ATO Back In TownMay 11 2022 in Cash Flow Finance
The onset of the COVID-19 pandemic saw a flood of Government support for the economy as well as a sharp decline in ATO collection activity, with virtually no applications by the ATO to wind up companies in the best part of the last two years.
There has been much conjecture since the start of the pandemic as to when ATO recovery actions would recommence, if at all. In fact, large parts of the ATO debt recovery teams were seconded to other areas of the ATO.
It has been reported that the ATO’s debt book has risen to $58.8 billion as at the end of June 2021
and as at the end of December $61.4 billion, with experts believing it to be much higher allowing for unaccounted tax debt.
ATO are collecting debts again
ATO recovery action has well and truly recommenced in recent weeks with a reported 50,000 warning letters sent to company directors around the country. These warning letters are issued as:
● Director Penalty Notices pertaining in the main for unpaid superannuation, PAYG withholding and GST
● Warning letters to directors via debt reporting powers provided to the ATO in 2019 [which took a backseat during the pandemic], that the ATO may report company taxation debts to credit reporting agencies for any businesses that owe more than $100,000 in tax and are more than 90 days in arrears without a payment plan.
These warning letters are being sent to the director’s residential address as per ASIC records and even if the address is no longer current, the ATO deems that it has been received whether the director[s] actually sees it or not as it is the responsibility of the director to keep ASIC records up to date.
If debts to the ATO have been correctly reported within prescribed timeframes, the director has the opportunity to remit their penalty by paying the debt or by placing the company into voluntary administration, liquidation or appointing a Small Business Restructuring Practitioner (SBRP) within 21 days of the date of the notice (NOT the date the director received it).
If debts have not been reported correctly and within prescribed time frames the penalty is a “lockdown” penalty and the director can only avoid the personal liability by having the company pay the outstanding amounts in full.
This does not leave much time for a director to consider their options and take the necessary action. If a director has received a warning that they may receive a DPN, they really need to plan now to deal with any penalty they might receive in the future. Both directors and accountants [on behalf of clients] need to engage with the tax office, as ignoring these warnings might result in a company director becoming personally liable for the company’s tax debts.
The ATO will no longer be perceived as an unofficial Line of Credit
Directors can no longer avoid penalty by just entering the company into a payment plan with the ATO.
Directors will remain personally liable for the debts (unpaid PAYG withholding, net GST or Superannuation Guarantee Charge [SGC] obligations).
Directors now have 21 days from the date of the DPN to exercise one of 4 options:
● Pay the liability in full
● Put the company into administration
● Appoint a Small Business Restructuring Practitioner (SBRP)
● Put the company into liquidation
It’s important to note that even if you’re no longer a director, you could still be liable for director penalties equal to the unpaid liabilities of the company, if liabilities of the company were due before the date of your resignation, fell due after your resignation when for PAYG withholding and net GST (inclusive of LCT and WET), the first withholding event in the reporting period occurred before your resignation and for SGC liabilities, the date the charge became payable.
So plan now and this is where cash flow finance options such as those offered by BCashflowPositive can assist. Freeing up cash in unpaid invoices to relieve the pressure on cash restraints whilst waiting for the customers to pay.
So, what is the real cost of the facility?Mar 21 2022 in Cash Flow Finance
The question most asked but rarely answered by many of our competitors. The reason? Their pricing models and funding costs are constantly shifting, so they really don’t know what the real cost of the facility will be for a customer.
At BCashflow Positive, it’s actually a straight forward question with a straight forward answer. To get to the bottom of why many of our competitors have trouble answering the question, let’s look at this in more detail.
Recently, we’ve seen advertising in the media from a home loan lender which satirically has its competitor running around, spruiking fees and this is pretty much on the mark in the invoice factoring space as well.
Invoice factoring has traditionally been a product offered by the non-banking sector, however in the last 20 years the banks have gotten on board as they see the potential money to be made in fees. Due to the way they manage the facility, banks refer to the product as invoice discounting. Your business still needs to qualify under the bank’s underwriting standards, which assesses your business’ eligibility based on the quality of the business to meet their lending ratios, not the quality of the customers buying your products. The banks charge an interest rate on the money out the door and a buying fee for the invoices initially purchased. Often, to qualify for the bank’s factoring facility, you will need to do all your banking with the same institution, which introduces a range of other fees attached to these accounts.
As banks are usually deemed to be the leanest when it comes to pricing as they have the cash reserves to do so, it might sound like a good deal for a business. At the end of the day though, you still need to qualify under their standards. As their facilities often focus on the larger business sector, many small to medium sized businesses will not qualify.
Banks often have a lower interest rate for the funds in use (perhaps 5% p.a. calculated daily) but they also have a buying fee which is often capped around $80,000 p.a. because it is hard to justify this fee constantly growing as a percentage of turnover when there is also the interest component, activity fees, line fees, unused limit fees and other account fees to consider.
A big issue has therefore arisen from the model used by the banks, as many non-bank lenders in the factoring space have copied this model of multiple fees to benefit their bottom line. Many of these lenders have a ‘cost of funds’ – a borrowing cost they incur and need to cover.
The majority of these lenders essentially borrow money and then lend it and as such need to cover the costs of doing so. With a simple fee structure that is more difficult to achieve. What has evolved is that many of our competitors have adopted multiple fees within their factoring facilities that reflect what the banks are doing.
At BCashflow Positive, we have many businesses who are currently factoring elsewhere and exploring alternatives, tell us when they ask the cost to fund an invoice, they can’t get a simple answer. We decided to look at some of the fees our competitors are adding in:
• Management fee / invoice buying fee: a fee charged on the purchase of the invoices being factored. The majority of lenders now require all invoices raised be processed through the facility and as such this fee captures each and every one and will vary based on the deal size or level of turnover. With a minimum ranging from $1,800 through to $2,500 subject to deal size.
• Interest rate: the interest rate will be applied to the funds in use or drawdown. As we already noted, the majority of lenders have a cost of funds and this interest rate will always be higher than that offered by the banks. We have seen in recent times this being as high as 10%-15%.
• Unused Limit Fees: to offset the savvy client who manages the funds in use to minimise interest, a number of lenders now have unused limit fees which is a fee that is charged for the funding gap between the money being used and the facility limit set.
