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.
How to Boost Cash Flow this Holiday Season and Get Paid on TimeDec 02 2019 in Business Cash Flow
For the retail & hospitality industries, Christmas is a busy time, but for most other businesses sales begin to decline, cash flow slows down and customers take longer to pay.
The impact of the slowdown in cash flow during the holiday season often continues until the end of the first quarter as spending capabilities are limited due to maxed-out credit cards, back-to-school expenses, and other financial obligations.
Your business may find itself in financial difficulties if you fail to boost cash flow well in time for the holiday season. In this article, we will explain simple tactics to boost your business cash flow and how to get paid on time during the holiday season.
Cash Flow Boosting Tips
Here are some ideas you can make use of to boost sales during the holiday season.
Make Irresistible Offers: According to a study conducted by Roy Morgan, retail sales during the 2019 Christmas season is forecasted to be over $52.7 billion. The holiday season provides the perfect opportunity to boost your marketing campaigns for meeting the demand from customers hungry for a great deal.
If you are a service provider, improve the customer experience by building on the relationship. Offer after-hours service or a holiday-special “thank-you” offer.
For example, a cleaning business can offer to perform a complimentary cleaning if the customer prepays for two or more services in the New Year.
Introduce Loyalty Programs: This is the perfect time to introduce customer loyalty programs. Not only does it allow you to show loyal customers you care about them, but it also helps in boosting cash flow through recurring sales in your business.
Stock Up on Popular Items: Make sure you have sufficient stock of your most popular items, so you don’t run out of them when the demand peaks. Revisit the previous year’s holiday season sales to forecast how many units of popular products you will need.
Position popular products in a way that makes it easy to be found. If you have an online store, use banners and position them on your website so they immediately catch a website visitor’s attention.
On the other hand, if you have a physical store, place the items near the entrance or checkout counter. You can also put up some signs to draw a customer’s attention to the products.
Stand out with a professional website: Although your website may not require all the bells and whistles of household brands, a professional website is quite affordable and worth investing in. Trust is the new currency online, and if your website looks unprofessional and is hard to navigate, it’s not likely to give customers the confidence to buy. When designing your website, make sure it is mobile-friendly, as this will make it easier to keep up with traffic spikes and regularly promote special offers.
Managing Business Cash Flow
Whether you operate online or offline, managing cash flow during the holiday season is important to keep your business financially healthy.
Here are a few suggestions to help you keep cash flow under control this holiday season:
Get your Invoices Out on Time: Send out invoices to clients a little ahead of time, instead of waiting until month-end. Make it clear when you expect to get paid by ensuring payment terms are stated on invoices.When fulfilling orders, focus on the ones which can be completed the fastest, while scheduling others which take time to complete for early in the New Year.
Follow up On Payments: Set clear expectations with customers that they need to pay on time in accordance with pre-arranged credit terms.
Customers with a tendency for slow payment should be contacted a few days prior to the invoice due date to confirm they will be paying on time. Calling customers is a more effective option than emailing.
Cash Flow Forecast: Setting up a cash flow forecast is essential to weathering the ups and downs of your business and project future profitability.
Once you have a realistic budget set for the New Year, you can put your mind at ease knowing that your cash flow is under control.
Use a Debtor Financing Arrangement to Buffer Slow Payments
Despite your best efforts, you may face cash flow shortages during the holiday season. Debtor financing can help in accessing cash quickly and take away the pressure of chasing payments.
Debtor financing is designed to turn unpaid invoices into cash enabling you to pay suppliers and meet other operating expenses.
BCashflow Positive debtor financing can help your business avoid cash flow shortage by advancing up to 90% of the invoice value in as quick as 4 hours once a facility is in place, and the remaining 10% is credited to you when your customer pays us.
There is no fee to apply for debtor financing with BCashflow Positive and our charges are fully transparent, so you know exactly how much you will pay. If you’re looking to have fast access to cash locked up in your invoices this holiday season, don’t delay, call us on 1300 937 292 for more details or CLICK HERE to get a quote.
Businesses should explore invoice financing as a credit crunch loomOct 26 2018 in Business Cash Flow, Invoice Factoring
Are you a small business owner? You’re probably facing a credit crunch as banking regulations have tightened due to the Royal Commission’s highly legalistic interpretation of responsible lending laws.
According to the Financial Review (Sep 2018), The Australian Prudential Regulation Authority is forcing banks to apply tougher tests on borrowers’ income and expenses, also delaying the time it takes for loans to be approved.
Mark McKenzie, chief executive of the Australian Convenience and Petroleum Marketers Association said to the Financial Review “Loan-to-valuation ratios (LVR) offered by banks to small firms in his sector has been slashed in half. About a year ago, small service station operators could attain an LVR of up to 75 percent. At the moment no one can get an LVR over 30 percent.”
