Australia is a tale of two economies right now, depending on the state or sector your business is based in. Today we’ll run you through three cash flow tips for your business, whether it’s growing or struggling.
Covid-19 has really brought a two-speed economy to the fore in Australia.
For some businesses, the stop-start-stop nature of the pandemic has crippled cash flow and made planning ahead all but impossible.
Meanwhile other businesses, such as those in the digital space, are experiencing fast growth.
Your cash flow strategy this financial year will likely depend on how the pandemic is impacting it.
So below SME lender ScotPac has identified three cash flow management strategies for businesses that are growing, and for those that are struggling.
Three tips for managing growth
1. Find a flexible source of funding: strong cash flow is important for fast-growth businesses, which often have lots of cash tied up with debtors, ScotPac senior executive Craig Michie says.
“It’s important to find a source of funding that grows as your business grows. With invoice finance, as your debtors grow, so does the line of credit you can access,” he says.
“Another consequence of fast growth can be a demand on the business to put in place more capital assets, such as vehicles and equipment. In these situations, asset finance can help a business get the assets they need to support their rapid growth.”
2. Negotiate with suppliers: sometimes businesses can grow too fast for their suppliers to keep up with their demand for product.