• Audit fees: an audit is a field review that the factoring company may conduct at a desired frequency ranging from monthly, quarterly or six monthly. The audit cost could be as much as $1,000 per auditor per visit.
• Additional fees: other fees we have seen from our competitors include credit note fees, older debt fees (overdue accounts), overdrawn account fees, establishment fees, application fees, limit increase fees, legal fees, annual review fees, credit reference fees, insurance fees, misbanking fees and more.
With so many added fees, it’s no wonder many of our competitors can’t give a straight answer for the cost of the facility.
At BCashflow Positive, we believe in total transparency and provide a simple fee structure. We charge 1.80% flat for 30 days and then 0.06% per day thereafter for the time the invoice is outstanding between you (the client) and us.
So, for example, $100,000 for 30 days of funding is $1,800 as a discount of the value of the invoice(s). If the window between you and us is greater than 30 days, it is a further $60 per day based on this example. This makes it easy for our clients to calculate the cost per invoice, because we do not lend money at a rate of interest. We purchase invoices at a discount and charge as a percentage discount from the face value of each invoice. There is no third-party cost of funds that needs to be covered.
Many business owners and financial professionals treat factoring discount rates as interest rates on a loan, leading them to the incorrect conclusion that factoring is too expensive.
Let’s use our above example: If a business sells $100,000 worth of invoices to BCashflow Positive and the fee is $1,800 on invoices that are paid in 30 days, the tendency is to take the 1.8% fee, multiply it by 12 months and think that that’s an annual return of 21.60%. This is incorrect! Our charge was 1.8% on that sales transaction alone, no different than if you were to sell your own product or service to a client at a 2.50% – 5.0% discount.
With three decades of experience, BCashflow Positive has become a leading factoring company in Australia. We want to help small and medium businesses, even start-ups, to thrive and manage their cash flow needs. There are no quarterly audits or intrusive shadow software. We give you the freedom to run your business.
If you’re an SME looking for a flexible cash flow solution, call 1300 937 292 and speak to one of our factoring experts to fast-track your application.
Note: BCashflow Positive Facilities start at a minimum of $100,000 per month in factored sales
Managing Cash Flow: Supply Chain Finance Vs Invoice FactoringDec 10 2021 in Cash Flow Finance
Cash flow management is a critical component of business planning. Constant cash flow allows businesses to meet operating expenses while also enabling a business to grow and thrive.
While there are several strategies businesses can use in an effort to improve cash flow, including sending invoices promptly and restructuring payments, when companies are late to pay invoices, it can present significant challenges for businesses.
Many large companies offer supply chain finance as a means of providing early payments and maintaining control over their suppliers. Another far better, more convenient and controllable option for small and medium sized businesses is BCashFlow Positive invoice factoring, a tool that businesses can use to get money on outstanding invoices immediately.
At BCashflow Positive, we have over three decades of experience helping Australian businesses improve their cash flow. Our goal is to assist our clients at every stage of their business with transparency, flexibility and top-notch customer service. In this article, we will explore the differences between supply chain finance and invoice factoring as tools to help businesses manage cash flow.
What is supply chain finance?
Supply chain finance programs (also known as reverse factoring) are buyer-led financing options and can be a way for suppliers to get cash quickly at a discounted rate. It’s essentially a three-way financing solution requiring the supplier, a financial institution and the buyer to all be actively involved and facilities are normally set up or engaged by the buyer.
In reality, this is a complex transaction that disadvantages the small supplier (SME) who made or supplied the product in the first place, by providing them with a far reduced payment.
With supply chain financing, a buyer of goods or services engages a third party to pay the invoices owing to its supplier at a discounted rate. For large businesses with many suppliers, supply chain finance can be particularly beneficial as the cost can be either absorbed by the buyer over extended payment terms or as in most cases, passed onto the supplier by way of large discounts taken for early payment. Suppliers should be aware of the potential to be taken advantage of via the buying power of their customers (particularly much larger corporations).
As mentioned above many big companies are using supply chain finance schemes, partnering with third party providers to fund early payments for suppliers at a discount with the reported strategy of taking much longer than the recommended 30 days to pay bills.
The Commonwealth’s Payment Times Reports Register became public last month, allowing small businesses to access information about payment practices from large companies and government agencies. It covered the six months to June 2021 and highlighted and named some of the big companies paying their invoices late while also using supply chain finance programs.
It could be argued that they are forcing the hand of suppliers to adopt the supply chain option if they wanted to be paid on time and it is clear that these large corporations would not enter into such arrangements if there was not a cost benefit to them.
What is invoice factoring as offered by BCashFlow Positive?
Also known as invoice finance, invoice factoring enables businesses to unlock instant cash flow. While it sounds similar to supply chain finance, invoice factoring works in the opposite direction to reverse factoring.
In supply chain finance/reverse factoring, the buyer initiates the process where a financial institution factors the supplier’s invoice. On the other hand, traditional invoice factoring is initiated by a supplier who requests early payment at a discounted rate for their own outstanding invoices using these unpaid invoices as a form of security against the debt.
Invoice factoring enables the supplier to negotiate the terms, tailored to their specific circumstances. Essentially invoice factoring or financing enables businesses to access cash flow from their unpaid invoices at the time of issue, rather than waiting for the buyers of their goods or services to pay the invoices.
Is BCashFlow Positive a better option for your company?
Effective cash flow management as supplied by BCashFlow Positive is essential for businesses of all sizes. Often there is significant working capital tied up in unpaid invoices and businesses could certainly benefit from accessing that cash for immediate use.
When it comes to supply chain finance, the supplier will not be able to negotiate discounts and other terms, so it’s important to weight up the pros and cons of each to determine which is better for your business.
As a leading invoice factoring company, at BCashflow Positive, we offer invoice factoring for small to medium sized businesses. A form of finance with no hidden fees, invoice factoring allows businesses to finance sales invoices to help cover the gap of slow payments. If you’re unsure whether invoice factoring is right for you, speak to an expert at BCashflow Positive today by calling 1300 937 292.
Invoice Finance: Flexible & Faster AlternativeSep 14 2021 in Invoice Finance
Now more than ever, businesses need to explore alternative financing solutions to ensure they have sufficient cash flowing through their business. Traditional bank loans and overdrafts are not your only option; to give you the flexibility and simplicity you need to grow your business.