That being said, small business owners need to look at alternative financing options to sustain their cash flow.
Why explore invoice financing?
Invoice financing, also known as invoice factoring, allows business owners to finance outstanding invoices. BCashflow Positive invoice financing advances you immediate cash collateralised by your unpaid invoices. It’s a great way to ensure you can still be on top of your operating expenses when your customers are slow in paying their invoices.
Invoice financing is also a great way to boost working capital when your company is experiencing rapid growth.
BCashflow Positive invoice financing
Applying for invoice financing with BCashflow Positive is simple and fast. Our online application takes 3 minutes to complete and an approval can be provided in as quick as 24 hours.
How invoice financing works?
Accessing funds from your unpaid invoices is as easy as 1 2 3:
1. Send us copies of invoices you wish to draw funds against.
2. Up to 90% of the invoice value is credited to your account in as quick as 4 hours.
3. The remaining 10%, less any accrued fees, is transferred to you when your customer pays us.
For more information on invoice financing with BCashflow Positive, call us at 1300 937 292, or fill out our quick contact form and we will be in touch shortly.
Scale your business by factoring your accounts receivableSep 25 2018 in Business Cash Flow, Invoice Factoring
Are your clients taking up to 90 days to pay invoices and it is affecting your cash flow?
Factoring your accounts receivable can be a great solution to cover the gap of slow payments. It can also save you time as factoring companies like BCashflow Positive will also assist with the follow up of outstanding factored accounts.
As a business, any strategy you can incorporate to enable you to focus more on growing your business, is invaluable.
How does accounts receivable factoring work?
Accounts receivable factoring is an easy process and a fast way to get your invoices paid immediately. Here’s how it works with BCashflow Positive:
1. Invoice your clients for services or work completed and send BCashflow Positive copies of invoices you want funded.
2. BCashflow Positive will credit your account with up to 90% of the invoice value in as quick as 4 hours.
3. Once your client pays the invoice in full to BCashflow Positive, we will credit the remaining 10% to your account, less any accrued fees.
Advantages of accounts receivable factoring
Expanding your business is much easier with the available cash provided by accounts receivable factoring. You can add on more equipment or staff, implement new marketing strategies, or introduce new products.
You can also take advantage of supplier discounts by paying early, or get on top of your ATO obligations.
Why accounts receivable factoring with BCashflow Positive?
BCashflow positive is a leading Australian factoring company with over 28 years’ experience and offices nationwide. Other key benefits include:
· Fast approvals: Within 24 to 48 hours.
· Flexible funding: You can choose what invoices you would like funded.
· Transparent Fees: Use our online calculator to work out exactly how much funding you can get and how much it is going to cost.
· Industry Experience: We provide flexible cash flow solutions to a wide range of industries.
For more information on accounts receivable factoring with BCashflow Positive, call us at 1300 937 292, or fill out our quick contact form and we will be in touch shortly.
The Importance of Positive Cash Flow for SMEsJul 20 2018 in Business Cash Flow
Cash Flow is a great signal to indicate the health of Small To Medium Enterprises (SMEs). Positive cash flow puts a company in a better position to grow and sustain the business.
However, if the business cash flow is constantly in negative, there should be an immediate concern to find out what is causing the problem. Not all situations are alike. However, many common issues can be solved by taking advantage of debtor financing with BCashflow Positive.
What is Cash Flow?
Cash flow takes into account the total amount of cash you have on hand. It looks at the total cash from one billing period to the next and compares money in with money out.
If you have money left over, you are cash flow positive. And if you’re left with a negative number, then you’re cash flow negative.
Why is Positive Cash Flow Important?
As the saying goes, “Cash is King,” and for a good reason. Having surplus cash is necessary for meeting operating expenses like wages, and unexpected expenses that might pop up like servicing equipment that requires maintenance.
There are many reasons why a company is cash flow negative. Poor cash management is a common factor with SMEs, which can lead to problems like restricted growth or worse, insolvency.
Even a profitable company has the chance of going out of business when the negative cash flow is a long-term issue. The lack of available cash is what can cripple a business over time.
BCashflow Positive Can Solve Your Negative Cash Flow Problem
A prime contributor to negative cash flow is slow payments. This can cause a huge strain on a company’s cash flow, particularly if clients can take up to 90 days to pay.
Debtor financing with BCashflow Positive can provide your business with immediate cash flow and it is as easy as 1 2 3.
1. Invoice your clients for sale of goods or services and send BCashflow Positive a copy
2. Get up to 90% of the invoice value in as quick as 4 hours.
3. Receive the remaining 10% when your customer pays us less any accrued fees.
Call BCashflow Positive today on 1300 937 292 and get cash flow positive!
Is Cash Flow Finance A Good Form Of Business Funding?Aug 31 2017 in Business Cash Flow
In an ideal world, customers would pay their bills the day that they were invoiced! There would never be disputes over payment and businesses would never have to wait months to be paid. Unfortunately, in the real world, problems over payment are a fact of life for many companies.
