Adopt these 'healthy' practices to get your cash flowing:  

1. Profit margins: with the current ever-increasing costs of doing business, it’s critical to have true-cost pricing. Don’t let your profit margins be eaten away. 

Tip: Regularly check the cost of goods and products and determine realistic profit margins by setting prices not too low or too high. Pricing points are needed to keep you competitive and in the red. Offer value for money and your customers will keep coming back! 

2. Overdue payments - monies due to you: Slow and late payments pose the greatest risk to small Business. Cash in keeps the money flow flowing, without it the cash river dries up! 

Tip: Have an efficient invoicing and billing system in place, one that generates accounts at point of sale and offers various payment methods. Electronic systems can also monitor receipts and overdue accounts allowing you to better manage and avoid late payments. Keep on top of your debtor's ledger, remember you are running a Business, it's your livelihood.  

3. Personal and Business financial matters: Mixing money, personal and Company transactions is fraught with danger, including relationship friction and can easily lead to ‘robbing Peter to pay Paul’! 

Tip: Keep separate systems and records and avoid ‘borrowing’ from either.  Makes it simpler for all concerned including for providing true and accurate Business financial reports, taxes and audits. 

The tell-tale warning signs of trouble are there, but perhaps you don’t see them or more critically you ignore them. Either way, if you don’t take action to remedy the situation your Business will suffer, be severely damaged and even fail.  

The 4 warning signs of trouble include: 

1. Poor cashflow 

2. Weakening financial position 

3. Not keeping up with compliance obligations 

4. Changes in customer behaviour 

1. Poor Cash Flow 

Signs such as, 

• You have a cash deficit, or you are unaware of your cashflow position 

• Creditor/customer payments are late or irregular 

• Payments to suppliers are unreliable or you struggle to pay 

• Profits are low despite a healthy turnover rate 

What you can do, possible remedies. 

Starts with improving your cashflow management and starts with the following steps; 

• Set up a cashflow forecast and closely monitor it 

• Chase up late payments and any monies owed to you 

• Establish/review Terms & Conditions for Customer payments & credit 

• Review your operating costs across all areas to find opportunities to reduce outgoings 

• Seek expert advice from an experienced Accountant. Blackburn Accounting your family Business Specialists, offers a broad range of personalized professional services.  Act now, contact the Team today. 

2. Weakening Financial Position 

The crux of the matter, simply said, without sufficient funds your Business will no longer be able to continue operating or trading. 

Warning signs include

Are you struggling with the challenges of managing your cashflow?

You are not alone, with a recent survey revealing, ‘nearly 80% of small to medium Businesses have experienced a lack of cashflow in the past 12months.’ Many, a quarter, survived by not paying themselves a salary or dipping into personal savings.   

Yes, running a successful Business isn’t easy, it takes courage and a range of skills to stay on top of things. It's weathering the ‘storms’, complexities and demands of everyday operations, including customer relations, Suppliers, and sales! Sound familiar! 

The key to success is Cashflow, the amount of money going in and out of your Business.  In today’s trading environment this flow has never been more important, vital if you are to remain financially stable.  

To tackle cashflow challenges Businesses need to adopt 'sound' business strategies to keep the cash flowing now and to be better prepared for future challenges.   

Firstly, let’s look at Cashflow, what it is and how it impacts your Business  

Cash flowing-in is usually the money you get from sales but can also include sale of assets, grants or money from debt repayments. 

Your outgoings include; wages, rent, maintenance, payments to suppliers and loan repayments. 

Common flow causes include: 

Declining revenue, inaccurate forecasting, low profit margins, lengthy payment terms and supply chain issues. Examples include; 

• High overhead expenses: Having high administrative costs that support company functions but don't generate funds returns eg rent increases due to inflation 

• Expensive debt: poor debt management practices or taking on too much debt or extending credit card debts

• Inadequate cash reserves: little or no backup cash on hand to cover emergencies and lean periods  

• Seasonal fluctuations: Having seasonal highs and lows in sales, which can lead to extra costs like hiring more staff or buying more stock 

• Excess inventory: Having excess stock reserves you can't sell, which ties up cash  

• Decreasing sales: Selling products or services at low prices or offering discounts that reduce profit margins  

• Slow payments: Receiving late or slow payments from customers, which means you've already paid for production but haven't been paid yet. 
• Capital Expenditure: Upcoming fitout or new office fitout costs and new machinery acquisition's have significant impact on your cashflow

Impact on Operations and Growth 

Business viability and sustainability, loss of confidence, yours and others, poor staff morale, operational inefficiencies and investment limitations. Simply put your Business is, is stifled and stymied and at risk of sinking. 

