Nicola Smith 16 June - 3 min read
After a challenging year across the global economy, Australia’s economic recovery has been much faster than expected. Business confidence reached a new high in April, according to NAB’s Monthly Business Survey, while consumer sentiment reached its highest point since August 2010. Despite the surprisingly fast pace of employment growth and many businesses seemingly getting back on track, it doesn’t mean further economic growth is certain. If COVID-19 has taught businesses anything, it’s to always be prepared for uncertainty and ensure your cash flow is strong. In this article, we outline how to balance your cash flow in an uncertain economy.*
Why is cash flow important?
How do you figure out your cash flow?
Most accounting software packages will provide you with the functionality to see your net cash position. If you haven’t spent much time looking at your cash flow before, take a look at this current financial year. Identify the periods where cash flow was tight and you felt financial strain with more money leaving than flowing in. Around these times, look at what contributed to tight cash flow. It may be factors such as late payments from your customers, yet you still had to pay your bills, or maybe you experienced a quiet period where your revenue has temporarily decreased.
Once you’ve looked at the current financial year, review previous years and see if there’s a pattern in your cash flow. Chances are many of the same factors have probably resulted in tight cash flow throughout previous years too. The difference when you take the time to review your business’s finances though, is that you can plan for periods of tight cash flow while working to resolve the initial causes in the first place.
How do you resolve cash flow problems?
There are a number of ways you can resolve your cash flow problems, depending on the cause. If you’re struggling with late payments, introducing an integrated payments platform, such as Spenda, into your business can provide your customers with the payment options and flexibility to pay on time. Not only will your customers enjoy more payment options, but because they can schedule their payments, you’ll have a clearer insight into what money is expected to hit your account and when, and better understand your cash flow position. Think of it like cash flow forecasting without the mind numbing spreadsheets.
How do you manage cash flow in uncertain times?
One of the key features of Spenda’s payment platform is the payment options available to customers, such as credit card payments and bank transfers, and allowing them to schedule how and when they pay. Further, with the ability to process B2B credit card payments, even for large transactions, you’ll be able to securely pre-authorise payments so there’s no need to spend time chasing up late payments down the track.
Providing a range of payment options along with an intuitive cash flow forecasting interface gives businesses the ability to see how their finances are tracking at all times. This is particularly important in times of economic uncertainty as you can proactively determine what you’ll do to resolve potential cash flow challenges. For example, you may opt to:
These options all allow you to focus on the activities that strengthen your cash flow while addressing those that are a drain on your business’s resources.
Strengthen your cash flow with Spenda
Spenda provides business owners and leaders with the systems they need to strategically manage their cash flow. With integrated payment systems working seamlessly with other parts of your business, including your finance and accounting software, you’ll have the right tools to weather all economic conditions.
Click here to learn more about how Spenda’s products can improve your payment processes and help balance your cash flow in an uncertain economy.
*This article is for general information purposes only. Consult a qualified financial advisor regarding any changes to or decisions about your business’s finances.
Chasing up late payments is something business owners and their finance and accounting teams spend a lot of time doing.
Chasing late payments can cost your business a lot of money, and today, Australian small businesses spend an average of 12 days per year chasing late payments – many of which are still likely relying on out-dated and inefficient manual processes.
Late payments amongst Australia’s SMEs have been an ongoing issue for many years. To address the issue, various policy measures have been introduced, especially when it comes to larger businesses paying SMEs.
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