Whether clients are late in paying or it’s simply the case that a few larger projects are in the process of completion and it’s not yet time to invoice. There are many different circumstances when the cash needed to pay staff, purchase materials, or just to keep the power on, isn’t readily available. When there are issues with cash flow, a significant number of businesses turn to cash flow finance.
What is cash flow finance?
Cash flow finance is a fairly straightforward concept. A third party (such as us here at BCashflow Positive) advance you with up to 90% of the invoice value and deposit the cash into your bank account in as quick as 24 hours. BCashflow Positive then collect payment of that invoice on your behalf and credit the remainder 10% less any accrued fees when your client pays us.
With BCashflow Positive’s cash flow finance, you can choose which invoices you require funding for and know exactly how much it is going to cost. We are fully transparent about fees so there are no surprises. Give our pricing calculator a try now.
Why opt for cash flow finance?
The main advantage of cash flow finance is that it can be quickly arranged – a great solution if your financial situation has changed rapidly (for example, if a large invoice that’s due hasn’t been paid, or a job requires an unexpectedly large purchase of materials), compromising your cash flow.
You retain control over which invoices you hand over with BCashflow Positive cash flow finance, and is not in danger of over gearing as funding is based on a percentage of the invoice value. You are simply realizing an asset and bringing it forward.
Cash flow finance can often be the quickest financing option
When it comes to business success, your team and your reputation also play an important role. If your cash flow problems mean you may not be able to pay your staff on time or are going to default on bills, cash flow finance could be a timely solution.
BCashflow Positive cash flow finance online application takes 3 minutes to complete and a response is provided within 24 to 48 hours of receiving your application. Once your account is set up, you can get up to 90% of the invoice value deposited into your account as quick as 24 hours.
To find out more about the benefits of cash flow finance, call 1300 937 292 and we’ll be happy to help.
4 Major Advantages Of Cashflow FinanceJun 29 2017 in Business Cash Flow
Cashflow finance is a form of financing backed by a company’s receivables. How this works is that, once you have delivered your goods or services to your clients, you can forward a copy of the invoice to your financier and they will make funds available before your customer has paid.
Understanding cashflow finance
Cashflow Finance works by turning invoices into immediate working capital. This then provides your company with up to 90% of the invoices face value in as quick as 24 hours. The remaining balance less any accrued charges is made available once the customer has paid the invoice.
4 major advantages of cashflow finance
The first major advantage of cashflow finance is that it may eliminate any cash flow problems arising by giving you cash on hand to pay for your expenses. This can benefit new or growing companies in particular as the early growth phase of a business is one of the most challenging times for a company. As your sales grow, you can be confident that your Cashflow will follow at a similar pace. The additional cash flow can be used to purchase more stock, hiring more staff, or advertising your business.
The second advantage of cashflow finance is it can cover the gap of slow payments. For instance, if you received an order for $20,000 but you have to pay your suppliers $10,000 within 30 days, and your customers won’t pay you until 60 days. Cash flow finance will allow you to release immediate cash from existing sales invoices to cover the 30 days gap.
The third advantage of cashflow finance is it also allows you to avoid any production interruptions. For instance, if your business is profitable on paper, that will not necessarily keep your employees working or your suppliers sending you materials if you are unable to pay them on time. Having an adequate cash reserve will help you meet ongoing expenses.
The fourth advantage of cashflow finance is as your business grows your facility can grow at the same pace. So the more sales you make, the more cash you can get.
How does cashflow finance work?
1. Invoice your client and send us a copy
2. We advance you with up to 90% of the invoice value
3. The remaining 10% is credited to you once your client pays us.
To find out more call 1300 937 292 or fill out our quick contact form and a cash flow expert will be in touch shortly.
5 Ways To Avoid Cash Flow Problems In Your BusinessJun 29 2017 in Business Cash Flow
Until you can generate sufficient cash reserves to allow you some breathing room when it comes to expenses, cash flow finance should be at the front of every business owner’s mind. These simple and practical tips can help you avoid being short on cash, even though a big cheque is on its way to you.
Create a cash flow forecast
A cash flow forecast is a prediction of all the income and expenses for your business. Forecasts can cover a few months to a few years, and you’ll be able to put one together with the help of an accountant.
These forecasts can be used to identify when your business will run at a cash flow deficit or surplus, as well as how your predictions and budgets line up with actual income and expenses. If your bank statement doesn’t meet your predictions, use the following tips to address any issues and improve your business’s cash flow.
Limit bad debts
If your client can’t pay an invoice or outstanding account, you may be in cash flow trouble. To limit losses, try introducing a maximum on store credit accounts, or consider conducting a credit check on prospective customers.
