The New Year Cashflow Crisis
- Posted by Duografik
- On January 14, 2020
- 0 Comments
- cashflow, cashflow finance, customer invoice finance, holiday season, Small business
A warehouse without stock, a bank account without cash, a big December quarter BAS and January PAYG – all due at the same time.
Your sales leading to the end of the year were good. You cleared a lot of stock. You need to order more stock now but paying for this and the taxes is leading to a major cashflow crisis. Does this sound familiar?
This is the most predictable cashflow crisis of the year, yet so many businesses are unprepared for it. A week or two into January you look to order as you normally would because you have very limited stock after Christmas. So now you need to order more. The problem is that you have not yet been paid for your pre-Christmas sales.
So, its time to get on the phone to see if you can get some money in from your customers. The only problem is, they are going through the same crisis.
What can you do now?
As this is a very predictable, reoccurring crisis, there is no excuse for not seeing it coming. The problem is what to do about it. You can go back to your bank and see if you can increase your overdraft. In the time they take to approve anything the crisis will have already happened. And, you only need help for the next two or three months, then you will be back on track.
Pull money out of the mortgage? Try to get another business loan? Or do you just suck it up and not order enough stock for the next two months to pay BAS. This leaves you missing out on sales and not servicing your clients to the best of your ability.
The answer, of course, is to use your sales in November and December to fund your purchase in January and February. So how do you do that when you won’t get paid by customers for another six to eight weeks or more?
This is the ideal situation for Customer Invoice Finance. That is, access the money that is already owing to you based on the invoices you have already sent out. AddCash is a Customer Invoice Finance company that will finance your business based on your sales invoices. Up to 80% of the value of your invoices can be used right now, straight after the sale is made.
It just makes sense.
You have already made the sales and the reason you do not have enough stock or enough money is that you have been so successful in selling. Using this success to fund your next purchase makes good sense. And that is why Customer Invoice Finance makes good sense.
Great for the future.
Using your sales success to fund your future success is a very resourceful principle to establish. Realising that you can make as many sales as you like without running out of funding is a powerful concept to master. Not only can it get you through a cashflow crisis like the new year, but it can also give you the confidence to chase new customers knowing that you will be able to fund your sales growth.