Cash flow management is critical for small and medium businesses. It’s the lifeblood of your company, it keeps business ticking over, and it needs to be managed carefully. Cash flow problems generally come down to one thing – cash coming in too slowly, and going out too quickly! Encouraging customers to pay quickly, while delaying outlays of cash, will provide a more constant cash flow. But as we know is not always that easy to achieve. There are several ways to do this, and it’s important to get it right from the start.
1. Plan your cash flow – ins and outs
It’s impossible to project your cash flow exactly as sales can fluctuate due to a number of reasons, but an estimate can allow you to project future trends. How much cash do you need to have in order to carry out your business, pay staff and suppliers, and make a profit? How much cash will you be receiving, and whether a cash flow finance facility might be a good option to cover the gap of slow payments? You’ll also need to take into account variables like seasonal dips and peaks and determine all those amounts to budget accordingly.
2. Invoice promptly
Make it a habit to invoice your customers as soon as the job is done, rather than at the end of the month. Also ensure your invoice is easy to understand and your bank account number is visible.
3. Establish clear payment terms
Be clear about your payment terms, whether it’s seven, thirty, or sixty days, and include an action plan if payments become overdue.
4. Follow Up
Another way to improve slow payments is to follow up on accounts that fall outside your terms. With Key Factors cash flow finance the follow up of accounts is a part of our service, at no extra cost.
5. Consider factoring your invoices
Invoice Factoring can improve your cash flow by unlocking the cash tied up in your account receivables. This is where Key Factors can help. Send us your invoices, and we can pay you up to 80% of the invoice face value immediately – in as quick as 24 hours – so you don’t have to wait 30, 60 or even 90 days for your client to pay. You will receive the remaining 20% less our fee, when your client pays the invoice.https://www.keyfactors.com.au/services/factoring/
Key Factors can help manage your accounts while providing you with a constant cash flow. This allows you to focus on doing what you do best, which is growing your business. Get in touch with us today, and find out how we can help you.
Steady cash flow is vital for all successful businesses. Have you considered cash flow finance for your small business loans Australia? It is the difference between being able to pay off debts and growing your business, and struggling to keep things running efficiently enough to keep your business alive.
At Key Factors, we know how challenging it can be to run your business smoothly and manage your accounts receivable – that’s why we’re here to help.
How can cash flow finance benefit small business?
Cash flow finance allows small businesses to sell their invoices at a discount to a debtor finance company like Key Factors so that they get paid for them upfront. This means businesses don’t have to wait up to 90 days and can get instant access to working capital by converting their credit sales into cash.
With Key Factors, cash flow finance for small business loans Australia, the cash you receive is aligned with your sales – so the more sales you make the more cash you can get. In addition to giving your small business cash flow a boost, you can also cover the gap of slow payments, pay off expenses, meet ATO obligations, and most importantly grow your business.
How does cash flow finance work?
Invoice your clients for goods or services and send us a copy.
Key Factors transfer up to 80% of the invoice face value to your account in as quick as 4 hours, less a discount rate.
The remaining 20% is provided when your customer pays, less any accrued charges.
Flexible cash flow finance for small business loans Australia
Key Factors cash flow finance for small business has no lock-in or long-term contracts, no ongoing monthly charges or annual charges. There are also no quarterly audits and no property security required.
Contact us at Key Factors, on 1300 884 100 and a local state manager will be more than happy to discuss your needs and provide you with a quote to suit your requirements today.
One of the most challenging parts of running your own business is the unpredictability. Unlike being an employee with a fixed salary, there are many moving parts that can affect your cash flow. Late-paying clients, unexpected expenses, ebbs and flow in customer demand — all of these things can make paying your bills, employees and contractors on time a constant struggle. When there’s so much uncertainty around your incoming payments from clients, it can be nearly impossible to look to the future and grow and scale your business. Thankfully, there is a way that you can make your cash flow predictable, reliable and regular again. Read on to learn how to forecast future cash flows with factor financing.
What is factor financing?
Factor financing is when a financial institution or funding source pays a portion of your client invoices up-front. Other names for it include invoice financing, debtor financing, invoice discounting and cash flow financing. The business sells its accounts receivables to a third party (called a factor) at a discount, in order to get access to immediate cash. It can improve your working capital by drawing funds against your unpaid invoices.