At BCashflow Positive, we provide credit checks on prospective customers to our clients free of charge. If one of your clients is regularly late to pay invoices, politely ask for at least partial payment upfront and reconsidering whether to continue to trade with them.
Buy stock often and in smaller quantities. Rather than buying all of your supplies in bulk, consider buying smaller quantities more frequently. While not netting you the same ‘in bulk’ savings, this can help your cash flow by spreading your expenses out more regularly.
Reassess your expenses
If your cash flow forecast brought your attention to excessive expenses, be sure to investigate these to see how you can save. When it comes to bills and utilities, paying in monthly installments rather than quarterly or annually can help you avoid large outgoings.
If your energy bills are higher than you expected, look at installing energy efficient appliances or looking for an energy plan with better rates or discounts to help you save money. Finally, always shop around to see if another supplier can cut you a better deal on a product you buy regularly.
Consider Cashflow Finance
If you’re planning on expanding your business, or need working capital so you can fill a big contract or order, consider services like Cashflow Finance. Cash flow financing allows companies to finance slow-paying accounts receivable, by passing on outstanding sales invoices to a cash flow finance company ( such as BCashflow Positive) for immediate payment. You can get up to 90% advance on the face value of your invoices in as quick as 24 hours.
Call us now on 1300 937 292 to find out how, or fill out our quick contact form and a cash flow expert will be in touch shortly.
Keep The Tax Man At BayMar 28 2017 in Business Cash Flow
Keeping on top of lodging and paying your BAS on time can be challenging for most companies. Even if your business has all of its finances in order, it is still often a mad rush to get your tax information in on time and your tax bills paid. Often, these tax bills can strike us when we’re not ready for them, putting stress on your business’ cash flow.
If you are struggling to meet your tax bills don’t despair BCashflow Positive can help. As a leading invoice finance company with 27 years experience, we can help you stay on top of your ATO obligations by unlocking immediate cash from your unpaid invoices.
How accounts receivable factoring can free up cash flow
Sometimes your clients can take up to 3 months to pay their invoices, and this can feel like forever if your business has bills to pay and salaries to meet. The financial strain can be more stressful particular around tax time. Accounts receivable factoring gives your business the option to get an advance based on what your customers owe you. In other words, your business can seek finance based on your accounts receivable. Accounts receivable factoring can release immediate cash flow from your unpaid invoices, allowing you to pay your tax bills on time, reinvest into the business, pay for goods or services or pay wages on time.
How accounts receivable factoring works
You invoice your clients for goods or services and simply send BCashflow Positive a copy. We advance you with up to 80% of the invoice face value in as quick as 24 hours. Then we work with you to help follow up on payment and pass on the remaining 20% less any accrued fees when your client pays us. The beauty of accounts receivable factoring is that it can cover the gap of slow payments and provide you with immediate cash flow. This will stop you having to juggle bills and other business expenses with limited cash flow.
Accounts receivable factoring at tax time
As a business owner, you know that it isn’t always smooth sailing. You can have a lot of work on at one time, followed by a work drought with no money coming in, and these ups and downs can put a heavy strain on the running of your business. When your tax bill arrives, you want to ensure you have the money to pay it without the hassle. And by contacting us at BCashflow Positive ahead of tax time, and talking to us about our accounts receivable factoring service, you can put the wheels into motion for a stress-free tax period.
How to Manage Cash Flow ProblemsJul 01 2016 in Business Cash Flow
Did you know that poor cash flow is one of the main causes of business failure in Australia? According to ASIC reports on corporate insolvencies 2014-2015, the top 3 causes of business failure are, inadequate cash flow, poor strategic management, and trading losses. Industries with the most insolvency lodgements between 2014-2015 were, business and personal services, construction, and accommodation and food services.
Cash flow is the life line of any business
At BCashflow Positive we understand that cash flow is the lifeline of any business, like fuel to an engine, a consistent cash flow keeps your business going while helping to achieve growth.
How debtor finance works?
Our Debtor Finance facility can provide your business with constant cash flow by releasing the cash tied up in your unpaid invoices. Up to 80% of the invoice face value is advanced in as quick as 24 hours. The remaining 20% is credited to you as soon as your client pays. Click here to learn more about how it works.
Benefits of a predictable cash flow
With a more predictable cash flow you can get on top of your operating expenses, pay your staff on time, take on more business and most importantly grow.
Why BCashflow Positive?
At BCashflow Positive we also pride ourselves on providing personable debtor finance solutions to our clients. With a national footprint and offices in Sydney, Melbourne and Perth, you will be dealing with our friendly and experienced team. Click here to learn more about us.
Our simple and fast debtor finance service grows with your business without the need of property security. So the more sales you make, the more cash you can get.
So don’t wait 30, 60 or even 90 days to get paid. Call 1300 937 292 and convert your invoices into instant cash flow now.