Don’t let cash flow cause seasonal stress

Don’t let cash flow cause seasonal stress

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Date: November 25, 2020

Don’t let cash flow cause seasonal stress


This Christmas season is likely to be one like no other – and that’s completely understandable due to the fact that we’re approaching the end of a year like no other. 

Retail and hospitality businesses have been some of the hardest hit over the past 12 months and they’re going to be hoping to take advantage of what is (hopefully) looking likely to be a celebratory atmosphere as people across Australia approach the end of 2020, and the beginning of 2021, with cautious Covid optimism. 

In fact, 49 per cent of food and accommodation providers are anticipating increased revenue in December 2020. 

On the other side of the coin, of course, are those businesses that are looking forward to a well-deserved summer break. 

From accountants to lawyers, engineers to tradies, there’s a whole host of people who’ll be clocking off in the days preceding Christmas, and won’t set foot back into the workplace until the new year’s well and truly rung in. 


The Christmas cashflow conundrum 

While there is cause for optimism, the reality isn’t all sunshine and rainbows. 

Research from the Australian Bureau of Statistics says that more than a third (35 per cent) of Australian businesses expect to find it difficult or very difficult to meet financial commitments up to the end of the year. 

For those businesses that are taking a leave of absence or running on skeleton staff over the summer break, then invoices payable may not reach the top of the to-do list. 

After all, they’ll still be there in the new year.

But that can spell trouble for small businesses whose very existence relies on that cash coming in.

And consequently, for those retail and hospitality businesses that are – hopefully – going to busier than at any other point of the year, the priority will be on paying staff wages, rather than paying invoices. 

Of course, cash flow worries are nothing new – even before Covid, cash flow was a dominant stressor for small business owners. 

According to the Australian Small Business and Family Enterprise Ombudsman, cashflow impacts the revenue of nine out of ten SMEs, keeping 79 per cent of small business owners awake at night. 

Nearly all SMEs (92 per cent) said they would have generated more revenue over the past 12 months if their cash flow situation was improved, while late payment accounted for 43 per cent of cash flow downturn.

And, critically, more than 40 per cent of invoices are paid late. 


Speeding up your cashflow

Cashflow can be improved by invoicing early – partially upfront if possible – while research has also shown that specifying a due date can have a positive effect on receiving payment in a timely fashion. 

While a payment term of 30-plus days may seem the norm, it’s actually a remnant of the analogue world, with people allowing time for invoices to be received through the post.

In today’s instantaneous workplace, that’s no longer relevant. 

By reducing your payment terms to seven or 14 days, you can increase the chances of receiving payment in a timely fashion. 


Getting your back up plan in place 

Of course, regardless of the steps you take to improve your cash flow, it’s still out of your control as soon as the invoice is issued – so it’s important to have a back-up plan in place. 

Bizcap’s cash flow capital can help bridge any gaps or delays in receiving payment and takes away the seasonal headaches you could well face. 

The team here at Bizcap will be available every day except the public holidays to help small businesses out with same-day funding – enabling you to focus on reaping the seasonal rewards – or taking that well-deserved worry-free festive break.  

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