Solving the small business cash flow challenge

Written by: Jessica Stephens

November 23, 2020

A strong and consistent cash flow is critical for any organisation. However, for small businesses, it’s the thing that can make or break you. 

You might have a whole host of invoices outstanding, but that matters little if you can’t pay your rent, your staff or your suppliers. 

A 2019 report from the Australian Small Business and Family Enterprise Ombudsman underlined just how much of a concern cash flow is: 

  • Late payments are responsible for 43 per cent of worsening cash flow.
    • Just under half of all small businesses indicate their cash flow has suffered because of late payments.
  • 92 per cent of small businesses in Australia believe they would have generated more revenue in the previous year if their cash flow was improved, and; 
  • Just over half of small businesses receive invoice payments late – on average, 23 days after they are due. 

The report also found that accessing external capital for cash flow support has become more difficult, with lending to small businesses decreasing by 3.3 per cent from February 2018 to February 2019. 

And that was before the global pandemic struck. 

Keeping business moving 

Here at Bizcap, we love helping small businesses out with the short-term capital they need to not only keep going, but to grow their business, too. 

One of our customers runs a multi-site food business that’s been in the family since the mid-1970s – and over the past ten months has used Bizcap to keep his operation growing. 

“We were experiencing rapid growth with our latest venture,” he explains. “Our cash flow was good, but not fast enough to support the growth we needed. 

“We needed equipment, a new building, machines, and the mainstream banks were a pain to deal with. There’s so much they put you through, and we just didn’t have the time to spend doing that.” 

Previously, the business had finance with three other lenders; however, a call to Bizcap soon changed that. 

Ted, a Bizcap lending specialist, helped the business access the capital required to take advantage of the growth opportunities available – and since that first call, Ted’s helped the business access over $275,000 of funding. 

And, where once there were three lenders to deal with, now there’s only one. 

“It really is a partnership,” our client says. “We pay the loans off quickly, and I’ll ring Ted up and say ‘where are we at, am I eligible for more funds?’ And it works. 

“Our cash flow can easily make the repayments, and it’s helped the business grow. We use it as working capital to pay the bills, and the day-to-day business has been great.”

Making repayments on time has helped boost the client’s credit score – which in turn enables Bizcap to access lower rates. 

Having the capital there has also enabled the business to ride out some pretty significant hurdles. 

“We’ve had cold rooms and freezers blow up with the storms, and we were able to replace them quickly – if we’d not had that capital there it would have been problematic.”   

 

Growing during a pandemic 

The COVID-19 pandemic has hit a lot of businesses in the hospitality sector hard; however, in this instance, a new delivery service meant the company has been able to grow. 

“We’ve been astronomically busy. We’ve been able to invest in growing the business, and it’s got to the stage where we’ll have to employ an admin person to do a lot of the backend work. 

“The capital Bizcap has been able to provide has helped me grow the business to that point – and hopefully, we can work together to grow it in the future, too.” 

And, ultimately, that’s exactly why Bizcap exists. 

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