Cashflow stops flowing for small business.

Recent research indicates that cashflow is the big hurdle facing many small business operators right now. While customers are delaying payment of invoices, small business operators are being hung out to dry as their cashflow slows down.

Small businesses have been further affected as the government incentives of 2009-10 have finished, yet the economy hasn’t ramped up to provide the momentum that small business needs. We also get a distorted view of the economy when we see the economy from a national point of view which is heavily influenced by the momentum of the mining industry.

To make matters worse, certain parts of the country have been more adversely affected as natural disasters like the Qld and Victorian floods are still having a dampening affect on small business. The situation is also widely documented internationally in places like the US where cashflow is being stunted by slower sales and delayed invoice payments.

So where can a business owner turn? Talking with a specialist business finance broker about your cashflow situation is a good place to start. The advice a broker offers is generally free and the better brokers are able to offer practical solutions to your immediate cashflow predicament. We spoke with Mark O’Donoghue who heads up operations for Finlease. The close contact Finlease maintains with its small to medium sized business clients provides unique insights into what’s really happening out there. This in turn allows the broker to provide effective measures that deliver immediate relief.

“One ready made solution is debtor finance. This is a facility that can fund your receivables which you may not otherwise be able to recoup from your customers for weeks or months. In other words, the finance pays your bills so that you can meet your ongoing commitments to keep running your business efficiently.

“You'll receive up to 80 per cent of your invoice, eliminate the immediate hassle of collecting payments and will be able to fund current operations without incurring further debt.”

This is particularly important as recent research has pointed to a sudden worsening of the cashflow situation. For the March quarter, delinquent accounts – situations where bills were being owed for 90+ days - increased by an alarming 20%.

There are other measures you should consider, like asking your best customers to accelerate payments. Simply explain your situation to them and perhaps offer a small discount for prompt payment. Similarly, you should also focus on your worst customers - those whose invoices are more than 90 days past due. Offer them a steeper discount if they pay today.

This article has been prepared by Finlease, a specialist finance broker uniquely focussed on small to medium businesses. Additional insights can be found at www.finlease.com.au.

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NOTE FOR EDITORS:

Finlease is a specialist finance broker that provides the easiest way to finance business. Finlease has grown 20 times in 20 years and has nearly $1 billion worth of funds currently arranged and in place for their predominantly small to medium business clients.The company finances all manner of business & personal assets - from charter boats to cranes, aircraft to fit-outs and all types of property. With offices Australia-wide and over 4,000 clients throughout Australia, Finlease acts as finance advocates to ensure favorable outcomes for its clients.

For more information, or an interview with a Finlease broker, call Sian Grech phone 1300 FINLEASE (346 532) or email sian@finlease.com.au