Sydney – With the Christmas holiday period fast approaching, business owners should be taking steps now to manage their cash flow to avoid the traditional cash flow squeeze.
The high rate of late payments, as revealed by Dun & Bradstreet’s latest Trade Payments Analysis, has seen businesses pay their bills in an average of 58 days during the third quarter of 2013, more than three weeks beyond standard terms. Late payment can be exacerbated over Christmas and the New Year period as Australians turn their focus to festivities rather than paying their bills.
Mark Cleaver, Managing Director, Australia and New Zealand, said: “This tendency for late payment reinforces the need for small and medium-sized enterprises (SMEs) to actively manage their cash flows this Christmas. With most of the nation going on holidays, it’s important to act now to put systems into place to protect your cash flows and enjoy a prosperous Christmas and New Year.
1. Get in line early at the fish market
As you complete work, you’re entitled to charge clients, so invoice clients when work is done rather than wait until the end of the month to send invoices. Time is money, so act now and get paid sooner. You should also make your payment terms clear. Payment terms are usually set at 30 days; however, it’s perfectly legitimate to set your own terms at 14 days. You’ve done the work or delivered the goods, so you are entitled to payment.
2. Don’t wait until after Christmas to stuff your stocking
Deal with late payers as soon as you become aware that an invoice is overdue. Any accounts receivables system should be structured so that late payers are identified as soon as possible. Remember, a sale isn’t a sale until the cash is in your bank account. So if there is a problem, pick up the phone and demand payment. An invoice is money due to you, not a donation.
3. Make sure your Christmas lights are working
Investing in software can help you streamline your invoicing and receivables management as well as protect your cash flows. There are several excellent solutions available on the market that can automate the invoicing and receivables management functions, so investigate your options. Automation means you can redirect your staff to other functions within your business, such as sales or operations, helping to make you more profitable.
4. Christmas is a time of giving
Over the holiday period, you might consider rewarding early or consistent payers with a small discount on their bill if it won’t harm your business. This is a great way to say thanks and show your appreciation to your loyal customers - and it might well bring in cash sooner than you expect.
5. Don’t hold on to old baubles
If you’re hoarding stock that isn’t likely to sell over Christmas or the New Year and it’s got a use-by date, consider selling it at a discounted price to get it out. The November Westpac-Melbourne Institute Consumer Sentiment reveals consumers are planning to restrain their Christmas spending this year, with 35 per cent of Australians recently saying they intend to spend less than last year, while 51 per cent are planning to spend the same. This is sobering data so the time might be right for a sale.
6. Close up shop and head to the beach
There’s no point keeping your business open and incurring costs if you aren’t busy over the Christmas period. Either maintaining a skeleton staff or shutting down over the holiday period can save running costs, as well as keep your staffs’ annual leave entitlements in check.
7. Cash in your invoices this Christmas
Debtor finance can help companies alleviate difficulties with cash flow by quickly converting unpaid invoices into cash. Typically, a debtor finance company advances you up to 85 per cent of what you're owed from customers within 24 hours of request. The remaining 15 per cent balance, less a small fee, is paid to you when your customers pay their invoices. This allows SMEs to leverage one of the biggest assets on their balance sheet, their accounts’ receivables, to create immediate cash flows and avoid the Christmas squeeze.
8. Get social this season
Consider the Christmas period as an opportunity to review your business and marketing strategy. Consider dabbling in social media next year to increase engagement with your target audiences or listen to the conversations they are having about your business or sector on Twitter, Facebook or LinkedIn. Bibby’s recent Barometer, conducted in July, found that 75% of small businesses are using social media tools in their business operations.
9. Have a game of Christmas cricket
Running a business can lead you through countless hurdles and challenges. Ensure you and your staff schedule in time to relax, have fun and partake in the festivities. Why not enjoy a friendly game of backyard cricket.
Nicki Bourlioufas, FCR t (02) 8264 1008/ +61 411 786 933
Bronwyn Putland, Bibby Financial Services t (02) 9310 8993
Bibby Financial Services is one of the world’s leading global debtor finance specialists (also known as invoice finance, factoring, cash flow finance and invoice discounting) - a flexible and accessible cash flow funding tool for small and medium sized businesses. With over 6000 clients in 15 countries worldwide, Bibby Financial Services is part of the Bibby Line Group, a family-owned business-to-business services group with origins in shipping dating back over 200 years to 1807.
Debtor finance is designed to improve business cash flow and support business growth by releasing cash tied up in unpaid invoices. Unlike other funding arrangements, no real estate security is required, making it more accessible for small and medium sized business owners.
Bibby Financial Services Australia has grown dramatically, in recent years at an average 20% pa, due to increasing awareness of debtor finance as a smart choice for improving cash flow, and a commitment to providing flexible, tailored solutions quickly. It now serves clients nationally, via a network of offices in Sydney, Melbourne, Brisbane, Perth and Adelaide.
For more information on Bibby Financial Services please visit www.bibby.com.au or follow them on