At BCashflow Positive, we have more than 32 years of experience working with businesses all over Australia. Whether you are looking to expand your operations with a new facility, launch a new advertising or customer loyalty campaign, or get on top of your ATO obligations, BCashflow Positive invoice finance can help you do it.
How Invoice Finance Works
BCashflow Positive Invoice finance is a fast and easy way of getting access to the money you have already earned. Instead of waiting 30, 60, or 90 days for your clients to pay your invoices, you can bridge the gap of slow payments by financing your invoices. Convert your invoices into cash with three simple steps:
1. Invoice your clients and send us copies of the invoices you want to be funded.
2. In as quick as 4 hours, BCashflow Positive will credit you with up to 90% of the invoice value.
3. You will receive the remaining 10%, less any accrued fees, when your clients pay us.
Benefits of BCashflow Positive Invoice Finance
It is important to realise that not all invoice finance companies are the same. When you work with BCashflow Positive, we make it as easy and quick as possible for you to access the money you have already earned.
Fast Approval: You will get a response within 24 to 48 hours after submitting your application.
Fast Funding: Once you send us your invoices for funding, you can expect to receive funds in as quick as 4 hours.
No Hidden Fees: Our fee structure is simple and transparent so there are no nasty surprises. Use our funding calculator to see how much funding you can get and how much it’s going to cost.
No Property Security: Our standard security is a charge over the debtors’ ledger, not the director’s home.
No Quarterly Audits: We trust you to run your business. We just help you to keep your cash flowing.
Friendly Professional Service: We’re just a phone call away. Call 1300 937 292 to speak to a local invoice finance expert.
Why Consider Invoice Finance Over Traditional Loans and Bank Overdrafts
Invoice finance is an alternative to traditional cash flow solutions like loans and overdrafts – and for many reasons, it may be a preferred solution. Business loans are getting harder to come by, and it can take weeks or even months to get approved. Depending on the loan amount required, property security may be required, forcing you to put your personal asset, like your home on the line for the business. It’s a big risk to take in uncertain times, and it’s unnecessary when there are alternatives available. BCashflow Positive invoice finance does not require property security and approval can be provided in as quick as 24 hours.
Bank overdrafts are another go-to solution for many businesses, but they have their own challenges. Overdrafts limits can be restrictive and often not enough to support business growth. With BCashflow Positive invoice finance, your funding limit can be aligned with your receivables, so the more you grow, the more funding you can get.
Contact BCashflow Positive for a Customised Invoice Finance Solution
Since 1989, we’ve worked with many small to medium businesses with an annual turnover ranging from $500,000 to $30 million in industries such as logistics, manufacturing, labour-hire, IT, and more. With a friendly and professional approach, our team can be a great extension to your business, to help you bridge the slow payment gaps and improve your cash flow.
As an independently owned Australian company with offices in Sydney, Perth, Melbourne, and Brisbane, BCashflow Positive is committed to helping businesses all over the country. Our staff are highly experienced and will be more than happy to discuss a tailored solution for your business. Contact us to learn more about how we can help you inject cash flow into your business, stay on top of ATO obligations, negotiate bulk pricing with your suppliers, develop a new product or service, and more.
Be Prepared As The ATO Resumes Debt RecoveryMay 12 2021 in Business Tips
As the pandemic reached unprecedented heights last year and business’ cash flow slowed to a trickle in many industries, the ATO leniently paused taxation auditing and collection. This offered some relief to small businesses struggling under the financial pressure caused by sudden closures, altered supply chains, and lost clients. However, now that the economy is slowly rebuilding and the JobKeeper program has ended, the ATO is resuming its debt recovery activities.
For many businesses, this comes too soon. Although the ATO is prepared to offer payment plans, the burden of these sudden costs will be shocking and difficult for many companies still reeling from a year full of uncertainties. It’s important to prepare your business with strategies that will not only improve cash flow but also allow you to meet your ATO obligations. Factoring invoices is one such strategy.
What ATO Debt Recovery Means for Your Business
As the ATO looks to recover billions of dollars from their debt book, businesses have already started receiving letters about their tax obligations. The ATO has stressed the importance of taking action, even if you’re in a situation where you’re unable to pay the entire amount.
In these extraordinary circumstances, customised payment plans are available. The ATO is prepared to consider each business on a case-by-case basis, as companies in some industries have done well during this time, while many others are barely hanging on. They’ve promised to be reasonable and understanding, but they need to get back to business, and they’re requiring companies to lodge their tax returns and start meeting their obligations.
The big takeaway: don’t ignore ATO communications, no matter your situation. If you do, you risk facing penalties and additional expenses. Instead, explain your situation and work with the ATO to create a payment plan. From there, develop a strategy that includes factoring invoices to increase business cash flow, so you can manage your ATO obligations and continue to help your business thrive.
How Does Factoring Invoices Work to Improve Business Cash Flow?
By factoring invoices with BCashflow Positive, you get quick access to the money you’ve already earned. Instead of waiting for 30, 60, or even 90 days for your clients to pay their invoices, bridge the gap between those payments and inject cash into your business within a few hours. Use funds from invoice factoring to get on top of your ATO obligations, pay your employees, increase inventory, improve your marketing strategy, and more.
With BCashflow Positive, there are only 3 simple steps to release cash from your unpaid invoices:
1. Invoice your clients as usual, and send us copies of the invoices you want funded.
2. In as quick as 4 hours, BCashflow Positive will credit your account with up to 90% of the invoice value.
3. You’ll receive the remaining 10% (less any accrued fees) when your client pays us.
Factoring invoices allows you to put your hard-earned money to work for your business. It’s a strategy you can use during the pandemic to keep cash flowing through the business, help pay employees, and meet your ATO obligations.
When you partner with BCashflow Positive, you have the advantage of working with a company that has more than 32 years of experience helping Australian companies improve their cash flow.
The Benefits of Factoring Invoices with BCashflow Positive
No two businesses are the same, which is why we offer fast, flexible business cash flow solutions customised to suit your needs. Our goal is to make it easy for you to access the money you’ve earned, through the goods and services you’ve already provided to your customers.
Fast Approval and Funding: A response is provided within 24 to 48 hours of submitting your application. We’ll process your invoices the same day we receive them, and you will receive funding in as quick as 4 hours.