These are the symptoms and causes of unhealthy cashflow, for remedies check our '8 Tips & Strategies' 

Develop your Business Plan.  

Whether you are starting a Business or if you are already running one, it is essential to have a Business Plan. It’s vital to your success!  Without it direction and decisions can lack foresight and insight, operating like a ship without a rudder!  

Why is it important? Reasons include: 

• Clearly defines your objectives  

• Gives you and your Business direction 

• Guides and maps out how you will achieve your goals 

• Helps you identify and manage potential risks 

Other benefits:

Running a Business as you know presents challenges and complexities none more than in our current economic environment. Inflation and market uncertainty are around every corner. 

You have enough to deal with!  

Do what you do best, manage your Business and let us help with managing the behind scenes. 

Let Blackburn Accounting help take the worry out of juggling and managing the paperwork, balancing numbers, figures and meeting reporting obligations. We can help you understand your cashflow better, find possible improvements and explore efficiencies.

Blackburn Accouning is your family Business specialists offering a range of services including Business Development, Taxation and Strategic Planning.  

Personal and Business Financial matters:

Mixing money, personal and Company transactions is fraught with danger, including relationship friction and can easily lead to ‘robbing Peter to pay Paul’!

And it is easy to fall into the trap of thinking it's all the same money, same interests but that is a slippery slope, particularly when the 'chips are down'.  Moving money, shuffling IOU's and broken promises is a recipe for disaster!   

Tips:

• Personal and Business matters are different matters.

• Keep separate systems and records and avoid ‘borrowing’ from either. 

• Adopting these practices makes it simpler for all concerned including for providing true and accurate Business financial reports, taxes and audits. 

• Supports transparency of operations. 

Do you feel like your Business is sinking?  

Are you drowning in paperwork, bills piling up?   

Running a Business, getting on top of financial matters, can wear you down and at times be overwhelming. Not good with numbers, always juggling accounts. Is that you?  

Don’t despair; there are solutions at hand. 

Seek Professional advice. Contact Blackburn Accounting, we are your Family Business Specialists. We offer; 

• personalized accounting 

• help manage cashflow 

• taxation minimization 

• bookkeeping services 

• assist with strategic planning and more! 

Cashflow Strategy No. 9 

Do you have Cashflow that isn’t flowing?  

Are you ignoring it, or robbing Peter to pay Paul and hoping the problem will go away? None of those solves it, as you have probably found.  

What to do! 

1. Acknowledging there is a cashflow problem, that is the first step! 

2. The second step is to take action and seek professional Business advice. 

3. Next, contact Blackburn Accounting, we offer an individualized service that helps you get and keep on top of your cashflow.  Let us help you address and solve your problems.

Assets usually cost a lot. Think of machinery, equipment, vehicles, and property; all these are expensive items.  

If you are not using them to full advantage, it’s worth considering if you can put that money to better, more effective use. 

For example: 

• Do you have assets no longer in use that you could sell to bring in cash?  

• Consider leasing or hiring equipment if that is better value, particularly if it is only needed for a short time or specific job.   

• Do you have the best finance deal if you are buying your assets? Is refinancing an option to explore? 

Do you need help with making your dollar work best for you, running your Business to full capacity, and meeting the bottom line? Blackburn Accounting is your Family Business Specialists, we offer an individualised service that helps you keep on top of your cashflow, assists in strategic planning and develops your business capacity for growth and expansion. Contact us today; we are available to offer solutions. 

Employing the right people at the right time helps support you and your Business development. It helps set you and your Business up for success. 

Do your recruitment homework!.  

• Before hiring do your research and sums. What are the total costs, and implications including their entitlements, pay rates etc. Ensure you match your Business needs, and employment costs to their skills, abilities and productivity. Make sure all the ducks line up. 

• Be flexible with employment arrangements and options. Roster to peak periods, consider employment options, casual, or permanent to suit your needs. Is outsourcing viable or practical for some tasks?  

• Develop ‘good’ staff.

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Worth repeating, the importance of factoring in the true costs of doing business, particularly amid a time of ever-increasing Business expenses.  

Be aware that trying to absorb the costs of rising interest rates, fuel shortages, and out-of-control inflationary pressures can leave you financially disadvantaged and cash-strapped. 

Tips: 

• Regularly check the cost of goods, products, and services to determine realistic profit margins and set prices neither too low or too high.  

• Pricing points are needed to keep you competitive and, in the red.  

• Communicate and be transparent with your customers, offer value for money, and they will keep coming back. 

High overheads:

How much does it cost to run your Business?

