Is your business dealing with extended supplier payments or seasonal fluctuations? Perhaps your customers just can’t seem to pay on time. Whatever the cause of your cash-flow strife, you’re not alone.
According to our latest press release, Australia’s two million small- and medium-sized enterprises (SMEs) are drowning in a sea unpaid customer bills, with businesses perpetually owed an average of $38,000. It’s a dangerous place to be — 40% of Australian businesses that fail identified inadequate cash flow as the main reason they went under.
As you continue to serve your client base while waiting to receive extended payments, an increasing amount of your operating funds end up trapped in unpaid invoices. Even after charging interest on the owed balances, your company’s ability to forge ahead unscathed could hinge on receiving your next payment. To avoid constantly hanging in the balance, you can proactively seek financing solutions to release the financial chokehold and open up the doors for growth opportunities in your industry.
Unsteady cash flow repercussions
When you have a steady amount of liquid capital on hand, you can rest assured that your business has the buffer it needs to ride out lean or tough times. However, during periods of low sales or vendor rate hikes, you can only ensure the continued operation of your business by having the funds needed to continue your daily tasks. If you are waiting on invoice payments, you may find yourself without the funds to cover the cost of materials and labour.
A lack of steady cash flow also limits your ability to put funds toward research and development that keeps your business competitive. You may find positive growth opportunities slip through your fingers simply due to the lack of fluid funds for the immediately deployment of the necessary upgrades or changes. Furthermore, your cash flow will forever rely on your ability to capture that next payment rather than investment opportunities that could expand your income flow.
Invoice finance opportunities
Like many businesses, your vendors’ payment terms may allow them to push payment due dates out up to 120 days to meet their obligations. During that time, you must find a way to continue operations and facilitate growth without those tied up funds. To best meet this challenge, you can utilise invoice financing to restore your working funds and forge ahead with your business plans.
Invoice financing plans allow you to sell your pending invoices and receive a large portion, up to 80%, of the funds upfront. When the client or vendor hands over the payment in full, you receive the rest of the owed balance minus a small fee. In the end, this option results in less risk and fewer charges than loans of the same amount.
You can use the collected funds in any way that benefits your company such as payroll, assets, and investment opportunities. In addition to offering a true financial safety net for your company, invoice financing saves you time and effort by instantly fulfilling your need for immediate funds. You will not have to chase down payments, resend invoices, calculate late fees, or source loan funds from private lenders or banks. You can simply continue following your business plans to keep your daily operations on track and meet your growth targets by your expected deadlines.
Dangers of inconsistent cash flow
No matter the cause of the inconsistent cash flow your company experiences, your ability to sustain market demands and capitalise on growth opportunities may halt without a safe resolution. You can give your company the best chance at remaining healthy and competitive by acquiring invoice financing. An invoice financing plan can boost the resiliency of your business by eliminating the precarious situation you face every time unpaid invoices outweigh fluid funds required for your daily operations. To acquire the perfect invoice financing plan for your company, contact the team at tim.