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How Outsourcing Your Accounts Receivable Benefits Your Business

As a business owner, you know that any strategy that allows you to save time, money and stress is worth it. Here’s one you may not have considered: outsourcing your accounts receivable. How does this work?

Business owners expend a great deal of time and energy building their business, often making sacrifices along the way. Stable growth and maximum profit are two major goals of every business. Another crucial aspect giving your business stable growth and profitability is accounts receivable management services, but it is often an afterthought for many businesses.

It’s tempting for businesses to entrust the credit and collections work to accountants or administration staff, as part of their job; or they may not have the budget or expertise to collect cash in a structured way. It’s an after-thought rather than a mainstream activity, despite the fact that accounts receivable is often one of the biggest assets on the balance sheet and usually one of the most liquid.

Outsourcing your accounts receivable to an expert gives you the opportunity to deploy the best available specialist knowledge, to leverage the maximum efficiency from your cashflow.

Outsourcing can reduce process costs and provide enhanced growth and investment opportunities for your business.

The average business time to pay a bill in Australia is 44.8 days. But 44.8 days is the average – some businesses wait much longer to be paid. That, supposedly, is “prompt”. Then the owner has their bank and the Australian Taxation Office breathing down their neck for payments. All because the firm’s client will not pay its bills on time.

The small business can always bill faster, chase clients up when payment is late or bring in the debt collectors, but that takes time and money. By this time, it’s too late to rectify the severe dent in your cashflow. You need to be earning income, not chasing up payment.

Instead, consider outsourcing your accounts receivable to an expert and concentrate on doing what you do best.

What are the Benefits of Outsourcing Accounts Receivable?


  1. Calculating Days Sales Outstanding:An important aspect of accounts receivable management services is Days Sales Outstanding (or DSO). This tells us tells how many days’ worth of sales are outstanding and unpaid within a time gap. Outsourcing accounts receivable management services helps to record every single sale and keep on top of those outstanding days from blowing out to a level that severely limits your cashflow.

One simple way of reducing your debtor days is to utilize a finance product called debtor finance. This solution pays up to 80% of the value of your debtor invoices within 24 hours, with the remainder paid when your customer pays the invoice. If your customer is late in paying their invoice, then the debtor finance provider will also chase up the debt – something else you don’t need to worry about.

Outsourcing your accounts receivable means that you’ll gain an improved level of systems and processes in place to control collection activity and debtor days. In return, you’ll achieve far greater growth and profits over the long term.

  1. Effective efficiency: By outsourcing accounts receivable services you can get professional assistance that gives you back the time to concentrate on your area of specialty. It can also free your other staff from doing a job for which they may not have the necessary experience. In outsourcing accounts receivable, your business will experience less wastage of manpower.
  2. Remain in control: By outsourcing accounts receivable services, you will always have access to up-to-date data. Instead of realizing too late that your cashflow is being impeded, you’ll instead be able to make any necessary rectifications much sooner. You won’t lose control of the accounts receivable process either: Many companies don’t realize going in that they manage an outsourced provider more stringently than their in-house resources were managed.
  3. Lowers unnecessary costs: One of the best ways to improve your cashflow is by lowering unnecessary expenditure. Outsourcing accounts receivable helps to lower the indirect costs associated with trying to do it all yourself: reviewing your suppliers, making follow-up phone calls or other communications, keeping the books up-to-date, and missing discounts or opportunities for growth because your cashflow is suffering.
  4. Staffing costs: The responsibility of managing the accounts receivable is done by experts, and so there is no need for a full-time accounts receivable resource in your business. You’ll save both time and money, and you’ll improve your cashflow position as well.

Letting someone else take over your accounts receivable allows your company to focus on what really matters for your business success. Outsourcing companies will chase down delinquent payers for you so you can have more time on building and growing your company to its full potential.
Your accounts receivable is an important asset to your business and your cashflow. Outsourcing your accounts receivable means that you can achieve a stable and positive cashflow while freeing up your time to concentrate on growing your business.

Contact us today to find out more.

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Six Cashflow New Year’s Resolutions to make in 2018

What does the end of the year mean for your business? Some business owners are winding down, looking forward to a break over Christmas; while others are gearing up for their busiest season of the year. Whatever category you fall into, it’s also a good time to think about how you’ll operate your business in the New Year, and how you can improve growth and profitability.

