RA Business Advisors

cash flow

Managing Your Cash Flow Over The Holiday Period

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December is usually the busiest time of the year for retail and hospitality businesses. But businesses in other sectors often find that their sales slowdown and their customers stop paying them for a few months. So cash flow dries up.

Whether your business is large or small, well-established or in start-up mode, you need to take a planned approach to managing cash flow during the holiday season. Here are few tips for keeping on top of cash flow management during the Christmas/New Year holiday period.

1. Keep Invoicing In The Lead Up To Christmas

Don’t let your business admin slip in the rushed lead-up to Christmas. This is the most important time of the year to stay on top of your invoicing. You may find that many customers will be slow to pay because their businesses are closed over the Christmas period.

2. Set Clear Expectations With Your Customers

Be clear with your customers that you expect them to pay within the pre-arranged credit terms over the Christmas period. Phone regular slow payers a few days before payment is due to confirm that they’ll be paying on time. The phone is always a more effective method than email. If you’re not comfortable having this conversation with your customers, your accountant or bookkeeper may be able to assist.

3. Service Business – Offer A Discount For The “Quiet Time

If your business is usually quiet in January, why not offer your clients a 10% discount if they book you in for January? Why not offer them a 15% discount if they also refer a neighbour or a friend? Set whatever discount amounts work for you. This is the thing: A strategy like this will keep your business busy and some cash coming through during the usually quiet period.

4. Use The Quiet Time To Work On Your Business

If sales are a little slow in the lead-up to Christmas, use the time wisely to hit the ground running int he new year.

The pre-Christmas slow down is a great time to work through the to-do list you’ve been compiling all year.This might include taking a thorough inventory, searching for more suitable lending alternatives, completing a comprehensive competitor analysis or researching the market for new products and suppliers.W

Small Business Owners: Why they can’t sleep

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Can't sleep

Why Small Business Owners can’t get any sleep

Time management and cash flow concerns are keeping Small Business Owners (SBOs) awake at night. They are constantly fretting over slow paying debtors and an endless lack of time. I’m not going to bore you with statistics but if you’re interested, check out the graph below:

Reasons why Small Business Owners can’t sleep

Slow paying debtors

Small businesses always seem to find themselves at the mercy of slow paying debtors. Picture your business as a scale, on one end you’ve got creditors and on the other end, you’ve got debtors. Unfortunately, big businesses don’t give you much time to pay (that phone bill is due ASAP), whilst debtors use small businesses as a source of working capital. According to the Australian Competition and Consumer Commission, three out of every four businesses are paid late (link). Thinking back to that scale, if your debtor pays on time the scale tips in your favour (providing cash flow), if that debtor pays late, the scale tips towards creditors – meaning debt.

Where does the time go?

Many SBOs complain they don’t have enough hours in the day to do everything that is required for their business. The majority work a minimum 50 hours per week (that’s roughly 10 hours a day for a five day week), yet state they still can’t get everything done. As much as they would like to explore alternative ways of improving their cash flow, they never have the time!

Unfortunately, technology hasn’t been as advantageous as we previously thought.

See: Make Technology work for you

Reduce the risk

  1. Set a maximum figure for outstanding total invoices – if a customer has not settled their outstanding account, bar them from receiving more products or services until the account is settled
  2. Upfront pre-payment – Opt for upfront pre-payments with as many customers/clients as possible (i.e. service plans, fixed monthly plans, etc)
  3. Obtain part payments (milestone) for larger projects
  4. Pay your bills manually – opt for manual payments, rather than direct debit. This can help greatly with cash flow timing issues

Often cash flow problems are caused by out of date bookkeeping and slack financial management.

We can help

At RA Business Advisors, we can assist our clients with a whole range of services, including cash flow analysis. We can identify what’s blocking your incoming cash flow, and help you with strategies to overcome it. Sit down with one of our friendly advisors for a coffee and a chat.

To chat with one of our advisors call 07 3367 0852 or email mail@raaccountants.com.au

 

Make Technology work for you

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Your small business

Running a small business seems great in theory; you’ve got the benefits of being your own boss, extra income, flexibility – the ‘Australian dream’.

When in reality you’ve got hours of administration work, constant pressure of cash flow, and endless hours working on the small minute financial details of you business. With revolutions in technology like the famous ‘cloud’, how come you still have hours of bookkeeping, payroll and the like?

The cloud isn’t the be all end all

Great, you’ve setup your business and transitioned everything into the cloud. Have those hours of painstaking work dialled back? Or has it just gotten worse? The cloud isn’t user friendly and unless you’re prepared to take up another university degree or spend hours reading through multiple guidebooks on bookkeeping, payroll, and marketing. When you’ve got inventory, cash flow, supplies, and clients/customers to worry about, how can you spare the time?

The cloud, bookkeeping applications, payroll software won’t save you time, it’ll just increase your workload.

By now you’re thinking, why did I ever start this small business, will it ever succeed? Don’t worry; you don’t have to handle all of this paperwork on your own. Luckily, there is a major time-saving solution just one phone call away.