When you use Key Factors for factor financing, you invoice your client, then send it onto us. We then pay up to 80% of your funds in as little as 4 hours, with the remaining 20% minus any accrued feeds to be released when your client pays us. The cost of factor financing can vary depending on the factoring company. Usually, a flat factoring rate is applied which will determine the factoring fee. At Key Factors, we only charge a flat daily rate on what you use. There are no ongoing monthly admin fees or annual charges associated with Key Factors’ invoice factoring service
How does factor financing help forecast future cash flow?
Factoring is an indispensable strategic and financial resource when it comes to forecasting future cash flows. While surprises can be nice when they involve fun things like flowers, cake or puppies, this certainly isn’t the case when it comes to your finances.
For example, if you have just started working with a new customer or client, it can be difficult to know how cooperative they are with payment terms. Without using factor financing, a business could be left waiting 30, 60 or even 90 days for this client pay. This may leave them completely blindsided and leave them unable to pay outstanding debts — let alone invest in more things that are going to drive their business forward.
On the other hand, businesses that use factor financing know exactly how much they are going to get paid and when. Having a more predictable cash flow will allow you to take on more work, hire more staff and grow your business.
Factor financing is not only pivotal for forecasting future cash flow, but also future business growth. The two are deeply intertwined, with poor cash flow being the number one reason 82% of small businesses fail. With the knowledge that they will be relying on factor financing — not the whims of clients and customers — to manage their incoming finances, business owners can make strategic decisions that are going to accelerate the growth of their business.
From this secure position, they are able to create a robust business plan that outlines a strategic plan to scale. They can decide in advance exactly when and where they will invest in tools, employees and education that are going to skyrocket their growth, rather than having to wait on cash tied up in their accounts receivable.
With Key Factors, funds can be released in as quick as 4 hours, factor financing can also allow you to quickly get on top of financial burdens, like ATO obligations. This can allow you to focus on moving your business forward, rather than focusing on past debts that need to be settled.
Is factor financing right for my business?
If customer payment terms or rapid growth is affecting your business cash flow, you may want to consider setting up factor financing to get instant cash flow from your sales invoices. At Key Factors, we service small to medium businesses from a range of industries. Whether you are a growing company requiring cash flow to service demands, a newly established company requiring working capital to expand, or you simply need to bridge the gap of slow payments, Key Factors can help.
Companies benefiting from Key Factors factor financing generally have a high level of customers on accounts for the provision of goods or services, and have an annual sales turnover ranging from $500,000 to $30 Million. Invoices relating to business-to-business transactions can be considered, not consumer receivables. We also only process invoices which are still within normal trading terms, and those that are for work fully completed, not progress claims.
Interested in learning more about how to forecast future cash flows with factor financing? Apply online, call us 1300 884 100 to find out more, or fill out an enquiry form and we will be in touch within 1 hour.
55.8 days is the average payment terms for Australian Businesses, according to the most recent survey by Dun & Bradstreet June 2013. So what can businesses do to ensure they get invoices paid quicker and maintain a healthy cash flow?
Secure cash flow financing
Key Factors flexible cash flow financing allows businesses to release the cash tied up in their unpaid invoices in as quick as 24 hours, without the need of real estate security or long-term contracts. Instead of waiting 30, 60 or even 90 days to get paid businesses can get up to 80% on the value of their invoices credited to their account, when they need it.
Invoice promptly and correctly
The sooner the invoice is issued and is received by your customers the sooner you will get paid. Ensuring all information on the invoice is correct can also get your invoices processed more promptly with minimal delays. Electronic invoicing is quick and easy to track and is a viable option for businesses wanting to reduce processing & delivery time of invoices.
Know your customers
When a company has clients on accounts they are essentially providing credit, hence it is important to know the credit worthiness of their customers. At Key Factors we conduct essential background checks & analyst on our clients debtors to limit their risk.