One improvement that will affect growth and profitability is eliminating your cashflow problems for good in 2018.

Six Cashflow New Year’s Resolutions to make in 2018

  1. Organise your books

When your books are disorganized, you don’t know how much income you’ve got coming in, what your expenses are or if you’re making a profit. Now is the time to organize your books for the New Year – look at your invoicing system and methods of collecting payment to make sure it’s as efficient as possible.

Once your books are in good order, you’ll be able to stay on top of how much each customer owes you and whether they’re paying you on time.


  1. get rid of BAD DEBTS

In the New Year, get on top of your bad debts. Bad debts are amounts owed by customers that cannot be recovered. They can be crippling for your cashflow and can easily occur if you don’t have a good system for collecting money your customers owe you.

Sometimes bad debts exist simply because you don’t have enough time to properly chase your debtors. You might so busy running day-to-day operations that the last thing you want to do at the end of the day is chase up late invoices.

One quick solution to this problem is invoice financing, which can reduce the impact of bad debts on your cash flow.


  1.  balance your CREDIT TERMS

If the credit terms you have set your customers are out of sync with the credit terms set by your suppliers, negative cash flow can build up and worsen over time. In cases like these, there are some measures that you can set in motion:

  • Debtor Finance: This is where a finance company lends your business short-term cash that is secured against the value of the invoices you have issued.
  • Early Settlement Discounts: You could offer early settlement discounts on your invoices which will give your customers a financial incentive to pay you early.


  1. review your pricing

Naturally, lack of profit will lead to a lack of cash. Ultimately, no business can sustain losses indefinitely.

If your business is losing cash, it’s essential to uncover the cause of any losses and address them as soon as possible. Possible solutions to becoming profitable may be to increase your prices.

  1. forecast your cash flow

With a cash flow forecast, you’ll be able to see which months you can expect to see a cash deficit, and which months you can expect a surplus. You’ll also be able to get a pretty good idea of how much cash your business is going to require over the next year or so to survive.

Having this information on hand means you can look at spreading out big purchases and investments – such as staff hires, marketing campaigns or purchasing equipment – so your cash flow is not affected.


Sometimes growing too quickly can cause cash flow issues that can hurt the business.

Entrepreneur Adir Shiffman founded a tech company that grew very quickly and discovered how dangerous unchecked growth can be. He says,The company had always grown 50-100 per cent a year, with profits and cashflow sacrificed for growth. When sales first fell I confidently predicted they’d quickly recover; the salespeople just needed to work harder.

“I was always one cost cut behind where I needed to be, which inevitably necessitated another painful cut later. If only I’d cut earlier and more aggressively, the total cuts would likely have been smaller overall.”

If your business is enjoying high levels of growth, keeping an eye on your cash flow is more important than ever.

These New Year’s Resolutions for your business will help you to control your cashflow and enjoying a successful, sustainable business. In the words of Shiffman, “Cash is all that matters. Cash buys time, no cash buys death.”

We can help you buy time and improve your cashflow. Make it your New Year’s Resolution to contact us to help your cash flow in 2018.

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How do I generate more cash in my business?

Having a healthy cash flow in business is incredibly important, especially for small to medium businesses. The Australian Securities and Investments Commission’s report into business failures found that 44 percent of failed businesses had inadequate cash flow or high cash use. The report, based on 8354 reports from external administrators, found small to medium-size insolvencies “dominated” insolvency statistics, with 85 per cent of the collapsed businesses having assets of less than $100,000.

The report found that small businesses are struggling with cash flow as it is taking longer to collect money.

Having a poor cash flow can bring your business to a grinding halt. You may find you can no longer invest into your business for growth, suppliers may refuse to provide stock due to late payments, and you may have to reduce the number of your employees. Eventually, a business with a poor cash flow will fail unless more cash is generated.

So how can you generate more cash in your business?

Do you know how much you spend?
Spending more than you earn will decimate your cashflow, as will selling your products and services at a loss. Although discounting can help you attract new customers, selling anything at a loss won’t help you generate more cash in your business.

It’s important to know two crucial numbers:

* your cost base; and

* your profit margins.

Knowing these two numbers will help you to know whether you are operating at a loss, which will detrimentally affect your cash flow.

