Research has shown that the biggest challenge of small businesses today is cash flow. Delinquent accounts increased by 20 per cent in the March quarter with payments over 90 days late.
This problem has been caused by customers delaying payments. The situation is compounded as the government incentives of 2009-2010 have already ended before the economy has reached the level required by small businesses to survive. To add to the problem, the natural disasters in Queensland and Victoria had adverse effects on small businesses in parts of Australia.
On a national perspective, the difficulty of small businesses is not reflected as it is heavily influenced by the mining industry’s momentum.
Here are possible solutions for small business owners.
Mark O’Donoghue, Finlease Finance Broker, said that it would help to talk to a specialist business broker. The advice of a specialist is free and offers practical solutions.
“One readymade 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. 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.
Another practical solution is to encourage customers to pay in advance and then give them discounts when they do so. And for those customers who are the worst payers offering them a big discount to pay promptly can help ease the situation.
Source: DynamicBusiness.com.au »