Poor cash flow management is one of the leading causes of small business failure: over 60% of businesses that go bust are still profitable, but just ran out of cash.
The ongoing success of your small business is therefore dependent on your ability to manage inward and outward cash flow. Put simply, it’s important that you have enough available cash to pay your bills when they’re due. If a business makes a profit yet loses cash flow, eventually it will run out of funding.
Your cash flow is a result of your profit as well as the changes in your balance sheet, such as increase in stock or debtors. If you buy something for $120 and sell if for $200 you have made a profit of $80, but if you do not collect the money from the sale, your cash flow is zero. If you have to pay the $120 before you collect the $200, your business cash flow is actually negative $120.
That’s why managing your cash flow is so important. Some successful ways to manage your cash flow include:
- negotiating the best terms from your suppliers
- holding as little stock as possible (slow moving stock is dead money)
- sending your invoicing out on time with clear instructions about when you expect your payment
- taking payment at the time of the job; offer your clients payment options such as BPAY or ecommerce on your tablet or mobile phone
- leasing capital equipment rather than making outright purchase.
PSC Connect Authorised Representatives care about the financial performance of your business. With this in mind we have entered into a partnership with Macquarie, to offer an alternative way of managing your business finances.
Macquarie is a leading provider of business finance to SMEs across Australia. There are a variety of products available to finance items of capital equipment. Macquarie Leasing can provide a choice of products depending on the nature and usage of your equipment being financed, and your individual financial and tax circumstances.
Finance leasing has a number of benefits for small businesses. Firstly, it can reduce your risk on general banking and free up assets for future growth requirements. Additionally, by minimising the impact on your working capital requirements, a finance lease can allow you to expand your company while protecting your business and personal assets.
Speak to us today if you require help with your business finances.
PSC Connect Pty Ltd may receive a benefit from Macquarie Bank of 0% to 3% on successful loan applications following this referral, a percentage of which is shared with the authorised representative. The borrower recognises that PSC Connect Pty Ltd and the authorised representative are not a party to the loan application and indemnifies PSC Connect Pty Ltd and its authorised representatives and employees from any claims you may have against the lender.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.