Sydney – 19 March 2020
Small- and medium-sized businesses need to focus now on managing their cashflows to protect their business as the COVID-19 coronavirus spreads, according to Australian Invoice Finance.
“Just as SMEs should have plans to safeguard the health of their employees, it’s critical that they also have plans in place to protect their cashflow and their business,” said Mr Greg Charlwood, Managing Director of Australian Invoice Finance.
“The COVID-19 outbreak is rapidly causing many Australians to change their behaviour. Travel bans, larger numbers of people working from home, and self-isolation as a result of suspected illness are leading to cashflows for many small businesses coming under increasing pressure. While Federal and state government measures will provide some support and stimulus, business conditions are changing daily.
“Lenders are adjusting their credit criteria, and support from traditional lenders may become less available. Credit insurance may also be harder to secure, and some invoice financiers will only provide funding based on the debtors being credit insured to a credit limit. These limits are likely to be harder to obtain and maintain at current levels.
“Small business owners need to think carefully about alternative potential methods of managing their cashflow, financing their day-to-day activities, and ensure they’re able to survive in a very different business environment,” Mr Charlwood said.
Mr Charlwood recommended that small business owners immediately revisit their assumptions and estimate the impact of different falls in business activity, cashflow, and revenue.
“Make sure you know where you’re spending your money, and if it’s absolutely necessary. Understand your debtor days, and the time it takes for your invoices to be paid. Keep a tight rein on expenses, and think about what’s essential spending, and what’s discretionary. Keep your accounting records up to date so you have timely and accurate information on which to make decisions,” he said.
“Stay aware of how the measures the Federal Government and your state and local government are putting in place can help your business. Check with your accountant or business adviser to make sure that they’re working with you to help you maximise the available opportunities,” Mr Charlwood said.
Small business owners should also consider alternative forms of working finance.
“The pool of working capital is the most important asset your business has,” Mr Charlwood said. “It’s important to have a strategy for accessing additional capital if you need it, such as a line of credit, especially as there is a chance the economy could move into a recession. Alternative sources of credit such as invoice finance can take the pressure off when cashflow is tight, and help cover regular expenses such as wages, utilities bills, and tax obligations. Invoice finance is specifically designed to turn your unpaid invoices into cash to pay supplier accounts and other operating expenses.”
About Australian Invoice Finance (AIF)
Australian Invoice Finance (AIF) (www.austif.com.au) is the leading debtor finance and invoice finance company in Australia providing cashflow finance support to businesses. AIF is an expert in helping Australian SMEs improve cashflow by quickly advancing up to 85 percent of unpaid invoices through a cashflow finance facility, overcoming the problem of sluggish cashflow caused by slow-paying customers.
Phillip Gray – FCR
D: 0488 771 858