Is your cash flow keeping you up at night?

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If you’re losing sleep, it's probably because you're having trouble with cash flow. A cash flow forecast and contingency plans can help.

Cashflow causing sleepless nights3

If you're running a business, chances are cash flow is a primary reason for sleepless nights. You commonly hear this statistic tossed around - 60 per cent of the time organisations fail in Australia, it's not because they aren't profitable. It's simply that they don’t have the cash they need when they need it.

This is why it's so important to plan ahead.

Anticipating financial ebbs and flows

Predicting your company's cash flow can be tricky because during the course of a year, you're likely to have ebbs and flows in activity.

That's why it makes sense to put together a detailed forecast for the whole year. If your business peaks in August and then dips in January, have a forecast that accounts for that and helps you adjust your business plan accordingly.

The levels of working capital you need each month to keep your company operational will depend on a wide range of factors - your inventory, production process, sales volume, staffing needs and more.

By preparing a detailed cash flow forecast (Business Victoria has a template you can use here), you can monitor your results as the year goes on and compare them to expectations. If you're not hitting your numbers in a given month (yet another reason you’re probably losing sleep), you'll know to be more proactive about improving your cash flow situation.

Getting debtor finance when you need it

What happens if you know your cash flow goals but you're having trouble meeting them?

For example, if you need to order raw materials or inventory now but you are still waiting to be paid for goods and services you’ve already delivered to your clients, you may be left with a cash flow gap. If not resolved, you could hinder your business’s growth or damage your reputation if you fall behind with delivering on orders (there’s the insomnia trigger again).

In this situation, you may want to get help in the form of debtor finance. Debtor finance can plug this cash flow gap by using the equity in your outstanding invoices to access funds when needed.

Is Debtor Finance suitable for me?

To set up a debtor finance facility, you first need to ask yourself 3 questions:

  • Do I sell my goods and services to other businesses on credit terms?
  • Do I have a broad spread of business clients (e.g. no one client makes up more than say 30% of ledger)?
  • Do I have a way of proving that I delivered the goods and services for each invoice?

If your answer is ‘yes’ to all three questions, then chances are that you qualify for a Debtor Finance facility.

Give us a call at Classic Funding Group on 1300 780 895 to further discuss your business requirements and initiate a suitable facility. You may just be able to catch some shut eye after all!

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