No Hidden Fees: Our fees are simple and transparent. Our funding calculator shows you how much funding you can get and exactly what it’s going to cost.
No Property Security and No Quarterly Audits: We give you the freedom to run your business and help you manage your cash flow.
Enjoy the BCashflow Positive Difference
BCashflow Positive is an independently owned Australian company with offices in Perth, Melbourne, Sydney, and Brisbane, servicing small to medium-sized businesses from all over the country. We have long-lasting relationships with many of our clients because our business cash flow solutions are tailored specifically to their needs. Our commitment to helping our clients at every stage of their business journey has made us one of Australia’s leading factoring companies.
If you’re concerned about meeting your taxation obligations as the ATO resumes its debt recovery activities, contact us. We have been helping Australian businesses get on top of their ATO obligations since 1989. Funds released from factoring your invoices with BCashflow Positive can help your business meet the initial lump sum payment, as well as stay on top of ongoing monthly payments.
Businesses we have worked with generally have an annual sales turnover of $500,000 to $30 million and come from a variety of industries such as recruitment and labour-hire, IT and business services, manufacturing, transport, logistics, and more. Call us on 1300 937 292 to find out how we can help your business get on top of your ATO obligations.
From Surviving to Thriving: 2021 Key Business StrategiesFeb 10 2021 in Invoice Finance
Businesses of all sizes in nearly every industry experienced difficulty in 2020. Whether they were struggling with cash flow and were forced to close temporarily, or transitioning their employees to work from home, COVID-19 presented a variety of challenges most of us never thought we would have to face.
It was a year of survival: businesses adapted and did what they could to make it out the other side. With 2020 behind us, it’s time to focus on adopting key business strategies to get out of survival mode and into thriving mode. Here’s how to start:
Focus on What You Can Control
There’s still a lot that’s out of your hands: government regulations, public trust and willingness or ability to spend money, vaccination rates, the virus itself, and more. Although it’s good to be aware of how they can affect your business, a better approach is to shift your energy towards what you can control.
This may include developing a new product or a new service that better meets customer demands in the current conditions, adopting a lean and agile operating model, reconnecting with your most loyal customers, or managing your cash flow with alternative finance solutions.
Adopting a Lean and Agile Operating Model
Agile organisations empower teams to make decisions, rather than relying on people at the top of the business hierarchy to make them. Those teams are encouraged to take action, learn from their mistakes, and adapt to move forward. This not only fosters a culture of improvement and innovation, but it also makes it faster and easier for a business to pivot when consumer demands change – and it can better prepare you for unforeseen challenges like COVID-19.
Combining agility with lean operations helps you save money. A lean business is one that focuses on more efficient business strategies to be able to do more with less. This approach helps you eliminate waste, improve sustainability, and reduce your expenses.
Going lean starts with you assessing your organisation’s processes and identifying opportunities for improvements. Once the areas of improvement have been identified, strategies to go lean could be adopting new technology and embracing automation to save costs. Enhancing process efficiencies, improving communications, or restructuring and redefining roles to improve employee engagement and reduce turnover.
Focus on Core Customers and Personalised Offerings
Identifying your core customers – those who are most likely to buy enough of your products to enable you to keep selling them – is essential for both survival and growth. Losing your current customers is a major risk, not only because they are likely to continue to buy in the future, but also because they are the people who are most likely to tell a friend about your business.
Keep your current customers coming back with personalised offers and solutions. Ask your customers for feedback to show them you value their input. Develop a loyalty program that rewards them for their continued support and encourages social sharing. Getting to know your customers and catering to their changing needs are also key foundations in building loyalty.
Cash Is King: Seek Alternative Flexible Finance Solutions
When slow payments start to affect your ability to pay suppliers, pay wages, and meet your ATO obligations, you will soon realise that cash is king. Getting a traditional loan in the current climate can be tough, and your business could be left waiting for weeks or even months. There is a simpler alternative, where instead of waiting 30, 60, or even 90 days for your clients to pay their invoices, you can access that cash in as quick as 4 hours.
BCashflow Positive has been providing flexible invoice financing to help businesses improve their cash flow for over 31 years, via a simple and transparent process:
1. Invoice your clients and send us a copy
2. In as quick as 4 hours, we’ll advance you with up to 90% of the invoice value
3. You’ll receive the remainder with any accrued fees when your client pays us
When you work with us, you will enjoy several benefits that can help you save time, money, and hassles:
Fast approval: A response is provided within 24 to 48 hours of receiving your application.
No hidden fees: Our transparent fee structure ensures you know what you’ll be paying—no surprises.
No quarterly audits: There are no intrusive shadow software or quarterly audits. We give you the freedom to run your business.
Help when you need it: Our friendly local team is only a phone call away to answer any questions you may have.
Since 1989, BCashflow Positive has been a trusted partner to help small to medium businesses improve their cash flow. We have offices in Sydney, Melbourne, Brisbane, and Perth, and work with clients all over Australia. If you are exploring strategies to thrive in 2021, then improving your cash flow should be one of them. Contact us today or call 1300 937 292 to speak to an invoice financing expert.
Don’t let your business fail because of inadequate cash flowNov 11 2020 in Business Cash Flow
Stats released by Rodgers Reidy make note that the Covid stimulus measures introduced have had a drastic effect on the number of insolvency and winding up procedures. For the month of October 2020 compared to October 2019, there has been a significant reduction in the number of reported events in particular Winding Up Applications and Court Liquidations.
Winding up Applications are down by 94%.
Court Liquidations are down 93%.
Voluntary Administrations are down 64%.
Voluntary Liquidations are down 44%.
It can be safely assumed that 2021 will be a year when this trend will be corrected. Government stimuluses will be reduced or cease all together and the ATO along with a plethora of other mainstream creditors will be looking to be made whole. Cash flow will be king during this time and the ability to trade and pay whilst avoiding delays may be the difference in becoming a stat in the insolvency world or a survivor.
According to the ASIC, more than 8,000 businesses became insolvent in 2018/19, and 51% of those businesses reported inadequate cash flow as the key cause of failure.
We will not always have job keeper rent & loan deferrals, and other governments initiated top ups and bailouts to come to our aid. Cash flow issues can creep up very quickly and without adequate working capital, a business can find it very difficult to stay afloat. During these uncertain times, it is more important than ever to get a handle on your cash flow.
