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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.

If you don’t have the cash flow to pay your supplier for more product up front, you can attempt to renegotiate terms with them, or seek alternative finance options.

“One option for fast-growth businesses to have up their sleeves is to use trade finance. This ensures they can pay suppliers upfront so they can meet their increased demand for product,” Mr Michie says.

3. Cashflow forecasting is vital: cash flow is often described as the “lifeblood” of businesses.

Knowing what cash is likely to be coming in, and what’s likely to be going out, is therefore vital for not only keeping your businesses alive, but ensuring it will thrive.

“It’s not unusual for a small business to spend months winning big new clients, then realise they had not accounted for the cashflow implications of winning new business,” Mr Michie says.

“Putting in place a 13-week rolling cash flow forecast – which really would only take an hour with your accountant to set up, helps fast-growth businesses avoid cash flow issues.”

Three tips for getting through tough conditions

1. Get in touch with funders and the tax office: with a number of recent state lockdowns, and ongoing uncertainty in NSW, many businesses are doing it tough.

Mr Michie says it’s crucial for businesses struggling through adverse trading conditions to talk to their financiers asap.

“Do this early in the piece to get the best outcome. Talk to your funder about whether it’s possible to restructure or to put in place moratoriums,” he says.

He adds that SMEs shouldn’t put off talking to the Australian Tax Office either.

“Too many businesses make the mistake of thinking a problem ignored is a problem solved – getting on the front foot with tax obligations is vital.”

2. Look at your balance sheet: to help secure working capital for your business, Mr Michie suggests looking to the assets on your balance sheet.

“Balance sheet assets can be a hidden resource for many SMEs – your debtor’s ledger, unencumbered plant and equipment and even inventory can be used to bring working capital back into the business.”

3. Again, cash flow forecasting is vital: Mr Michie says that having a running 13-week cashflow forecast lets business owners spot any cashflow gaps on the horizon, with enough time to do something about it.

He suggests that this could include reassessing your cost base, negotiating with creditors to change terms or defer payments, or chasing up aged receivables.

Last but not least, get in touch

If you’d like to discuss how any of the above cash flow tips or finance options could help your business, get in touch today.

The sooner we can run through your options with you, the better placed your business can be in the 2021 financial year and beyond.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Do you use a Buy Now Pay Later (BNPL) service like Afterpay or Zip? If so, be warned that one leading credit agency has made a big change that means your BNPL data will go onto your credit report.

Continue reading “Buy Now Pay Later users put on notice by credit agency”

Drive or walk around your local suburb mid-morning on a Saturday and chances are you’ll pass a few freshly banged up ‘Auction’ signs. But is Saturday actually the best day to auction your home? New data suggests perhaps not.

Continue reading “What’s the best day to auction your house?”

As if Australian business owners hadn’t faced enough challenges this past year – now the dreaded annual insurance and workers compensation premiums will soon arrive in mailboxes. Here’s how to smooth ‘em all out (and get an early bird discount!).

Continue reading “Need help paying your insurance and workers comp premiums this year?”

One of the most exciting things about moving into your own home is doing whatever you want with it, such as growing your own veggie patch. But did you know more than a third of Aussie backyards are contaminated with lead? Here’s how to get your soil tested for free.

Continue reading “Green thumbs beware: one-third of veggie gardens contaminated with lead”

After 18 straight RBA cash rate cuts it can be easy to dismiss the notion that interest rates might rise again. But if the cash rate returned to mid-2019 levels, how much extra would an average new mortgage holder expect to pay each month? Let’s take a look.

Continue reading “How much extra will your mortgage cost when interest rates rise?”

If you’d like to buy your first home with just a 5% deposit and pay no lenders mortgage insurance (LMI), then you better act quick, as thousands of first home buyers are expected to rush to apply for the limited spots up for grabs.

Continue reading “It’s on! First home loan deposit schemes open for applications”

Small business owners wanting to buy a vehicle, asset or important piece of equipment and immediately write off the cost only have a few days to act this financial year.

