While there’s no one-size-fits-all approach to fixing cash-flow problems, the pressures will only mount if you don’t have a flexible solve. “Borrowing for cash flow is a good way to keep your business running smoothly and to ensure you capitalise on any growth opportunities that may arise, like staff recruitment or a new product line,” says CommBank’s General Manager of Working Capital Elizabeth Huxley. Understanding your options is the first step in helping your business succeed.
Stop borrowing from yourself
Dipping into personal savings to prop up your business is risky – it can lead to tangled finances and messy tax returns. “There can be a stigma associated with needing cash-flow support,” says Huxley. “It can be seen as complex and expensive but solving your cash-flow gap is key to being able to make business decisions.” And the right lending can provide the injection of cash required to keep your business moving while still planning for growth.
Get access to the cash you need for new equipment
It’s a common story: to grow your business you need to invest in new equipment – be it vehicles, IT resources or manufacturing tools. Businesses often pay for these in cash, resulting in a cash-flow crunch. Instead, consider asset finance. This is a loan secured against the equipment you buy and is an approach that can free up cash flow for where you need it most.
Have a solid back-up plan for unexpected costs
No-one wants to think about their business being in dire straits but miss a couple of payments and things can get out of hand. One way to safeguard against this is with a business overdraft that kicks in if your bank account falls to zero. It’s best to think about this as an emergency plan. Another option is to keep some cash in a rainy-day fund.
Unlock cash in unpaid invoices as soon as you send them
Waiting on invoices to be paid with overheads rising is tough. Enter CommBank’s Stream Working Capital, which allows you to borrow against the value of outstanding invoices so your business can keep running as usual until the money comes in. Simply connect an eligible accounting software and when invoices are paid, the balance of your loan will automatically adjust. “Stream allows customers to access funding in an easy and digital way without the need for bricks-and-mortar security,” says Huxley.
Cash-flow basics
Tap business cash flow in the CommBank app
This is a snapshot of your incomings and outgoings in eligible accounts for the current month.
Build a buffer
Many bills are predictable (like GST and tax). Set aside money for these.
Check your invoice terms
If you often find yourself waiting to be paid, check that your invoice payment terms are right for you.
Review expenses
These can creep up. Keep an eye on expenses so you know where money is going.