Don’t let insufficient cash flow be the key reason for your business failing, look into debtor financing, and explore the cash flow management tips below to get your business on the right track.
Identifying and understanding cash flow problems
There are multiple factors to consider when assessing your cash flow as it depends on the industry you are in, your business life cycle, your payment terms, your sales cycle, your margins, and more.
The first step in understanding and identifying whether you have a cash flow problem, is to focus on the important areas such as sales, pricing and margins, expenses, inventory and obsolete equipment, accounts payable, and accounts receivable.
Sales can quickly decline due to a pandemic, a new competitor, or a recession. Whatever the reason, cash flow issues will eventually follow.
Some strategies to improve sales are:
Review all aspects of the sales cycle such as prospecting, qualifying, sales pitch, objection handling, closing, and following up for referral opportunities.
Adopting new sales tools and technology such as CRM (Customer Relationship Management) to track and measure performance.
Create an effective sales training program when onboarding new sales staff
Using sales metrics and set targets to motivate better performance
Having regular sales meetings to discuss what can be improved
Pricing and margin
Your margins should allow for rising costs without affecting your profits too severely. Low profits can also indicate that there are cash flow issues looming. As a starting point, you can look to reassess your pricing strategy and improve your productivity at the same time. Offering value that correlates to the pricing increase could translate to a competitive advantage and improve your cash flow.
Go back to basics and identify what your customers really need and how your products or services can help solve them.
You should look to reduce your expenses when there are signs of cash flow issues. It is important to consider what benefits are derived from each expense and micromanage how that cost is being utilised.
Categorizing your expenses and noting the percentage on each category is a great way to determine what you are spending your money on. It will help you keep track of whether the spending allocation makes sense and pick up anything that stands out.
Inventory and obsolete equipment
Having working capital tied up in excess stock and obsolete equipment can put a major strain on your business cash flow.
Consistently reviewing your stock level, what you are ordering, and your ordering cycles can help to reduce any excess.
Consider the extra expenses of holding excess stock and obsolete equipment, and decide whether the cash you can get for disposing excess stock and obsolete equipment quickly can be better utilized elsewhere.
Accounts payable and accounts receivable
Optimising accounts payable can help improve working capital. Some key steps to optimising your accounts payable are:
Identify key suppliers/vendors and prioritise to negotiate favourable terms that will help boost working capital.
Streamlining the invoicing and payment process to ensure invoices are paid consistently, according to terms, and on time but not early.
Having up to date and accurate data gives visibility on how much, how often, and when you pay each supplier to better manage your cash flow.
Your accounts receivable should be considered as one of the most important assets as it is the most liquid behind cash. If most of your business is done on accounts then this process needs to be prioritized, as it will determine what will actually sit in your bank account.
Some practices you can put in place to optimise your accounts receivable are:
Regularly reviewing your customer’s credit limit will ensure you are not putting all your eggs in one basket, and if your customer’s business is in jeopardy you won’t go down with them.
Pay close attention to your largest customer’s payment trends, their credit limit, and whether they are abiding by your payment terms.
Ensure you are invoicing promptly, accurately, and following up on payments in a timely manner.
The other way to enhance your accounts receivable procedures is to look into debtor financing.
Using debtor financing to fast track access to cash
BCashflow Positive debtor financing can work in conjunction with your accounts receivable process while helping to cover the gap of late payments. Instead of waiting up to 90 days to get paid, we can convert your sales invoices into cash in as quick as 4 hours.
Simply invoice your clients and send us a copy. We will advance you with up to 90% of the invoice value and credit the remaining 10% when your client pays us, less any accrued fees.
We can also help to monitor your customer’s accounts and help to follow up on payments, so you can stay on top of your cash flow.
With faster access to cash, you can take advantage of early payment discounts, pay wages on time, and pivot your activities toward more revenue generating activities.
BCashflow Positive has been helping Australian businesses improve their cash flow for over 30 years. Contact us today to find out how you can improve your cash flow while having us as an extension to your accounts team to help optimise your accounts receivable process.
The Key To Keeping Your Business Finance AgileSep 09 2020 in Invoice Factoring
Running a business can be rewarding but also challenging. What COVID-19 has shown is that companies must be positioned to quickly adapt or run the risk of going out of business. More than ever businesses need financial solutions that are more agile, to allow them to pivot their operations and adapt to any economic conditions. Instead of resorting to traditional rigid business loans, companies should explore an agile and flexible funding solution such as debt factoring.
Debt factoring breathes with your business
Debt factoring breathes with your business and funding is more closely aligned to sales. As your business grows so can your debt factoring facility and access to funds.
The exposure to the factoring company is only ever a percentage of your factored sales at a point in time, which reflects where the business activity is throughout the year. As the business grows so do the sales, and as it contracts so do the sales.
Should the business retract, a fixed business loan does not adjust accordingly. It was most likely taken at a time of growth and as such reflects the business at that previous point in time. Repayments must be met but the circumstances of the business have changed, and it might be difficult to maintain your cash flow throughout this time of reduced activity.
The money you can get from debt factoring your invoices allows you to stay operational during the quieter times and scale-up production or staff for the busy times.
Debt factoring allows you to access an untapped asset
Unlike a loan, debt factoring allows you to access an untapped asset, your accounts receivable and bring it forward. Instead of waiting for up to 90 days for your clients to pay, you can cover the gap by converting your unpaid invoices into immediate cash.
Debt factoring is a more flexible business funding solution
Unlike traditional business loans where security is normally taken over property, plant, equipment or even a blanket security over all the company’s assets, debt factoring only takes security over the accounts receivable.
Debt factoring focuses more on the strength of the debtors and the quality of the ledger, so it can also be a suitable option for start-ups and turnaround companies.
BCashflow Positive debt factoring facility does not require quarterly audits and there is no intrusive shadow software. We give you the freedom to run your business.
We at BCashflow Positive understand the need for SMEs to manage their cash flow pressures during these uncertain times. We provide a consistent funding solution for companies with a minimum funding requirement of $100,000 a month. And we offer a flexible ‘pay as you use’ funding solution via Key Factors for businesses who are looking to have a cash flow buffer with no-lock in contracts. This allows businesses of varying sizes the ability to withstand any economic conditions and prepare for the future.