That is those costs not directly related to selling your goods, products or services. Costs such as utilities, rent and office equipment are some examples.  You may have others.

Tips:  

• To get on top of this, undertake an audit to establish what you have, what is needed, and what works. Keep, recycle, chuck! 

• Assess, determine if there are any cost-saving measures that can be introduced. Paperless systems, utility gas and electric efficiencies can be investigated without compromising Business operations.Look around you might find more!   

• Investigate vacant, underused space (floor or outdoor). Can it be leased out to generate revenue to counter expenses! 

• Review your telephone systems, digital online phone systems may be more cost-effective.

Bad Debts: 

These occur when clients or customers don’t pay their due accounts, going beyond the terms of credit. These are monies owed to you for services or goods already provided. 

Tips: 

• Help avoid bad debts by reviewing the credit rating of your clients before offering extended terms.  

• Work with new clients to establish credit ratings and performance before entering credit arrangements. 

• Adopt a Debt Management Strategy to better monitor and manage accounts. This scrutiny can help prevent debts from becoming bad debts. 

• Take any necessary recovery as required.  

• Remember that you are running a business. Failure to manage or recover debts can hijack your cash flow and business success. 

Cashflow Management

Proactive Financial management is key to keeping your Business in a healthy financially viable state. Hoping things will solve themselves isn't the answer nor is avoiding the issue.  

Tips:

• Set up a Cash management system that includes budgeting, forecasting and financial planning.
• Ideally implement automated payment and processing options.
• Monitor your cashflow diligently and regularly. Daily if needed.
• Seek expert help if required.
• These measures can help small Business foresee future obstacles by predicting cashflow crunch periods.
• This allows Business to build up cash buffers in advance.
• Contact Blackburn Accounting to assist.

Strategy No.2

Overdue payments - monies due, owed to you:

Slow and late payments pose the greatest risk to Small Business. Cash in keeps the money flowing, without it the cash river dries up! and so can your Business.

Tips:

• Have an efficient invoicing and billing system in place, one that generates accounts at the point of sale

• Offers a variety of payment methods and options.

• Electronic systems can also monitor receipts and overdue accounts allowing you to better manage and avoid late payments.

• Keep on top of your debtor's ledger, remember you are running a Business, it's your livelihood.

• Keep in communication - ask for a payment plan or set up a payment plan

Strategy 6: Excess Stock 

How often do you review your stores and stock?

Are you holding too much including old, discontinued or slow selling items? 

Tips:  

• Take stock of all your reserves 

• To reduce or shift, consider offering discounts for bulk orders 

• Use online promotions such as auctions to clear stock 

• Monitor sales to track flow and movement 

• Undertake regular inventory stock-takes to keep on top of supplies & stores 

Most Small Businesses will experience ‘cashflow challenges’ those times when the sea of money seems to be adrift, with more money going out of the Business than there is cash coming in! 

If this sounds familiar you are not alone with ‘92% of Australian small Businesses experiencing negative cashflow with owners struggling to pay essential costs such as rent and wages’ (Insight report July 2022). This is financial pressure small Business doesn’t need!

The good news is that there are ways to help stay afloat! With foresight and adopting sound financial management strategies some common mistakes can be avoided and obstacles overcome.

  Here are some common challenges with our Top Tips to help you overcome them!

1. Profit margins: Particularly relevant in the current inflationary spiraling pricing cycle, it’s critical to have true-cost pricing. Don’t let your profit margins be eaten away by increasing costs.

 Tip: Regularly check the cost of goods and products and determine realistic profit margins by setting prices not too low or too high. Pricing points are needed to keep you competitive and in the red. Offer value for money and your customers will keep coming back!

2. Overdue payments: monies due to you: Slow and late payments pose the greatest risk to small Business. Cash in keeps the money flow flowing, without it the cash river dries up!

Tip: Have an efficient invoicing and billing system in place, one that generates accounts at point of sale and offers various payment methods. Electronic systems can also monitor receipts and overdue accounts allowing you to better manage and avoid late payments. Keep on top of your debtors ledger, remember you are running a Business. 

3. Personal and Business financial matters: Mixing money, personal and Company transactions is fraught with danger, including relationship friction and can easily lead to ‘robbing Peter to pay Paul’!

 Tip: Keep separate systems and records and avoid ‘borrowing’ from either.  Makes it simpler for all concerned including for providing true and accurate Business financial reports, taxes and audits.

The festivities are over, decorations packed away, the relatives have left, and the last of the Christmas cake is eaten! It’s time to sit back, relax, and take a break. 

But are you one of the many now dealing with a festive debt hangover?

