeff Bezos announced global revenue of $181 billion. It's clearly a successful business, and the venture into the Australian market means a number of things.

First, the Amazon Marketplace can help small businesses reach a wider audience around the country. Second, businesses that refuse to work with Amazon could fall by the wayside as better technology and more efficient warehouses dominate the retail space in Australia.

"It's a win-win for smaller retailers who might already have an online presence through eBay or Facebook."

"Aussie retailers have known it's been coming for a while, so I don't think the world is going to end tomorrow," said Associate Professor at Queensland University of Technology Business School Gary Mortimer to Smart Company.

Some retailers may already have made some preparations for the arrival of the retail giant. "It's a win-win for smaller retailers who might already have an online presence through eBay or Facebook, now they'll be able to sell their wares via Amazon. It's just another channel, which is a great thing for both shoppers and small businesses."

Of course, it's another competitor in the retail landscape, which already comprises 78,614 businesses, according to IBISWorld. It's a $165 billion industry, so what could an Amazonian presence mean for retail in Australia overall? Hopefully a major boost to the economy.

What businesses could be most 'at risk' because of Amazon's arrival?

Certain sectors won't be affected nearly as much as others when Amazon finally opens its doors in Australia. Those that choose to work with the retailer are likely to boost their business because of wider exposure. Those that do not could easily be swamped.

"Retailers in consumer electronics and toys will be more exposed to Amazon, where other retailers such as supermarkets or other groceries won't be," continued Mr Mortimer.

However, just because Amazon has an enormous range of products, it doesn't mean that smaller retailers will lose all of their customers.

"Studies have shown when consumers are provided with more choice they get overwhelmed with the volume of decisions needing to be made."

"We all get hooked up with a focus on choice," said Mr Mortimer.

"Studies have shown when consumers are provided with more choice they get overwhelmed with the volume of decisions needing to be made. Some shoppers will enjoy that choice, but others will just keep doing what they're doing now."

A separate article from Smart Company, published on March 22, suggests that business owners, no matter how established, will always have to persist when roadblocks pop up. The arrival of Amazon could be one of those roadblocks, and adapting to the change is likely the only option. That adaptation might come in the form of investment in robotics, or it might mean developing your online platform. Change is not something you can afford to be afraid of in the business world.

How could this affect start-ups?

Start-ups are often seen as the most vulnerable businesses in the market. They don't have an established customer base, they could be relying on grants or external funding to get off the ground, and they're only really finding their feet in the business world. For those reasons, they are potentially the most at-risk when Amazon touches down in Australia.

Start-ups are the most vulnerable businesses - but if they stick to their guns, they can succeed.Start-ups are the most vulnerable businesses – but if they stick to their guns, they can succeed.

No matter what you want from your start-up, make sure you stick to the dreams you have for it. That's the advice of The Social Outfit CEO Jackie Ruddock. The Social Outfit is an ethical fashion social enterprise that aims to help migrants and refugees in Sydney find work.

"Everyone involved makes compromises to get a start-up off the ground – the hours and effort are long. But we also know there are some lines we won't cross."

If you don't want to partner with Amazon, you don't have to. You might have to invest in technology or frameworks that are going to help you stay competitive in a crowded retail environment, but if you do it for the love of your business, you won't regret the decision.

For help finding the working capital you need to make these investment decisions before Amazon comes to Australia, get in touch with Cashflow Finance today.

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Investment in innovation is key for Australian businesses

A focus on innovation is a focus on the future of your work. A recent Commonwealth Bank report suggests that Australian businesses investing in innovation are the future of the national economy. The Regional Business Insights Report 2017 states that 50 per cent of regional businesses are already actively innovating, and these businesses have generated $19 billion of economic activity around the country.

If all regional businesses in Australia invested equally in innovative ideas or solutions, and achieved the same returns of approximately $279,000, the national sector could grow by $44 billion. The initial investment is the driving force behind the growth, and if your business doesn't have the required working capital or cashflow, you could struggle to keep pace with your competitors.