Simple and fast debt factoring with BCashflow Positive
BCashflow Positive simplifies the debt factoring process by converting your sales invoices into cash in 3 simple steps:
1. Invoice your client and send us copies of the invoices you want to be funded.
2. BCashflow Positive will advance up to 90% of the invoice value in as quick as 4 hours.
3. The remainder 10% less any accrued fees is credited to you when your client pays us.
Review your finance options
Now is the best time to review whether your lender is flexible and responsive to your business needs. In these challenging times, it is crucial to have the right financial partners and financial products backing your business.
Improve your cash flow with BCashflow Positive
With over 30 years of experience, BCashflow Positive has become a leading factoring company in Australia. Our goal is to assist our clients at every stage of their business with transparency, flexibility, and top-notch customer service.
We are transparent about fees from the very start so there are no surprises. Give our pricing calculator a go to find out how much funding you can get, and exactly how much it is going to cost.
BCashflow Positive acts as an extension of your accounts team by helping to monitor your debtors and their accounts. We also help follow up on payments and send statements of factored accounts to your clients.
Understanding and limiting your customer’s risk is an essential part of what we do. BCashflow Positive uses the latest risk-management technology to advise you on your debtors’ creditworthiness. We also provide our clients with free commercial credit reports to help them assess whether they should extend credit to a customer.
To find out more about how to keep your business finance agile and improve your cash flow contact us today, or call 1300 937 292 to speak to a debt factoring expert.
Factoring Versus a Business OverdraftAug 11 2020 in Invoice Factoring
Cash flow is the lifeblood of a business. Whether you’re a start-up or an enterprise, you cannot thrive without a positive cash flow. But the reality is every business faces cash flow challenges at a certain stage of their business. Whether it’s as a result of a downturn in the economy, seasonal issues beyond your control, unexpected expenses, slow-paying clients, or in the current climate, a pandemic.
In this article, we will examine 2 funding options businesses are using to improve their cash flow, and what to take into account for each.
1. Business overdraft
What is a business overdraft?
A business overdraft is a pre-approved line of credit that allows you to draw more than your available balance. The definition of an overdraft is taking out more than what is in your account. Similar to a credit card or a business loan, interest is charged based on the amount of credit you use.
What fees and charges apply for a business overdraft?
A business overdraft normally comes with an application fee or establishment fee, interest, account keeping fees, and an over-limit fee if you exceed your limit.
Security requirements for a business overdraft
A business bank overdraft can be secured or unsecured. Normally a business overdraft with a limit higher than $50,000 would require security by the banks.
Secured business overdrafts normally require a charge over residential properties, commercial properties, or blanket security over all the company’s assets. The issue here is that when said security is in place, you are fully locked into dealing with that one lender outside of the purchase of further fixed assets. Noting that although potentially being able to purchase fixed assets under a lease, the bank still requires their input as far as annual reviews, etc. to determine ongoing serviceability requirements. Once those fixed assets under finance have been repaid, they fall under the blanket security charge the bank[s] have in place.
What is factoring and how does it work?
Factoring allows you to unlock cash from your accounts receivable and improve your business cash flow. It helps businesses to cover the gap of late payments and provides instant access to funds instead of waiting up to 90 days for their clients to pay. BCashflow Positive factoring can convert your unpaid invoices into cash, in 3 simple steps:
1. Invoice your clients and send BCashflow Positive a copy.
2. BCashflow Positive will advance up to 90% of the invoice value in as quick as 4 hours.
3. We will credit you the remainder less any accrued fees when your client pays us.
How much does BCashflow Positive factoring cost?
BCashflow Positive is transparent about fees, so there are no surprises. We charge 1.8% for the first 30 days, and 0.06% thereafter for up to 90 days. There are no other hidden fees. Give our fee and funding calculator a go to see how much funding you can get, and how much it is going to cost.
Approval and security requirements for BCashflow Positive factoring
Unlike a secured overdraft, where a charge is over residential properties, commercial properties, or blanket security over all the company’s assets, BCashflow Positive factoring only places a charge over the accounts receivable. Factoring gives businesses the freedom to seek other sources of finance, if required, to support their growing business.
BCashflow Positive does not charge an application fee and approval can be in as quick as 24 hours.
What businesses or industries is factoring suitable for?
Since factoring primarily focuses on the quality of your accounts receivable and the paying capacity of your clients, it is very appealing to start-ups or growing companies with a large number of customers on accounts. Factoring is also suitable for industries with long sales cycles such as manufacturing, labour-hire for the health sector, commercial cleaning, business services, and wholesale, to cover the gap of slow payments.
Factoring compared to a business overdraft
A business overdraft is a straight forward loan that has interest and activity fees, its value is that it does not have an end date or repayment schedule. But once the limit has been reached it does not have any flexibilities post that and we have seen many businesses over the years cap out on overdrafts and then nowhere to go. That is when they look for options such as factoring to align the demands of cash flow to the actual liquidity of the business.
Factoring works and does so as it matches like for like. As the business grows so do the sales and the exposure to the factoring company is only ever a percentage of your factored sales at a point in time.
BCashflow Positive factoring allows you to leverage off an untapped asset within the business, the receivables ledger. A funding solution that allows you to release the cash flow that would otherwise be locked up in your unpaid invoices to cover the costs of your next round of new orders waiting to be fulfilled.
When operating successfully within the gross margins set, often a business will offer discounts to customers allowing them to speed up the cash flow cycle enabling them to purchase the stock or employ the staff to cover the next order or generically growing business. The cost is a manageable loss of gross margin to get the cash in. Factoring mimics that process by using a third party like BCashflow Positive to bring forward the sales timeline at a discount. It allows you to leverage off those future invoice payments, so that you can use the released funds to pay suppliers, cover the costs of production to deliver on new orders, and pay wages on time.
Why Factoring with BCashflow Positive?
With three decades of experience, BCashflow Positive has become a leading factoring company in Australia. We want to help small and medium businesses, even start-ups, to thrive and manage their cash flow needs. There are no quarterly audits or intrusive shadow software. We give you the freedom to run your business.
Since factoring is not a loan, industries that are new, growing, or facing cash flow gaps will find factoring to be an attractive option. If you’re an SME looking for a flexible cash flow solution, call 1300 937 292 and speak to one of our factoring experts to fast-track your application.