Follow up on payments
Late payments causes strain on a business’s cash flow. So when your customers pay outside your terms, it is always best to follow up. Simple but effective follow up methods includes, a telephone call, and posting out statements to clients outlining amounts owing and the date it was due. Key Factors conducts follow up on payments on behalf of our clients, allowing them to focus on what they do best and grow their business.
Don’t let slow payments hold your business back
Late payments have a major impact on the business’s ability to meet operational expenses and hinder investments for growth. Hiring new staff to meet demands is also not an option when cash flow is limited.
Find out more about our cash flow financing today by calling 1300 884 100 today.
Christmas should be all about enjoying a relaxing time with friends and family – the last thing you need is to spend the festive period worrying about whether your business will survive the New Year!
Many businesses discover their income slows over the festive season, but remember, that doesn’t mean your outgoings will come to a halt. Make sure you are prepared for all your regular payments, such as payroll and rent. It is easy to get ahead of ourselves with opportunities the New Year holds, but be careful to cover your daily payments first.
Depending on your sector, Christmas could be a busy time of year, or on the other hand, you could shut down for a number of weeks. Either way, you will usually be awaiting unpaid invoices, or have ordered and paid suppliers before your sales are made – this is where problems arise and issues need to be overcome quickly to avoid bills piling up.
It’s time to get savvy and avoid putting your business in imminent danger. There are some basic rules to keeping on top of your cash flow, but over the festive season, not sticking to them could be the make or break of your business. These rules should be nothing new, but we have found it is simply about being persistent, sticking to the basics and making sure you are prepared!
Simple steps to follow before the festive season hits:
Budgeting:Firstly, forecast your cash needs. Get a clear idea using realistic information – facts, figures and historical evidence are key to avoiding unrealistic budgets that your business can’t stick to.
Set strict payment policies:Many businesses are generous when they first start out, with no penalties for late payments. We believe that setting timely policies from the word go will show your customers that you mean business and makes sure they understand there will be consequences. The results of not doing this will mean having to offer early ‘Christmas payment discounts’ and other bonus’s to make sure you are paid on time and even then, there are no guarantees.
Bill quickly:The quicker you work on your end, the quicker you should receive payment – it pays to keep on top of every invoice.
Avoid impulse buys:Stick to necessities and don’t leave money in unnecessary stock – take regular stock takes and keep on top of products, cash locked up in stock could be put to good use.
Release your cash tied up in unpaid invoices
Even the most pro-active businesses can still struggle with cash flow, especially around the holidays. But this doesn’t mean you have to wait until you are forced to come up with a solution. Being prepared is a huge part of the battle. There are many alternative cash flow solutions, including factoring, which can release your tied up cash for very little cost.
New Year, fresh start
Wouldn’t you love to start the year as you mean to go on? With all the cash you’ve worked so hard for in hand, books up to date and nothing owed.
The Christmas break offers you time to reflect on your business goals. With all the motivation the New Year brings, it’s the perfect opportunity to assess how your previous year has gone, look at the results, review your cash flow and decide on your aims for the future. If you’re planning an expansion or to branch out the business, now is the time to discuss whether it is financially plausible.
How to avoid the inevitable
Be ahead of the game – issue invoices on time, make sure you have all reminders set before it gets too late and organise notifications for overdue invoices.
Remember, it is still not 100% guaranteed your invoices will be paid on time, even if you send notifications and charge for overdue payments. It is more a case of factoring these elements into your prediction and to have a buffer prepared for the circumstances. If you are already doing everything you can, but struggle with meeting payments on time due to tied up cash, factoring could be an option for your business. Having money locked up in unpaid invoices can lower the value of your company and prevent future growth and development.
Why use Key Factors?
Key Factors have been industry leaders for 26 years, offering expertise and reliable cash flow solutions. Plus, with no hidden fees and no minimum volume, you can use us if and when you need to.
Unlike many of our competitors, we are looking out for our clients, offering fast approval and no ongoing monthly or annual charges. We focus on simple, flexible alternative cash flow solutions so that you can focus on spending the holidays enjoying yourself, awaiting the New Year without worry.
We want your business to have the ability to meet it’s true potential all year round.
With over 30 years of experience and offices in Sydney, Melbourne, and Perth, your business is in safe hands.