Loyalty is low cost.
It is six to seven times more expensive to attract a new customer than it is to retain an existing one.
Encouraging repeat business is therefore a less costly exercise than attracting new customers, and this can have an impact on your cash flow if you’re seeking to generate more cash.

You could consider loyalty programs, VIP offers and other frequent-shopper discounts, but make sure you’re aware of what you can afford to give away.

Are you hoarding stock?

Holding too much stock will tie up cash and increase storage costs. The balance between having enough stock to meet demand yet not too much that your cash flow is negatively impacted is important.

Keep your debtors honest

Failing to follow up overdue accounts is a common reason business experiences poor cash flow. Making sure your debtors pay you on time means you can meet your own obligations to suppliers and employees.

Have you got the right finance solutions?

Many businesses utilise products like bank overdrafts to manage their cash flow, but this product may not be right for you. Often overdrafts provide less cash than other solutions such as debtor finance, so think about investigating different ways of managing your cashflow. Options include debtor finance, where you are forwarded up to 80% of your outstanding invoices that you raise daily in cash; utilising a mobile EFTPOS device; and taking payments via your website.

Are there opportunities to increase income?

One of the reasons a good cashflow is so important to your business is that it lets you invest into growth – and therefore to increase your income. Have you reviewed your pricing in the last year or so? A big advertising campaign could also attract new customers, or you might consider increasing the number of products or services you provide. A healthy, positive cash flow allows you to grow your business, buy new stock lines or employ more staff to help your business to grow.

Reduce what you’re spending

Controlling expenses is another way your business can improve cash flow. Options include reducing power and water bills, minimising wastage and ensuring you’re not paying late fees or penalty interest because you’re behind in your payments.

Add value
How can you add value to the transactions your customers are already making? Perhaps you could offer complementary products or services at each transaction to encourage your customers to buy more.

Generating more cashflow in your business can be tough. We know that you’re busy attending to your customers and running your business, so it’s a relief to know that we can improve your cash flow, reduce the time spent chasing debtors and decrease your stress levels.

Contact us today to find out how.

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Why your SME should beware cyberthreats this Christmas

Cyberattacks are among the most disruptive events that can happen to a business. From the smallest hack that copies your client list including all personal information to a total lockdown of your files and operations, cybercrime can cause businesses to collapse.

A recent scam from a cybercriminal pretending to be an employee of Energy Australia has surfaced, according to a SmartCompany article from November 21, and it's just in time for the Christmas rush. When you're stressing about getting everything done before the end of the year, a cyberattack will be the last thing on your mind. That's why investing in protective software and technology for your employees is vital.

How disruptive would a cyberattack be for your business?How disruptive would a cyberattack be for your business?

What does this latest scam look like?

The Energy Australia email scam is dressed up to look like an invoice – and it asks for a hefty sum of around $700. Instead of conning unsuspecting business owners into paying the money, pressing the 'View Bill' button takes users to a fake website posing as the Energy Australia one, and a piece of malware is downloaded onto the system. Any decent virus scanner would detect it immediately, but if you don't have one installed across your entire network, you might have been affected.

The issue with malware such as this is that it steals information and sends it back to the creator. That person will know all about how your network operates, they'll potentially have all the information stored on the computers, and it'll be easier for them to break back in at a later date.

Australians lost $373,860 to phishing scams in 2016.

Australians lost $373,860 to phishing scams in 2016, according to Scamwatch, and 2017 is already far worse. Through October, the total amount lost to phishing scams was $586,521. Could your business afford to lose even 10 per cent of that in one hit?

What can you do to protect your SME from a cyberattack?

Installing a protective firewall and virus scanner is the first thing you should do. These might cost a fair amount of money to install on every device, but it's worth it to stop your business being disrupted for weeks or even months. A spam checker for your email network is also a good idea, as spam accounts for approximately 45 per cent of all global emails everyday, according to Spam Laws.

To stop your business and employees from being hacked by cybercriminals, you need to install the right software on all of your systems. That requires some investment. If you're waiting for clients to pay their invoices and don't have enough capital to make the necessary investment right now, invoice finance can help. For more information, get in touch with Cashflow Finance today.

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Investing in the future can help your manufacturing business

The manufacturing industry has started a transitional period thanks to new technology such as 3D printers, and a university in Melbourne is at the cutting edge. Swinburne's Hawthorn campus is the first Australian university to install the HP Jet Fusion 3D Printing Solution, according to an Australian Manufacturing article from November 10, and the advantages to students are significant.

