Essential Cash Flow Tips for Australian Small Business
Leading Australian cash flow funding company OptiPay has revealed its top tips for Australian SMEs when it comes to managing their cash flow better.
“We’re seeing a huge increase in businesses struggling with their cash flow at the moment due to high interest rates, the rising cost of living and post-COVID tax debts,” says OptiPay CEO Angus Sedgwick.
“Late payments are another cash flow hurdle with some SMEs waiting up to 60 days to be paid for invoices,” he says.
“Cash flow is critical in navigating these challenges as it not only fuels daily operations but supports strategic growth too,” says Mr Sedgwick.
“We’re finding for many industries like manufacturing, labour hire services and transport and logistics - those that have strong cash flow systems in place are able to ensure year-round financial stability.”
OptiPay’s Top Tips for Better Cash Flow Management -
- Cash Flow Forecasting
Accurate cash flow forecasting and realistic budgeting are vital for effective cash flow management. Business owners should be regularly reviewing their financials, uncovering patterns and using those to plan for the year ahead. By anticipating cash shortfalls it allows businesses to make informed decisions about spending and investments. It’s worthwhile considering implementing structure surrounding invoicing practices and how late payments are dealt with as part of this.
- Controlling Expenses
Business owners should do a stocktake of their expenses and consider ways they can drive these down during times of low cash flow. Consider negotiating better terms with suppliers to reduce costs or explore bulk purchasing discounts. Reviewing spending helps identify unnecessary expenses and also provides a chance to look at opportunities to diversify revenue streams. It might be a good time to consider offering additional products or services to reduce reliance on a single source of revenue.
- Inventory Management
Inventory management can significantly hinder or enhance cash flow management for product-based companies. Overstocking ties up valuable cash in unsold goods while understocking can lead to missed sales opportunities. It’s important business owners implement a proven inventory management system specific to their business needs which can help them maintain optimal stock levels, reduce carrying costs and free up cash. Make sure to identify slow-moving items and have strategies in place such as discounts or promotions to clear excess stock.
- Consider Financing
To bridge gaps in liquidity it may be necessary for businesses to consider alternate sources of funding. Traditional loans are difficult to get in the current climate and credit cards come with their own risks. Invoice financing is worth considering as it allows business owners to borrow against the value of outstanding invoices so the business can keep running as usual rather than waiting for the money to come in from customers. There may also be government grants and support programs to assist businesses in managing cash flow which can provide financial relief and support during tough times.
- Update Technology
Businesses should stay up to date when it comes to the latest technology for managing their finances. Advanced accounting software and cash flow forecasting tools can empower business owners with real-time insights into their financial health and give them confidence to make proactive decisions. There are also tools that can automate many financial processes such as invoicing and expense tracking which saves time and reduces the risk of human error. A lot of these solutions are now cloud based too which give the added benefit of accessibility.
About OptiPay
OptiPay, formerly TIM Finance, has been providing Australian SMB businesses needing cash flow to grow, with innovative funding solutions such as invoice finance, inventory finance and lines of credit for the last 10 years. Their range of fast, flexible and affordable financing solutions help businesses solve their cash flow challenges, without the need for property security. Find out more at https://optipay.com.au