 

The truth about the digital age

Going digital isn’t all that, sure it’s great in some aspects but sometimes you really need a human element. This isn’t new to the technological world either. Many major companies such as Apple and Spotify use ‘real human beings’ to create popular playlists.

Not to mention those little food apps like Foodora and Uber Eats that combine technology with real human beings. Would you trust a robot delivering your weekly order of Mexican? It doesn’t even begin with these guys, full stack businesses have been around since smart phones came into existence!

But this article isn’t about your food delivery needs, so let’s get back to the topic of your business. Apps won’t make your professional life easier like they do with your personal. You need a REAL solution; well don’t worry reader that’s where professionals come into play.

And by professionals I mean, accountants and business advisors. Don’t worry you won’t need to open a new tab and scour the internet for a business advisor that actually makes sense. We’ve got you covered!

 

Xero: The beginning of the end

Xero is definitely a life changer, as we’ve discussed before but it can also be a hassle if you don’t know what you’re doing. Small business owners enjoy using Xero as it makes accounting fun but in the long run some are making a mess of things. I mean, if you join a bookkeeping Facebook group, you’ll see what I mean.

Enter: a Xero-savvy business advisor with a free one hour training session. Now before you go rummaging around for your keys, you’ll need to book as everyone knows time is valuable.

 

What if I still can’t get it right?

You’ve gone through your free training session, maybe you’ve booked a few more but you still can’t quite get the hang of it? Lucky for you our tech-savvy advisors know Xero inside and out, so you don’t have to!

And here’s the absolute kicker; choosing a business advisor over a DIY can not only save you time but it’s less risky and less expensive than hiring an in-house bookkeeper. So if you aren’t up to the task of sorting out your payroll, taxes, accounts receivable, and accounts payable, then I advise you to give us a call or book a consultation.

 

7 Resolutions to a Better Business Year Ahead

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REPEAT AFTER ME…

I will manage my cash flow more effectively.

Before even attempting these resolutions having a steady cash flow is vital! A prominent study from the financial services company U.S. Bank found that 82% of start-ups and small businesses fail due to poor cash-flow management. Read on if you want to be an exception!

I will improve my digital presence.

Don’t let valuable customers slip through the cracks of a poor web presence. Even if your website and email marketing list is up to date, when was the last time you checked if you’re web-presence was mobile friendly? Have you tried your hand at social media? Now is the time!

I will invest in much needed technology/equipment.

Nothing stunts productivity, and frustrates employees more than being stuck in the dark ages when it comes to fast advancing technology. Slow internet speeds, clunky operating systems and inadequate tools can eat up valuable time. While it may feel like a big investment it’ll pay for itself in future time saving.

I will learn something new.

If the end of the year is quiet for you, build in reading time and supplementary training to refresh the skills of both you and your employees! Industry blogs, books, magazines, demo videos are just a few in the long list of resources at hand that will enable you to be on top of the trends in your industry.

I will strategise weekly.

It is easy to steer off track when you forget where the track is leading. Each week you should remind your team of their individual and collective goals for the week.

I will build a promotions Calendar.

Holidays such as Easter and Valentine’s Day may seem unnecessary but they are designed to be vital marketing opportunities for any business. So get your calendar out and use the appeal of these festivities to your advantage.

I will consider my Hiring needs.

Of course none of the above can be done without the commitment and dedication of loyal employees. While running on skeleton staff may seem cost effective short term, make sure you don’t take it too far leaving unnecessary strain on your current staff. Consider hiring casuals to alleviate some of the excess pressure at peak times.

EFTPOS Minimum? Australian Consumers Are Cashing You Later

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How frequently do you go to your local café and pay for your morning coffee with a crispy fiver? The reality is that as soon as ‘medium cappuccino’ is rolling off your tongue, the café staff member is most likely entering the amount due into their portable EFTPOS machine, assuming that a cashless transaction is about to occur. Cashless payments are becoming a more prevalent trend in business transactions around the world, with Australia as one of the front-runners of this revolution.

Research conducted by market analysts East & Partners has shown that cash payments currently make up less than 10% of all payments received by Australian merchants, additionally; between 2010-2016 the amount of cash payments within Australia has fallen around 46%. This has been quite a quick transition for Australian businesses, as only 10 years ago cash payments represented 70% of all Australian transactions according to RBA. East & Partners have also claimed that only 2% of all transactions will be paid via cash within the next 5 years.

In a society that craves convenience more and more every day, these statistics definitely make a lot of sense. The prominent rise of cashless payment systems can also be attributed to leading edge organisations such as ride sharing service Uber utilising cashless payment systems, whose success with an online payment system is currently putting their competitors at a major disadvantage. This has created a knock on effect to all small businesses operating in Australia, in that Uber’s success with cashless payment systems has in a sense set a standard for convenience. The benchmark has been set, and it has become crucial for Australian businesses to aim for this level of convenience.

The modern consumer is time-poor, and a minor inconvenience such as a $5 EFTPOS minimum can now be a crucial factor for a consumer’s purchase decision. Technology is continually proving to be a crucial aspect of the successful operation of a business, and this is something that we as business advisors are extremely passionate about.

Post Contributor:
Andrés Pascoe