There has been a disturbing trend of late concerning late paying clients restricting Brisbane business owners from generating cash flow and investing in business growth. When payments are owed for an extended period, this has a domino effect on many other aspects of a business
It’s not that Brisbane businesses don’t want to expand, on the contrary, many are keen to grow and invest in innovative new technology. But when invoices are not paid on time, this makes it incredibly difficult for a business to evolve. We take a closer look at how late paying clients can limit a company’s growth.
Inability to hire new employees.
A lack of cash flow in your business can be worrying for several reasons. But one thing that SME’s, in particular, are often concerned with is their ability to pay staff wages on time. You may be relying on an invoice being paid by a large client to generate your staff’s salaries for the month. So naturally, if this is something you’re contending with regularly, you won’t have the money available to invest in human capital. And this can have all sorts of consequences, including already aggravated staff having to work overtime because of a lack of people to take on extra jobs. It’s no secret that a company’s growth often depends on the strength of your workforce. When you can’t employ new people, generate new ideas and keep your current staff happy, this makes expansion near impossible.
Can’t keep up with competitors.
A business’ growth often relies on its ability to keep up with industry changes to get ahead, or even stay on the same level, as its competitors. But without cash flow, it’s difficult to find the money to invest in resources that will give businesses a decent shot on the market. A business may want to purchase better CRM software to streamline work processes and provide more efficient services for their customers. But they do not have access to the funds required to do so because of late paying clients. This puts a business at a severe disadvantage when all of their competitors’ services are far easier for customers to navigate.
Harder to get bank loans.
The lack of cash flow that Brisbane businesses are experiencing has required many to turn to bank loans as a means to finance their growth. Unfortunately, contract terms on bank loans for SME’s have become more stringent, limiting the number of businesses that can gain access to this type of financial relief. As a result, Brisbane businesses are turning to less reliable means of money lending such as personal loans, trade credit and supplier terms. Having to turn to these options means that businesses are increasingly putting themselves at risk in order to expand and turn a profit.
A laid-back culture that has resulted in selfishness?
A lot can be said for paying your bills on time. Many companies don’t realise how much of an impact their late payments have on other businesses. It’s truly unsettling when you have to ask a client to pay an invoice up to five times before the cash actually comes through. Unfortunately, Australians seem to cultivate a “she’ll be right” attitude that we chalk up to our nation’s inherent laid-back nature. But it could be toxic to our economy, and our B2B relationships.
Is a lack of cash flow keeping your business from growing? Contact Toohey Reid today to discuss how we can assist you to strategise your business processes to remove risk, maintain positive B2B relationships and improve growth.
General Advice Disclaimer
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
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