Why invest in innovation?

Investing in innovation is investing in the future.

Investing in innovation is investing in the future. It's all about coming up with new and creative solutions to problems that you're struggling to overcome. You might have a manufacturing business that's seeing overheads rise and profit margins fall. To get around this problem, the innovative solution might be to install robotic manufacturing tools in your factory, reducing the need for human labour and thus lowering your overheads. Of course, that investment in robotics is expensive, but that's where debtor finance is so useful.

"They're encouraging people to challenge the status quo and expecting them to come up with creative ideas, and by doing this, many regional operators are unleashing the innovation potential of their teams," stated CommBank Executive General Manager of Regional and Agribusiness Banking Grant Cairns in a statement, as reported by SmartCompany on March 31.

"Mastering innovation means making creativity and experimentation an essential part of your business' DNA, rather than a one-off process improvement drive or product development program."

Forking out money for an innovative process or solution might not completely change your business, or even your bottom line, but continued investment will change your "business' DNA", resulting in continuing change and improvement.

Investing in robotics could be the future for your manufacturing business.Investing in robotics could be the future for your manufacturing business.

Who is innovating?

You might think that most of the innovation around Australian businesses is happening in the cities – that's not the case, as seen in the CommBank report. Instead, the regional businesses are driving the innovation, with 49 per cent innovating, compared to just 43 per cent of metropolitan businesses doing so.

Any business that innovates in more than one area, however, has a much higher chance of increasing revenue.

There are many benefits to innovating, including increasing revenue. For businesses that innovate in just one area of their operations, 59 per cent will experience an increase in revenue, 35 per cent will see no change and 6 per cent will see a decrease. Any business that innovates in more than one area, however, has a much higher chance of increasing revenue (76 per cent), with 22 per cent experiencing no change and only 2 per cent decreasing revenue.

What's more is the overall benefit to the Australian economy. As previously mentioned, if every regional business in Australia invested the same amount of capital in innovation, they would provide a $44 billion boost to the economy. If every metro business in the country did the same, the benefit to the economy would be $171 billion! Of course, it requires some upfront expenditure, but the stronger economy could pay that back.

For regional businesses, the average return on investment is $279,000, but for metro businesses, this is again significantly greater, at $460,000. When business operations stall or profit margins start on a worrying downward spiral, innovating might be your only solution. For farming businesses, examples of innovation could be using the cloud for greater control over your stock, or using autonomous vehicles to do work around crops and fields.

Debtor finance through Cashflow Finance can help you to realise your innovation dreams by providing you with sufficient capital to invest as you see fit. No more waiting around for your unpaid invoices – instead, have the funds paid direct to your account within 24 hours and start using the money to improve your business (and maybe even help the Australian economy). For more information, get in touch with Cashflow Finance today.

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What does the future hold for small businesses in Australia?

The future of retail and wholesaling in Australia is being small and local, according to a SmartCompany report from March 28. The Internet of Things (IoT) is also a vital component to streamline your business strategy and to improve relationships across the board. As a small business, you need potential customers to trust your brand, and taking advantage of available technology is one way to help achieve that.

Research from Huge suggests that brands build trust by delivering on promises on all levels.

Research from Huge suggests that brands build trust by delivering on promises on all levels. That might be living up to a motto or providing great customer service. In the SME world, you need to be more attractive to customers than your competitors. Improving your current business offering is possible, but you'll need the finance to make it work. Without sufficient working capital, you'll need financial assistance, however, and debtor finance could be the right solution.

What can small businesses do to compete with larger retailers?

In America, businesses like Amazon and eBay have been slowly dominating smaller retailers and forcing them to shut up shop. Amazon in particular is a giant of the tech world, with the widest possible reach (global, that is), meaning local shops cannot possibly compete. That seems like a disadvantage, but it doesn't have to be.

