An independently commissioned cash flow crisis report by The Invoice Market (tim.) illustrates that Australian businesses are constantly owed an average $38,000 each, with corporate customer excuses ranging from ‘lost in the system’ and ‘in dispute’ to ‘being reviewed internally’ and ‘being processed offshore’. In fact, the primary cause of failed SMEs for three years running has been insufficient cash flow due to late paying debtors, according to the 2017 Australian Securities and Investment Commission (ASIC) corporate insolvencies report.
In short, the survival of many small businesses depends solely on the ability to manage cash flow. Businesses need to pay in advance for bulk purchases ahead of the holidays; others need to funding their imports, sometimes up to 90+ days before being able to sell them and as such businesses across every industry run into problems when clients delay paying invoices.
Often, business owners have to dip into their own pockets to fund new their working capital, so what can you as a business owner do to avoid these cash flow problems?
Having a strong grip on the financial forecasts of your business means you’re better placed to make decisions throughout the year if there are any shortages or surpluses in cash.
Most businesses forecast their cash flow yearly and calculate their outgoing expenses per month.
It’s important to continually check your cash inflow and outflow every month to see if your forecasts are on track; if your debtors are paying on time and if your working capital cycle is as planned.
Knowledge is Power
Developing your management and financial skills can help you improve your cash flow. Attend workshops or seminars to improve your business knowledge. Do not leave it all to your financial controller to do, understand it yourself.
One should also seek advice from the experts (professional accountants) at least every 6 months if not quarterly: as they are able to independently assess your individual situation.
An effective invoice contains all of the important information that a customer needs to know in a concise and easy to read format. There should be no surprises for a customer when an invoice is received. Invoicing should be issued in a timely manner and not be held back until its too late. Online accounting software can not only handle your invoicing, but some even send out automatic invoice reminders to save you time and help you get paid on time.
Invoice Financing involves your business selling its unpaid invoices to a financer. In return, you will be provided with immediate access to cash, usually up to 85% of the total face value of the invoices. When an invoice is paid by your customer, you will then be paid the balance of the face value of the invoice, less the fees. This is a very cost effect way to cash flow finance your business and improve your working capital, and most importantly its not a loan, so you are not tied into fixed repayment terms at all.
Which Invoice Financer should you choose?
There are a lot of firms that offers cash flow financing, many of which are slow and challenging. That’s why we at The Invoice Market (tim.) created a better, faster way to help Australian companies get their funding, with no upfront fees and no lock-in contracts. tim. is able to fund your business within 24 hours of providing the information required with amounts from $50k to $5.0M.
Why is tim.’s funding better than a traditional business loan?
- Only pay for what you use when you use it
- No line fees and no establishment fees
- You make no repayments at all, as your Debtor pays their invoice/s it replenish your available credit
(a true revolving facility)
- Easy, quick online funding process
- No property security required
- There is no ongoing fixed weekly or monthly interest charges
- No locked-in contract period, come and go as you wish
- The amount of funding is based on your sales not on your debt position of the business
In summary, you’re in complete control – instead of being dictated to by a single financier, you can dictate your selling parameters, your maximum discount rate and the proportion you would like advanced up front. The end result is you can convert your invoices into more cash, more quickly and more easily than ever before because The Invoice Market is lean, fast and flexible.
“Get Tomorrow’s Cashflow Today”