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First home buyers can now purchase more expensive properties under the federal government’s hugely popular 5% deposit, no LMI scheme.

Single parents with dependent children are also welcoming the higher property price caps, which will apply to the federal government’s new Family Home Guarantee scheme, too.

The First Home Loan Deposit Scheme (FHLDS) allows eligible first home buyers with only a 5% deposit to purchase a property without forking out for lender’s mortgage insurance (LMI), which can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

The new Family Home Guarantee scheme, meanwhile, allows eligible single parents to build or purchase a home with a deposit of just 2% without paying LMI, regardless of whether or not they’re a first home buyer.

These schemes will run alongside a third home loan deposit scheme called the New Home Guarantee scheme, which allows eligible first home buyers to build or purchase a new build with a 5% deposit.

That scheme has even higher property price caps (see here), to account for the extra expenses associated with building a new home.

All three schemes have 10,000 spots available each from July 1, and spots are expected to fill up fast, so you’ll want to get in touch with us soon if you’re interested in applying.

New property price caps

So how much money can you spend and remain eligible for the FHLDS and Family Home Guarantee scheme?

Here’s a quick summary:

– NSW: $800,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $600,000 (rest of state).

– VIC: $700,000 (Melbourne and Geelong) and $500,000 (rest of state).

– QLD: $600,000 (Brisbane, Gold Coast, Sunshine Coast) and $450,000 (rest of state).

– WA: $500,000 (Perth) and $400,000 (rest of state).

– SA: $500,000 (Adelaide) and $350,000 (rest of state).

– TAS: $500,000 (Hobart) and $400,000 (rest of state).

– ACT: $500,000.

– NT: $500,000.

If you’re interested in knowing how much the property price caps have increased, you can check it out here.

Get in touch today to get the ball rolling

With all three schemes, allocations are generally granted on a “first come, first served” basis.

And it’s worth re-iterating that spots are limited and generally fill up fast.

So if you’re a first home buyer or single parent looking to crack into the property market sooner rather than later, get in touch today and we can explain the schemes to you in more detail.

And when July 1 rolls around, we can help you apply for finance through a participating lender.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

An increasing number of Australians are prioritising larger homes and bigger blocks in their house-hunting endeavours since the pandemic began. But where to look? Well, a new search tool helps you calculate which suburbs offer the best bang for your buck.

‘Give me a home among the gumtrees …’

There’s no denying that COVID-19 has resulted in a widespread shift in attitudes on how a family home can contribute to a better work/life balance.

With flexible work arrangements becoming the norm, families are focusing their house-hunting efforts on suburbs that offer larger homes with home offices, or simply just a safe, secluded and spacious place to raise the kids.

But you don’t necessarily have to move to the outskirts of a city for a bigger, cheaper block.

You just need to know which suburbs are most likely to help you unearth a hidden gem.

A new tool can help you identify where to look

This new realestate.com.au tool (mobile link here), which calculates each suburb’s median estimated price per square metre (based on plot size), can help you zero in on suburbs which give you more bang for your buck.

That’s because not only does it give you the median valuation per square metre for the suburb you select, but it also gives you the same data for the immediate surrounding suburbs.

This can allow you to shift your search focus to another nearby suburb if it offers a more attractive estimated price per square metre.

For example, Teneriffe is one of Brisbane’s most expensive suburbs, and topped that city’s list with a median estimated property price of $5196/sqm based on a median plot size of 441sqm.

However, about 400 metres away is the suburb of Bowen Hills, with a median estimated property price of just $1621/sqm based on an even bigger median plot size of 652sqm.

Not bad, when you consider the world’s fastest men’s 400-metre dash is 43.03 seconds…

Properties are selling faster than ever

Here’s the thing: chances are you won’t be the only one on the hunt for a bargain.

In fact, properties are selling at record speed at the moment, with the average number of days spent listed on real estate sites falling to an historic low of 32 days in May.

To help increase your chances of securing a property in this hot market, it’s a good idea to explore your borrowing options early.

So if you’d like to find out more about what you need to do to help make your home-ownership dreams a reality, get in touch today. We’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.