Small businesses can partner with large-format retailers to increase their spread. Take a local Melbourne wholesaler, for example. With investment in building a sound website, there is a possibility that you can sell online to further your target market range. If you invest and build a great online presence, Amazon may be willing to partner with you and take your brand 'global'. You'll still operate from your home base in Melbourne, but you could unlock a much larger audience. Chinese counterpart to Amazon, Alibaba, presents another opportunity to partner in the online space.

A major part of business right now is the online space.A major part of business right now is the online space.

People want to be connected as closely as possible to retailers, and other businesses want the same for their connections to wholesalers – they want to be able to buy online and get information from their workplaces when they're too busy to leave their offices or places of work.

Partnerships with similar retailers also offer a lot of value in the long term. Find a retailer that sells a similar product to yours and discuss a way to bring your product into their store as well. Support other Australian businesses and they will support you, building the strength of the small wholesale market in the country.

What do you need to help your small business develop?

Investing in a good online framework doesn't have to stop at an online store.

To achieve these outcomes in your small business, you'll need sound working capital or sufficient, continuous cashflow. An understanding of how the world is becoming more interconnected would be a strength as well. Businesses can take advantage of the fact that people are always on their phones, and even when they're not, they can browse on smart watches and even smart fridges, in some instances. Investing in a good online framework doesn't have to stop at an online store – expand into the world of the IoT and see where it can take your small Australian wholesale business.

Initial account setup with Cashflow Finance takes as little as 48 hours – after that, we pay up to 80 per cent of your unpaid invoices into your account within 24 hours. Rather than waiting weeks and weeks for your debtors to pay for goods you've provided, you'll be able to invest in the digital space quickly and propel yourself into the future of business in Australia.

To find out more about how debtor finance can assist your wholesale business, contact Cashflow Finance today.

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How can I avoid small business failure?

Rising business costs are a major headache for SMEs – the majority of Aussie small businesses fail due to their inability to manage cashflow, according to ASIC stats. But it's not all doom and gloom. You can keep up with the costs of running your business by implementing effective invoicing strategies and getting financial help to avoid business failure.

Here are four expert tips on how to kick those spiralling debts to the curb:

1. Anticipate rising costs from the outset

Proactivity is essential.

Proactivity is essential. Many Australian small businesses get caught up with unpaid invoices because they don't manage their paperwork sensibly. In fact, the majority of Aussie SME owners still keep their invoices in a shoebox, according to a study by accounting software company Xero.

Make sure you're on top of all your invoices so that you know exactly which clients owe you money and when by setting up a digital database with reminders.

Improve your cash flow and minimise the risk of business failure by implementing solid invoice management.Improve your cashflow and minimise the risk of business failure by implementing solid invoice management.

2. Establish iron-clad terms of credit

There's little incentive for customers to pay you on time if you don't have strong credit terms in place. Vague wording on your invoices can lead to late payments that hinder your cashflow and prevent you from having the necessary funds to pay your suppliers.

To minimise rising business costs, make sure all your invoices clearly outline how long your clients have to pay you and any terms and conditions they need to keep in mind.

Only work with companies and individuals you can trust to pay on time.

3. Do your due diligence

Researching potential clients before you take them on minimises the chances you'll get stuck with customers who are renowned for paying late.

Look into your clients' credit histories and determine whether or not they will be reliable. Only work with companies and individuals you can trust to pay on time.

Perform credit checks on potential clients to ensure that they can pay you on time.Perform credit checks on potential clients to ensure that they can pay you on time.

4. Get back on track using debtor finance

Sometimes, in spite of your best efforts, clients will fail to pay you on time.

Consider finance solutions that don't involve taking out a loan or dipping into your personal savings.

For a small business owner with a million other things to do, chasing up late payments is a massive time suck. Consider finance solutions that don't involve taking out a loan or dipping into your personal savings. Using debtor finance is a way to get some money upfront (80 per cent of the total invoice with Cashflow Finance). We follow up late payments while you focus on the day-to-day running of your business.

Planning sensibly from the beginning, being firm with your payment terms and performing credit checks will improve your cashflow and get your business back on track. And when you need that extra helping hand, give us a call

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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.

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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.