Rising business costs are a major headache for SMEs - the majority of Aussie small businesses fail due to their inability to manage cashflow, according to ASIC stats. But it's not all doom and gloom. You can keep up with the costs of running your business by implementing effective invoicing strategies and getting financial help to avoid business failure.
Here are four expert tips on how to kick those spiralling debts to the curb:
1. Anticipate rising costs from the outset
Proactivity is essential.
Proactivity is essential. Many Australian small businesses get caught up with unpaid invoices because they don't manage their paperwork sensibly. In fact, the majority of Aussie SME owners still keep their invoices in a shoebox, according to a study by accounting software company Xero.
Make sure you're on top of all your invoices so that you know exactly which clients owe you money and when by setting up a digital database with reminders.
2. Establish iron-clad terms of credit
There's little incentive for customers to pay you on time if you don't have strong credit terms in place. Vague wording on your invoices can lead to late payments that hinder your cashflow and prevent you from having the necessary funds to pay your suppliers.
To minimise rising business costs, make sure all your invoices clearly outline how long your clients have to pay you and any terms and conditions they need to keep in mind.
Only work with companies and individuals you can trust to pay on time.
3. Do your due diligence
Researching potential clients before you take them on minimises the chances you'll get stuck with customers who are renowned for paying late.
Look into your clients' credit histories and determine whether or not they will be reliable. Only work with companies and individuals you can trust to pay on time.
4. Get back on track using debtor finance
Sometimes, in spite of your best efforts, clients will fail to pay you on time.
Consider finance solutions that don't involve taking out a loan or dipping into your personal savings.
For a small business owner with a million other things to do, chasing up late payments is a massive time suck. Consider finance solutions that don't involve taking out a loan or dipping into your personal savings. Using debtor finance is a way to get some money upfront (80 per cent of the total invoice with Cashflow Finance). We follow up late payments while you focus on the day-to-day running of your business.
Planning sensibly from the beginning, being firm with your payment terms and performing credit checks will improve your cashflow and get your business back on track. And when you need that extra helping hand, give us a call.