Yes! In the excitement, the spirit of giving and spending, you have built up a sizeable debt. An amount that may take months or even longer to pay off. It's enough to give you a throbbing headache!

Additionally, in a time of cost-of-living pressures, there is no escape from stretching the dollar, trying to do more with less! 

You are not alone! But that is no consolation! If you are struggling to make ends meet, you may be feeling overwhelmed, causing a strain on your health, wallet and often relationships.  

And with the arrival of bills, particularly those highlighting accounts outstanding, now overdue, ‘pay to avoid legal action’, it’s time to find solutions for dealing with your festive hangover. Consider these 6 Steps to Recovery 

1. Get help if needed: Feeling daunted, stressed, and need advice. Contact a professional financial advisor. They have the expertise to guide and support you. Don’t wait until Debt collectors are knocking on your door. 

2. Consolidate your debts: if you are juggling multiple accounts, debts, consolidation may be an option. For example, with several credit cards there might be the opportunity to move balances into one. Speak with your providers to see what deals are available. 

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In your way, there they are Roadblocks, barriers and obstructions, holding you back, stopping you from achieving the success you and your Business deserve!

You may be feeling such obstacles are insurmountable and too difficult to deal with.  You are daunted, overwhelmed and even exhausted trying to find answers! 

But don’t give up, there are strategies you can adopt to overcome them. You can achieve the success you deserve!  

 READ on, to learn how you can bypass Roadblocks to achieve your Business Success. 

Let’s get started by looking at some possible Roadblocks  

• Cashflow challenges
• Under utilising resources
• Lack of confidence
• No Marketing Plan
• Poor Customer Service
• Time

Are these familiar to you? 

Yes! Check these 6 Tips 'how to get around them'. 

 1. Cashflow Challenges:

A barrier for many small Businesses, you find you are robbing Peter to pay Paul, and with no Financial Plan or Strategy you are operating on the edge. Stressful and often nail-biting times.

To overcome this barrier 

Simply put, ‘good supplier and customer management will ensure you have a consistent flow of money coming in from sales to be able to pay your bills’. And don’t we all want that? 

There are ‘9 Ways to Help get your Cash Flow flowing’! Click on the link......... https://blackburnaccounting.com.au/blog.

2. Under utilising Resources: 

This can be both human resources and equipment that are available but not fully utilised or employed efficiently to maximum capacity and capability.  Employees lacking training, or without empowerment are wasted resources. Equipment may be in need of upgrade or repair. In this situation, productivity is compromised.

To remove this obstacle 

Read on for our 7 Top Tips to help you take ‘good’ care of your Cashflow!  

Cashflow, the lifeline of your Business, keeping it flowing is critical if you are to succeed, more importantly, survive during these inflationary times, with cost-of-living pressures and higher interest rates eating into profits and for some, viability. 

If you are a small Business you may be already feeling this pain. 

For example, a recent survey found cashflow problems are already affecting two in five small Businesses, with $23,000 owed in unpaid invoices. Additionally, they often relied on personal funds as backup.  

Are you one of those Businesses? 

On that note, Small Businesses are being alerted to the need to stay on top of their Business ‘cashflow’ activities, specifically, debt management, your own and that of your Debtors. Key message, to carefully manage what’s coming in and going out! 

Its been said many times, running a Business, managing finances is challenging but don’t leave it to chance, or wishful thinking. 

Read our 7 Top Tips to help you take 'good' care of your Cashflow:  

1. Avoid overdue payments 

Slow and late payments pose the greatest risk to small Business. In a tight economy, as we are now experiencing, keeping on top of invoicing and receivables is the difference in debt levels, what you are owed. 

Tip: It’s essential to have a streamlined collection model in place, ideally one that prompts and collects payments rather than chasing them as overdue.  

For example, electronic systems can monitor receipts and overdue accounts allowing you to better manage and avoid late payments. These invoicing and billing systems can also generate accounts at point of sale and offer various payment methods, including upfront deposits or advances. Remember you are running a Business that supports you financially. 

An example, where you must outlay for goods, invoice clients prior to making an order rather than tapping into your finances (example, interior decorating). 

2. Pricing margins  

It’s vital to monitor pricing/ profit, margins particularly in the current inflationary cycle. It’s critical to have true-cost pricing, you can’t keep absorbing increases, letting your profit margins be eaten away. Be diligent in keeping watch on this cycle.

Tip: Regularly check the cost of goods and products and determine realistic profit margins by setting prices not too low or too high. Pricing points are needed to keep you competitive and in the red. Offer value for money and your customers will keep coming back!