Cashflow the biggest hurdle for small business in Australia
Cashflow is currently the biggest challenge facing small business, recent research has shown, with delinquent accounts – where payments were over 90 days late – increasing by 20 percent in the March quarter.
Customers delaying payments makes steady cashflow a problem. To make matters worse, the government incentives of 2009-2010 have ended but the economy has not yet reached the momentum small business needs to thrive. The natural disasters in Queensland and Victoria have also adversely affected small business in parts of Australia.
Nationally, the economy does not reflect the difficult situation for small business, as it is heavily influenced by the momentum of the mining industry.
So, what are some solutions for small business owners?
Talking with a specialist business finance broker about the cashflow situation is a good way to start, Finlease specialist finance broker Mark O’Donoghue said, as their advice is usually free and they can offer practical solutions.
“One ready made solution is debtor finance. This is a facility that can fund your receivables which you may not otherwise be able to recoup from your customers for weeks or months. In other words, the finance pays your bills so that you can meet your ongoing commitments to keep running your business efficiently,” he said.
“You’ll receive up to 80 percent of your invoice, eliminate the immediate hassle of collecting payments and will be able to fund current operations without incurring further debt,” he added.
Other solutions could be asking best customers to make advanced payments for a small discount. Similarly, offering worst customers a big discount if they pay promptly could help.