Get started
How business finance promotes better cash flow management

29 November - 2 min read

Many personal finance books such as Robert Kiyosaki’s classic, Rich Dad, Poor Dad, state that cash is king. It’s true — having ample cash reserves is a key part of having strong finances, both personal and business. In business, however, for continued growth and prosperity, cash flow remains king. If your business is unable to maintain strong cash flow, you’ll be unable to pay for your regular expenses or plan for long-term investments. Unfortunately, this means some businesses fail even if they have a strong sales pipeline. 

Research from ASIC recently found that new businesses in Australia typically don’t survive beyond four years, with 41 per cent of business owners citing inadequate cash flow or high cash use as a key reason for business failure. Some of these failed businesses may have had problems that couldn’t be solved, but for many businesses, addressing short to medium-term cash flow challenges can provide the support needed to build a long and bright future. 

These solutions enable suppliers to get paid earlier or on time, while giving buyers flexibility in how and when they pay, which helps improve cash flows across supply chains. In this article, we outline how your business can make use of on-demand lending solutions to improve cash flow management. 

Wholesalers and suppliers: Get paid on time, everytime and reduce your credit exposure

On-demand business finance allows wholesalers and suppliers to get paid what they are owed on time, every time. Essentially, a business supplier can turn their invoices into cash faster than if they waited for their customer to pay their invoices directly. This is done by offering customers a range of finance options such as buy now, pay later (BNPL) on future transactions. 

Wholesalers and suppliers that opt to use on-demand business finance will enjoy many benefits, including:

  • Access to cash as and when it’s needed: Convert accounts receivables into cash quickly by allowing the financier to fund the transaction. Your customer and the financier then collaborate directly to agree on repayment terms.
  • Forecast cash flows more accurately: With payments funded by your third-party lending provider, you’ll have more certainty over what money is coming into your business and when, removing the need to chase up late payments. Further, you can align your cash inflows with your outflows so your cash flow remains consistent and strong.
  • Limit your credit exposure: By accessing third-party finance solutions you limit your credit exposure, removing the risks associated with late payments or trading with insolvent patiries, getting you paid quicker and improving cash flow. 

 Retailers and buyers: Gain a cash flow advantage with business finance 

As a retailer or buyer, business finance delivers a cash flow advantage to pay supplier invoices on time while also giving you the flexibility to delay or spread your payments over smaller instalments. It’s a win-win: Your suppliers get paid on time but you don’t have to put a dent in your cash flow to make it happen. Couple pay layer options with credit card payments and you could further increase your payment terms through the interest-free period on your credit card.

Other key benefits that retailers and buyers will enjoy with business finance include:

  • More accurate cash flow: By aligning your payment instalments dates to on or around future cash inflows, your business will have better visibility over its cash flow
  • Strengthen relationships with your suppliers: Every business likes to get paid on time, and with solutions like BNPL, you can pay all of your suppliers immediately even if you don’t have the cash on hand. 
  • Boost your purchasing power: Instead of making smaller orders which may have a lower invoice amount, you can take advantage of buying in larger quantities by financing your purchases. This results in savings over time and increases your purchasing power with wholesalers and suppliers.

Fund your business growth with Spenda 

Spenda’s on-demand lending solutions make it easy to access the cash flow and capital your business needs to continue growing. Whether you’re a wholesaler, supplier, retailer or buyer, with our integrated technology, your business can improve cash flow, access and provide business finance, set up pay-later plans with customers, and align your cash inflows and outflows that enable stronger long-term growth. 

Download our guide on how to boost cash flow and grow your business faster. Click here.

This article is for general information purposes only. Consult a qualified financial advisor regarding any changes to or decisions about your business’s finances.

Related Articles

Common accounts receivable issues and what businesses can do to overcome them

Chasing late invoice payments is a burden for any business, and still, more than half of B2B payments in Australia continue to be processed late, costing businesses, on average, $115 billion every year.

Ola Polczynski
Smart practices to help you optimise your credit control and strengthen cash flow

When you’re running a large operation with hundreds of invoices processed each month, the resources required to manage your payments grow quickly, especially when ageing receivables become a problem. While customers may not pay their invoices for various reasons, it happens too often, causing a range of challenges and increased risk.

Adrian Floate
How businesses can leverage digital solutions to boost their cash flow and grow

Digital payments helped businesses get paid safely and efficiently throughout the COVID-19 lockdowns and associated restrictions. But as economies reopen many challenges still face businesses including supply chain disruptions, the ‘great resignation’, rising inputs such as fuel, and the expense of reopening. These business challenges make now an opportune time to build on the processes optimised throughout the pandemic, especially across B2B trade.

Subscribe to our blog       

Invoice Finance

To learn more about our invoice finance solution, fill out the form below and one of our team will be in touch.