Your manufacturing business could learn from Swinburne's vision for the future.

The printer operates a multi-agent printing process, which is more efficient and potentially more sustainable than melting plastic – the process many current 3D printers use. Swinburne sees this printer as the future of production and design, and Workshop Manager in the Faculty of Health, Arts and Design Andrew Tarlinton highlights the benefits for manufacturing:

"Having the ability to create parts that are essentially finished and ready to implement brings us in line with professional prototyping labs found in many large businesses … With the new technology we can produce prototypes at speed, while maintaining a high level of detail and accuracy."

Your manufacturing business could learn from Swinburne's vision for the future. With the best technology, they can produce high-quality parts and efficiently test new designs at lesser cost than older 3D-printed models. The HP printer recycles up to 85 per cent of the excess printing material to create more components. Of course, it will take investment, and if you're waiting for clients to pay their invoices, Cashflow Finance can help.

How can invoice finance help you to invest in your manufacturing business?

When you need money to buy a top-of-the-line 3D printer, you can't always wait around for your clients to pay. Xero research shows that 60 per cent of small businesses in Australia wouldn't last three months if invoices went unpaid, and 6 per cent wouldn't last a week. That's not investing to improve, that's simply staying afloat.

3D printing allows you to efficiently create and test prototypes.3D printing allows you to efficiently create and test prototypes.

Cashflow Finance can provide you with a percentage of the total balance you're owed quickly, so you can pay what you need and invest where you should. 3D printing can speed up the manufacturing process and allow you to create prototypes inexpensively and accurately. You can improve your design and production and reach a wider audience, increasing your potential turnover. To get started with 3D printing you need the right equipment, however, and that means investing.

Your business might not have enough in reserve to afford a 3D printer, but your unpaid invoices could boost your finances significantly. To make the most of money you're owed and to improve your manufacturing business so you can remain competitive in the current marketplace, get in touch with Cashflow Finance today.

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Why you need invoice finance to invest in new technology

When was the last time you invested in a new piece of technology or equipment for your business? New technology could change the way your business operates for the better, but it comes at a financial cost. If you're always waiting for clients to pay their invoices you might never have enough stored away to put toward that new machine or updated software package.

In March around Australia there were more than 3.8 million unpaid invoices on the Xero payments platform alone.

Xero analysis of ASX 200 companies paying small businesses shows that 20 per cent of all payments are more than 30 days late. In March around Australia there were more than 3.8 million unpaid invoices on the Xero payments platform alone. Your small business might be affected by this issue constantly, and invoice finance can help.

How do late payments affect small businesses?

If you aren't paid for work you've already done, your expenses don't just go on pause until you receive the money. You still have to pay employees and bills and taxes, and when clients don't pay in a timely manner you might have to take out a loan just to get by.

As many as 60 per cent of small businesses on the Xero platform said they wouldn't survive more than three months if clients didn't pay their invoices at all, and 6 per cent said they wouldn't last a week. Further, 49 per cent said late payments reduce ability to grow and 34 per cent cannot purchase necessary equipment or technology.

Invoice finance works by providing you with a percentage of the total balance of your unpaid invoices, then collecting the unpaid debt and paying you the remainder minus a small commission. You can get most of the money you're owed quickly so you can invest in the technology you need to grow.

Why is technology investment so important?

Your competition is investing in technology, and to keep pace you'll need to do the same. Larger investments such as 3D printing or robotic systems in a manufacturing plant are expensive but can pay off hugely. Smaller investments such as cloud computing and online accounting platforms are just as important, and less expensive.

Mobile technology can help your business to become more streamlined.Mobile technology can help your business to become more streamlined.

Better technology means better customer experiences because everything can be streamlined – especially with the use of mobile technology.

"Mobile is the norm these days as it's made our day-to-day lives easier and kept us more connected," said Managing Director of Appscore Alex Louey in a SmartCompany article from November 10.

"Business owners should look at it to make the jobs of their staff easier or provide a better customer experience. Both are things that will keep you ahead of your competitors."

To remain ahead of the competition, or catch up to those who have already invested in better technology, contact Cashflow Finance today to discover how invoice finance can help your business.