3 Financial New Year Resolutions for SMEs
Whether it is a promise to hit the gym or a vow to spend more time with the family, a new year nearly always comes paired with some new resolutions. Same applies for businesses. Here are three Financial New Year Resolutions for SMEs and solutions to keep them!
According to Dun & Bradstreet, small businesses led the charge for quickly settling invoices in 2016 with an average rate of about 40 days. Many SMEs however, have used extended credit terms to win business and often have to wait upwards of 60 days to see their invoices paid. In the meantime, wages and supplier invoices, along with many other expenses have to be paid.
One way of solving this cash flow conundrum in the new financial year is through Invoice discounting, also known as confidential or undisclosed debtor finance. This is a finance arrangement where a company that sells on credit to other businesses can raise funds against unpaid invoices, using the invoices themselves as collateral without raising additional debt.
Whilst the thought of setting up a confidential Debtor Finance facility for the first time may be daunting, having access to working capital that grows in line with sales is worth the bold step forward. For the veteran debtor finance users, the new financial year may be an opportune time to review current arrangements to see if there are alternate funders, (like yours truly), that are a better fit for their business.Make use of tax depreciation measures
The government's Ten-Year Enterprise Tax Plan, laid out in the 2016 Supporting Small Business Report, was created to enable SMEs across the country to grow, invest and hire.
One of the most notable measures includes a tax depreciation addendum. With this, the definition of a small business that can take advantage of the ‘accelerated depreciation’ measures increased from having a turnover of $2M to $10M. From 1 July 2016, businesses that fall under this definition can access the instant write off for assets costing up to $20,000.
Whilst not all assets are eligible, there are many that are, and acquiring eligible assets on secured loan agreements can facilitate this. Businesses that have not yet consulted their accountant about how this budget measure can help them should make the appointment sooner rather than later.Upgrade outdated equipment
Now may be the time to review whether the multi-functional printer is still pulling its weight, the company vehicles are still running smoothly and representing the brand positively and business-critical machines are not causing downtime or even worse, OHS scares.
Equipment that no longer serves its purpose or inhibits productivity need not be an issue for SMEs. Equipment leasing arrangements can be tailored to suit a company’s cash flow situation, and the application process through Classic Funding Group is fast and simple.
It is now time for small businesses to take a close look at what they want to strive for moving forward. These three resolutions are a great start and the Classic Funding Group business solutions team are eager to help!
We do not provide financial advice. You should obtain your own financial advice on the tax and accounting treatment of any finance solution you choose.