Many small to medium businesses we handle in our Accounting Practices at Springwood and New Farm suffer from cashflow starvation and its impacting the bottom line!!

When debtors are slow payers or they simply avoid your phone call and letter thats a sign that you need to change your process and procedures/systems. Its a red flag that your not managing your business and starving it of cash… we all know what happens when we starve, our mind set changes from abundance to scarsety and that effects the way your approach business decisions not to mention opportunities dry up.

When cashflow dries up, its a red flag for you to change your business approach and debtor proceedures

Secrets to improving your cashflow

1. Increase you price to compensate you for the extra debt your business is taking on
2. Make your clients pay a significant deposit up front
3. Don’t deal with clients that are not meeting your terms
4. Ensure you have you debtor collection followed up regularly
5. Have an early payment discount for paying within your terms
6. Have late payment fees/penalties if your payment terms are breached
7. Ask for progress payments
8. Take all forms of payment Credit card, direct deposit, Paypal, Bartercard

You options are limited if you dont want too or cant do any of the above but you can:

1. Seek a bigger overdraft which will cost the business in interest
2. Seek debtor funding (3^rd parties pay you instantly and collect the funds themselves at a cost of around 5% to you)
3. You inject more of your own money in the business (which is not recommended)

writeen by Jye Amery CPA

Evolution Accountants New Farm & Springwood

Ph     1300 506 664

Fax   07 3011 1028

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