Our research shows that a lot of businesses are struggling to manage cashflow gaps due to delays in getting stock in the door and the rising cost of doing business. We are also seeing a rise in insolvency numbers and businesses needing restructuring. My message for business is simple – don’t leave it too late. Seek help now, market conditions are forecast to continue for the next 12 months at least.
Some of the biggest issues impacting businesses, especially small- to medium-sized businesses include:
- Delays in getting stock in the door to sell to customers.
- Increases in the cost of purchasing stock to sell.
- Sharp rises in the cost of transportation and delivery.
- Increases in energy and other business operating expenses.
- Labour shortages and worker absenteeism.
All of these issues mean that there is less income coming in the door, while costs continue to rise.
Many businesses are struggling with cashflow and are not sure what avenues of assistance are available. There are some simple steps businesses can take.
Reach out to your advisor
Good accountants and business advisors whether they be financial advisors or business coaches, are knowledgeable and offer a lot of experience. For this reason, they are usually very well placed to assist you in navigating through the challenges and suggest potential solutions.
Review expenses
Many businesses operate on a set and forget basis, particularly when business is doing well and things are busy. However, when the market starts to tighten up, set and forget measures need to be reviewed. While there are definite advantages in terms of maintaining business continuity, partnering with suppliers that know your business and deliver no matter what, expense reviews are critical.
Take the time to look at supplier arrangements and seek better pricing where possible, reach out to other businesses to determine whether there are areas where you could share costs, and cut the things your business doesn’t need or put them on hold temporarily.
Outsource operations where possible
Many businesses are struggling to retain staff and bring on board new staff due to labour shortages. As a result, wages are going through the roof. Where possible, outsource operations. If you are an online business, look at third-party logistics providers. They offer efficiencies through scale and technology innovation. This will reduce your costs as well as your warehousing operations.
If you have administration staff, see if these activities can be outsourced offshore. Find ways to cut down your operating expenses by doing things smarter.
Get funds in the door faster
Not many businesses are aware that there are ways of getting funds in the door faster and invoice finance is one of these mechanisms. Invoice finance is considered a popular means of generating income upfront fast to help a business improve cashflow.
Typically businesses that have ATO debt or a history of credit issues struggle to get finance through banks and other lenders which is why invoice finance has become the go-to option for many businesses that need to unlock funds fast without taking out a business loan or setting up a line of credit.
In essence, businesses use their invoices as collateral to generate payment upfront. It is a way for businesses to access funds against the amounts due from their customers. Invoice financiers can also take care of managing debtors and collections so the business can focus on what they’re good at.
Invoice finance can help a business with its cashflow, pay employees and suppliers and reinvest in operations and growth earlier.
