Delayed invoice payment is one of the biggest issues facing Australian small and medium enterprises (SMEs) this new financial year.

Uncertainty about economic conditions, supply chain issues, cost of materials, and lack of access to additional funds are just some of the factors hampering general business activity according to the Australian Bureau of Statistics.[1]

These factors are slowing invoice payments, with delayed payments impacting cash flow for small businesses at a higher rate than larger operations. SME operators, who are generally accepting of already lengthy 90 and 120-day payment terms, are now waiting even longer if invoice payments are delayed.

These conditions are strangling SMEs. Our internal research shows SME customers chasing invoice payments to maintain cash flow as their main business concern prior to seeking finance products.

To combat slow invoice payment and improve cashflow, SMEs can tighten their own internal processes and also seek external assistance to ensure their business activity is not negatively impacted in FY23-24.

15% of businesses reported having sought debt or equity finance[2] and debtor finance is one financial product which can alleviate small and medium businesses cash flow issues.

If a business’ cash is tied up in outstanding invoices, debtor finance helps free up cash by supplying up to 100% of invoices as soon as they are raised, instead of waiting 90 or 120 days, or more, for payment.

Debtor finance can be used for better cash flow management, realising the full value of customer invoices, paying salaries, paying suppliers, and investing in growth opportunities. Moneytech’s straightforward, simplified approach to business lending ensures customers can invest in their businesses’ growth and development.

With poor cash flow and insufficient collateral or security being two of the top three barriers to accessing finance[3], many SME operators are dipping into their personal savings or mortgage to cover business costs.  Moneytech’s products generally take no security against primary places of residence giving business owners the ability to separate business and personal assets.

For businesses facing slow invoice payment, here are my top tips for businesses owners to consider for effective planning around the new financial year and identifying any potential cash flow hurdles.

  1. Assess finance

By outsourcing an independent accountant to do an in-depth analysis of the business’ finance, business owners can gain a fresh perspective of their finances. Using a strategic budget can also help predict the financial implications for the upcoming year and may identify new opportunities for business growth. The budget should include financial forecasts including profit and loss, balance sheet and cash flow statements.

2. Reassess strategic plan

Reviewing the business’ short-term and long-term goals can help evaluate the current strategy in place and ensure they are aligned. Undertaking a situational and SWOT analysis can be of use, especially if you leverage customer’s feedback as a starting point for developing solutions to meet customer feedback. The key is to keep any plan flexible so your business can adapt to any changes in the environment and make the most of potential opportunities.

3. Utilise a sustainable cash flow option

SMEs struggling with cash flow, should consider both immediate and long-term support. Moneytech’s trade and debtor finance solution frees up a business’ cash flow tied up in outstanding invoices to be redirected towards staff wages, equipment or stock. 

Nick McGrath is CEO of Moneytech.