Positive cashflow is essential to ensuring your business is in a healthy position. Unfortunately, only around 50 percent of Australian small businesses have a positive cashflow (Xero’s Small Business Insights Report).
The reasons businesses don’t have a positive cash flow can be varied, however; three main areas generally appear to be the root cause.
- Late Payments
In 2017, roughly 34 days passed on average while Australian small businesses waited for invoice payments (Xero’s Small Business Insights Report). This hasn’t improved over time.
- Poor Financial Management
Many small businesses don’t accurately track their revenue and expenses. This can mean overspending, poor budgeting and making purchases that hurt their bottom line. Poor financial management can hurt positive cash flow in a significant way.
3. Lack of in-depth reporting
Small business owners need to know their business, and the industry it operates in, extremely well. Not being aware of seasonal changes, industry regulations, customer nuances and effective marketing channels can have a far-reaching impact on cash flow. Regular reports, forecasts, and cash flow statements help small businesses to get a feel for the ins and outs of their company and supports them in making better decisions.
Choosing to automate payment collection could be the ideal solution.
Many businesses make use of apps to automate their processes and in-turn boost their productivity. These very same businesses are still stuck asking customers to make payments via outdated methods such as bank transfer.
These slow payment methods result in business owners chasing late and non-payment of invoices which ultimately impacts positive cash flow.
Take control of your cash flow
The ability to forecast cash flow is a great advantage for business owners. If you’re not in control of your income and debt collection, then your business is vulnerable in many ways.
Traditional payment methods such as bank transfer are all initiated by the customer, meaning they have control over when they pay you. Automated payments like Direct Debit and credit card payment collection put you back in control.
This allows you to speed up your payment process so your invoices are automatically paid on time, every time. Taking the pain out of getting paid and ensuring your cash flow remains positive.
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