Could $795 enable you to sail through this summer’s slow-down?
Martin Cattach
Working Capital Strategist | Founder of Finance for Business | Call me when the banks say NO.
In many industries, the Australian summer is increasingly an annual cash flow black hole.
Bills keep sucking up your available cash, even though customers (and their accounts departments🤔) seem to vanish for several weeks.
This year it feels like we’re facing a whole new level of international conflict, local weather threats, ongoing labour shortages and increased costs.
So summer's "Valley of Death” is looking like being a whole lot tougher for a whole lot more businesses.
That’s not just my opinion - on the 6th of October, the Reserve Bank said “Australian homes and businesses are vulnerable to financial stability risks as rising inflation and interest rates continue to pressure the global economy.” https://www.abc.net.au/news/2023-10-06/rising-number-of-households-in-financial-stress-says-rba/102942306
The right finance tools can make summer manageable…
It’s worth having a precautionary look at the Cash Flow Forecast from your accounting system so you know what’s likely to fall due. It could also be worth doing some extra homework on your Aged Debtors (as per my guide to Escaping the Cash Trap). https://finforbiz.com.au/cash-flow-ebook/
The holding cost of a $250,000 credit facility - essentially a non-bank overdraft - is currently around $795.00 per year (annual fee). If you don’t use the money, that’s all you pay.
Similar scales of fees apply for Responsive Finance tools - like Trade Finance and Invoice Finance - that use your Balance Sheet as security (instead of personal assets).
The time to get finance - like insurance - is BEFORE you need it!
As I said in July, the time to put your Cash Flow strategy in place is BEFORE you need it - and the earlier, the better.
Deciding on Monday 4th December to check your cash flow projections and realizing that you should increase your “cover” is leaving it rather late.
December is a busy time for finance providers (including their own holiday preparations). It takes longer than the usual 5 days to work out what you need, apply and get your finance approved.
Check your summer cash flow projections and your finance strategy while it’s still spring - in November. It’s like getting your home fire-ready for the summer and checking your smoke alarm batteries - do it early.
If you think that your business could be at risk from the post-Christmas Valley of Death, then book a call with me today to schedule a Confidential Working Capital Review - that way, you’ll be better placed to avoid the looming January cash trap.
#Accounting #BusinessFinance #smallbusiness #businessownership #ILOVEWHATIDO #cashflow #constructionindustry #CashFlowChallenges #BusinessSuccess #WorkingCapitalStrategist