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Profits are falling and the economy is slow. It is time to take the bull by the horns!

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With the current trend of declining profits and the impact of slowing economic activity, now more than ever, Australian businesses need to act right away or else many bottom lines will continue to bleed.

With company profits down and many businesses expecting sales to remain flat, Gary Green, National Sales Director, Bibby Financial Services said all businesses need to be more vigilant and aggressive about maintaining their cash flow and demanding payment on overdue invoices.

A stitch in time saves nine…

Green advises you to deal with late payers as soon as you are aware of a potential problem. Instead of waiting around and hoping for the best, businesses should know when to pick up the phone and demand payment. Remember a sale isn’t really made until you collect the cash.

“It’s amazing what can happen when you issue a letter demanding payment on legal letterhead. Payment typically follows soon after,” Green said. Yes, you should have your very own Harvey Specter on stand-by for the stubborn clients…

Don’t put all your eggs in one basket!

He also added that companies need to diversify their client bases noting that relying on a few core clients to maintain your revenue against the backdrop of greater slowing growth of the Australian economy is one huge gamble and you could easily lose your shirt!

“You need to get out there and broaden your sales base beyond just one or two large customers to cushion against a downturn. It’s the savvy thing to do,” Green advised.

More SMEs are struggling with difficult business conditions; rising costs and sluggish sales growth. Furthermore, cash flow still remains quite a headache for many entrepreneurs with 47 per cent experiencing a more difficult cash flow situation than 12 months ago.

Could debtor finance be the pill you need to ease the pain?

Green said debtor finance could help companies alleviate difficulties with cash flow, but we know many might be unfamiliar with this. So how exactly does this debtor finance work?

Typically, a finance company advances you up to 85 per cent of what you are 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. That’s not a bad deal, now is it?

According to Green, debtor finance is ideal for SMEs because it allows them to quickly convert unpaid invoices into cash and create positive cash flows.

Green explained, “Businesses don’t have to rely on bank loans that typically require the family home or other personal assets to be used as collateral, which can greatly restrict access to credit. Instead, SMEs can leverage one of the biggest assets on their balance sheet, their accounts’ receivables, to create immediate cash flows.”

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