Changes To JobKeeper: How To Mitigate The Impacts Using Factoring FinanceJul 22 2020 in Invoice Factoring
The JobKeeper wage subsidy will continue until March 2021 but will reduce from $1,500 to $1,200 a fortnight after September, and then reduce again to $1,000 a fortnight for the first three months of 2021. For people working fewer than 20 hours a week, they will receive $750 a fortnight, then reducing to $650 a fortnight along the same time line.
Approximately one million Australians have lost their jobs as a result of the pandemic, while small and medium businesses with their low cash reserves, higher fixed costs and restricted access to lending, are struggling to stay afloat.
The latest ABS Business Indicators survey observes that three in ten (30%) small businesses (i.e. those with 0-19 persons employed) reported that currently available cash on hand would support business operations for less than 3 months.
Business sentiments on length of time operations could be supported by currently available cash on hand (a)
a) Proportions are of all businesses. Source https://www.abs.gov.au/ausstats
Businesses should look into alternative sources of finance such as factoring finance to prepare for the reduction in JobKeeper, and eventually when the tap is turned off.
Prepare a cash flow forecast
Cash flow is the movement of money in and out of your business. A positive cash flow means that there is more money coming in than what your business is spending. While a negative cash flow means there is more cash going out of your business, than coming in.
Negative cash flow is a major warning sign, especially during these uncertain times. A reliable and consistent cash flow forecast is critical to ensure your business can plan for any shortfall.
A cash flow forecast can also help your business to understand the source and certainty of your income and expenses, and what actions to take.
Taking advantage of unpaid invoices
With the economic instability, businesses are now experiencing slow payments from clients, in turn, creating a cash flow gap. Instead of waiting for clients to pay, businesses can cover this gap through factoring finance, and get paid in as quick as 4 hours.
Especially with the economic turmoil brought about by the pandemic, we at BCashflow Positive understand the need for SMEs to manage the pressures related to cash flow during the crisis. BCashflow Positive offer a consistent funding solution, as an alternative to traditional loans and banks, and a flexible funding solution via Key Factors with no lock-in contract. This flexibility allows businesses of varying sizes the ability to withstand the current landscape, for as long as possible.
Using factoring finance can allow business owners to concentrate more on pivoting their business to adapt to the new economic climate, rather than getting stuck on perplexing cash flow concerns.
BCashflow Positive factoring finance: Where to start?
BCashflow Positive offers a straightforward and efficient way for you to access your cash flow in 3 simple steps.
1. Send us your invoices: Send BCashflow Positive copies of invoices you would like funded.
2. Funds in as quick as 4 hours: BCashflow Positive will process your invoices and advance you with up to 90% of the invoice value immediately.
3. When paid you get the rest: Once your client pays us, we will credit you the remainder less any accrued fees.
Who can BCashflow Positive assist?
Whether you are a company suffering from slow payments or poor cash flow, BCashflow Positive can help to unlock the hidden assets in your invoices and give you instant access to cash.
Don’t let slow payments hold your business back and start looking into how factoring finance can provide your business with a more predictable cash flow today.
The BCashflow Positive’s difference
We value transparency at BCashflow Positive. When using our online funding calculator, you can work out how much funding you can get and the exact fees that you’ll incur. We charge 1.8% for the first 30 days and 0.06% thereafter for up to 90 days.
As the uncertainty continues, it will be worthwhile to consider the benefits of factoring finance below:
Instant cash flow within hours.
Increase cash flow by drawing on your unpaid invoices.
No property or security required.
No restrictions and conditions like how banks work. No quarterly audits as well.
You can get on top of your tax obligations.
Above all, you’ll experience the flexibility in financing and improve cash flow.
It’s in our interest to help you carry on during these trying times, reach out and speak to a friendly cash flow expert today by filling out our contact form or call 1300 937 292.
Improving Your Cash Flow Amidst COVID19-Compelling Reasons to Finance Your Invoices NowMay 19 2020 in Invoice Finance
You have checked your cash flow data, monitoring every accounts receivable from your clients, who have not been able to keep up.
The wait goes on…
We know that having a positive mindset in this pandemic can be an ‘easier said than done’ scenario. But whilst the pandemic has had multiple industries grappling for some financial security, you can still be optimistic about keeping your business afloat – and more.
If you’ve found your cash flow to be slipping away from you more than ever, you need a flexible funding solution like BCashflow Positive invoice finance to stabilise your cash flow during this crisis. Your goal now is to manage overall business risks and keep financial continuity plans in place. You need all the support you can get in managing cash-related pressures during these times.
What short and long term cash flow management methods have you applied so far? What forms of alternative financing have you fuelled your business with to keep a healthy level of cash flow? What are your challenges with customer-client relationships?
Take a look at your invoices, waiting to be processed. Have you received what’s due to you from your clients?
Instead of grappling through your cash flow system, here are some reasons why financing your invoices now should be your next move. We’ve made each process as straightforward as possible so you can get back to being cash flow positive straight away.
Simple application process
In this time of crisis, the last thing you want is to be inundated with complicated paperwork and terms. Simply fill out our contact form and an invoice finance expert will be in touch to guide you through the invoice finance application process, and have a response for your application within 24-48 hours.
Our invoice finance experts will be there every step of the way to ensure that the application process is a simple and a stress-free experience.
Like you, we don’t like complicated jargon. We believe in transparency from the start so there are no surprises. You will know exactly what funding you can get and how much it is going to cost upfront by simply using our fee and funding calculator.
If you need more clarifications around our fee structure simply call 1300 937 292 and speak to one of our invoice finance experts, who will be more than happy to help.
Flexible alternative support
Instead of resorting to traditional loans, you will find invoice finance to be a more flexible alternative to support your business. Invoice finance is not a loan and the funding you receive is proportionate to your invoices. BCashflow Positive invoice finance lets you stay in control by allowing you to choose which invoices you would like to factor.
You can choose between our come and go arrangement with no lock-in or long-term contracts option via Key Factors. Or for more consistent access to funding BCashflow Positive invoice finance is a great long-term cash flow solution.
Manage business growth
BCashflow Positive invoice finance is suited to a variety of SMEs and growing businesses requiring additional working capital, even start-ups, or companies looking to get on top of their ATO debts, can benefit from invoice financing.
