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Accurately Forecasting Your Cash Flow for the Year Ahead


You’ve probably heard the phrase ‘cash flow is king’ and with tough economic times for many Australian SME’s never has this been more true. Cash flow is what separates a thriving business from one struggling to stay afloat. 

It encompasses all revenue generation, operational expenses and investment activities. Businesses that manage their cash flow efficiently ensure more cash is entering the business than leaving it which enables them to grow and expand. 

Get a Cash Flow Plan 

With the start of 2024 it’s important SME owners have a plan in place for their cash flow so they can invest in new growth opportunities, expand operations, acquire assets and explore strategic developments. Cash flow allows owners to realise their business goals but it’s important to have an accurate forecast. 

Accurate cash flow forecasting is the foundation of sound and comprehensive management. It involves predicting future cash inflows and outflows so owners know when to expect periods of surplus and shortfalls and can implement strategies to navigate the challenging times. 

Where it Goes Wrong 

It’s a tough time for SME’s at the moment. Rising overheads, supply chain issues, high staff turnover and rising interest rates – it’s no wonder many are struggling with the day to day running costs.  

Some of top mistakes small businesses make when it comes to cash flow include

  • Failing to manage payment delays
  • Expanding too quickly without enough working capital
  • Poor inventory management
  • Failing to generate new sales leads 

Get Help 

Whilst many businesses strive to reduce the time between invoicing customers and receiving payments to ensure positive cash flow this can become tough when some customers take up to 60 days to settle accounts.  

Invoice financing, which is widely used by business owners in the US, UK and Europe is becoming more popular here in Australia and allows a business owner to unlock the cash that’s tied up in their unpaid invoices, providing a line of credit secured by the Accounts Receivables ledger. The financier gets paid when the debtor makes payment so there are no repayments to be made. Typically, businesses can access up to 90% of the sale value of an invoice whilst continuing to offer credit terms to customers. 

It’s an option worth looking into if you are a B2B business. 

Have a Back Up Plan 

Lastly it’s important to have a contingency plan in place. Know what resources are available to you if unexpected challenges come your way. Some businesses have an emergency cash reserve to cope with economic downturns or supply chain disruptions, others have assets they can quickly convert to cash, and others feel secure having an invoice financing facility in place. 

Whatever challenges lie ahead for your business in 2024 going into the new year with a focus on maintaining positive cash flow puts you in the best position for growth and achieving your goals. 

About Angus Sedgwick 

Angus Sedgwick is the CEO of OptiPay, formerly TIM Finance, which provides Australian SMB businesses cash flow they need to grow. Funding solutions include invoice finance, trade finance inventory finance and lines of credit.  Their range of fast, flexible and affordable financing solutions help businesses solve their cash flow challenges, without the need for property security. Find out more at https://optipay.com.au

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