If you are in the wholesale industry, manufacturing, commercial cleaning, labour-hire, transport and logistics, manufacturing and wholesale, or earthmoving that is experiencing cash flow constraints due to slow payments, it might be a good time to consider invoice finance to cover the gap.
Rather than chasing receivables, you can concentrate on paying employee wages and outstanding operating expenses, exploring new marketing strategies and ways to pivot your business during COVID-19.
Our team can not only help to fund your invoices, but they will also help you collect them.
Instant cash—in hours
If your business is in need of instant cash, we can fund invoices in as quick as 4 hours. Rather than waiting for up to 90 days to get paid by your clients, you can convert your invoices into cash immediately with BCashflow Positive invoice finance.
Convert your invoices into cash in three simple steps:
- Invoice your customers and send us a copy.
- BCashflow Positive will advance you with up to 90% of the invoice value.
- BCashflow Positive will transfer you the remainder 10% when your client pays us, less any accrued fees.
With the instant cash flow support, you can return to normal operations, even speed up ongoing business transactions, and improve your cash management system.
With COVID-19 uncertainty still looming, it will be worthwhile to look into financing solutions to be able to move into the recovery phase of your business. Acting now and acting fast could be the difference between whether your business will survive.
If you’re unsure whether finance invoicing is right for you, speak to an invoice finance expert at BCashflow Positive today by calling 1300 937 292. With three decades of experience, BCashflow Positive has become the leading factoring company in Australia to help businesses see through cash flow challenges. Whatever your needs, we’re here to help.
Why Traditional Factoring Is Safer Than Reverse FactoringMar 31 2020 in Invoice Factoring
Factoring has long been a popular financing option for companies who need to improve their cash flow. For 30 years, BCashflow Positive has been proudly helping clients get access to the money they’ve already earned.
Invoice factoring should not be confused with reverse factoring, which is also known as supply chain finance. In this scenario, the company uses a reverse factoring partner, which could be a bank or an alternative lender, to help pay suppliers’ invoices.
What Is Factoring?
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business will sometimes factor its accounts receivable to meet its present and immediate cash needs.
Factoring vs. Reverse Factoring
With factoring, the factoring company advances you with a percentage of your sales invoice upfront to help you improve cash flow. Instead of waiting up to 90 days for your clients to pay, you can release immediate cash from your invoices.
With reverse factoring, the bank or lender commits to pay your suppliers’ invoices at an accelerated rate in exchange for a discount. The process is still initiated by you (the customer) to help your suppliers finance their receivables.
Reverse factoring fees are often higher than traditional factoring, as a discount is applied for the customer while the bank/financier also charges their fees. So, although the supplier receives the full amount upfront, it is still less the agreed discount and funder fee.
The Australian Competition and Consumer Commission is looking more closely at reverse factoring, and Small Business Ombudsman Kate Carnell has initiated a formal review of reverse factoring. There is some concern that companies are not disclosing their reverse factoring practices to their shareholders. Thus, it makes those businesses appear to be doing better than they actually are. When Carillion, a British government contractor, collapsed in 2018, it did so under the weight of extreme debt—and it had been using undisclosed reverse factoring.
Given the uncertainty of the future of this practice and the confusion it can create on paper, traditional factoring is a much safer option to achieve what is basically the same result: improved cash flow.
Factoring has a long history dating back to ancient Rome. It is widely used by businesses around the world to improve cash flow and it is not currently under Government scrutiny. Factoring also has many other benefits which are explored further throughout this article.
How Can Businesses Use Factoring to Improve Their Cash Flow?
Maybe you’ve already experienced this: you’ve made dozens of sales, but you have no cash to show for it because all those clients are sitting on their invoices—and may take 30, 60, or even 90 days to pay them. In the meantime, what are you supposed to do about ATO obligations and your own outstanding invoices? How can you hire new employees or develop new products? There is no certainty as to when your clients will pay their invoices.
That’s where factoring comes in. You can have the money you’ve earned within hours of invoicing your clients. Then, that steady cash flow can keep your business growing.
How Does the BCashflow Positive Factoring Process Work?
The BCashflow Positive process is simple and fast, giving you access to your money in as little as 4 hours. You can get your invoices funded in 3 simple steps:
- Invoice your clients and send us a copy.
- BCashflow Positive will advance up to 90% of the invoice face value, less 1.8% for the first 30 days, in as little as 4 hours.
- We will credit you the remainder of the invoice when your client pays us, less any accrued fees.
The BCashflow Positive fee structure is straightforward and transparent. Our calculator makes it easy to determine the fees you’ll pay on each invoice you send us—so there are no surprises. Stay in control by choosing which invoices you want to factor. We also don’t require property security or quarterly audits.
Advantages Compared to Other Business Funding Solutions
With banks tightening their credit policies, businesses may find it harder and harder to acquire traditional business loans. The application process can also be onerous and time-consuming.
A line of credit or overdraft may also not be enough to service ongoing business expenses, depending on the limit. If your business borrowings are secured by property or your home, you are also at risk of losing everything if something goes wrong.
Factoring is a faster, more accessible funding solution for many businesses. The application process is simple and there are fewer restrictions than what you’ll find with most banks.
Factoring Your Invoices With BCashflow Positive
With BCashflow Positive you choose which invoices to factor. Additionally, since the money you receive is based on sales you’ve already made, there is more peace of mind.
With three decades of experience, BCashflow Positive has become the leading company in Australia, providing businesses with steady cash flow. We prioritise customer service and love helping fellow Australian businesses succeed. When you work with us, you’ll enjoy:
- A response to your application within 24-48 hours
- Advance up to 90% of the invoice value to you in as little as 4 hours
- Upfront pricing structure—no hidden fees
- No quarterly audits or property security
- Friendly, professional, and dedicated service throughout our relationship with you
Factor the invoices you want, when you want, and get that cash flowing through your business. Use it to pay taxes and suppliers or take your business to the next level.
Not sure if invoice factoring is the right choice for you? Contact us today to speak to a local cash flow expert. Small to medium businesses and even start-ups that turnover $100,000 to $3,000,000 a month can benefit from factoring. Whether you work in recruitment, mining, manufacturing, transport, or any other industry, we can help you determine if factoring is a suitable funding solution for your business’s cash flow needs