Safeguard Your Cash Flow: A Holiday Season Alert for Businesses

Angela McDonald, Managing Director - Optimum Recoveries

Image: Optimum Recoveries

As the holiday season approaches, businesses often face several challenges, particularly concerning cash flow and late payments. This year, the situation is even more challenging due to significant shifts in the economic landscape. In these times, it's important to remember that 'prevention is better than cure’.

Rising Labour Costs and Lower Consumption

The Australian labour market has tightened, and wages have continued to rise over the past 12 months. While higher wages can be a positive for workers, it puts additional strain on business budgets. Simultaneously, higher interest rates have led to lower consumer spending, making it even harder for businesses to maintain a healthy cash flow.

Payment Delays Are on the Rise

The average wait time for small businesses to receive payment has increased to 23.1 days—an alarming jump of 6.8 days since the previous month. Longer wait times can lead to disruptions, especially if your business operates on tight margins.

Decline in Invoice Value and Increased Insolvency Risk

According to CreditorWatch data, the average invoice value has dropped by 28% year-on-year, squeezing businesses between rising demand and cost pressures. With external administrations rising by 10% and Southeast Queensland possessing one of the highest insolvency risk rates, vigilance is more crucial than ever.

Steps for Protecting Your Business

So what can be done? First, review your contracts and payment terms to ensure you're protecting your business as much as possible. Credit check your customers and take the opportunity to apply a 12 month monitor also – this will highlight any slow payment trends or negative payment behaviours that could impact your business.

 Diversify your income streams, and don't shy away from seeking financial advice. Daily  invoicing and follow-ups can also go a long way in ensuring you get paid on time.

Act Now, Before It’s Too Late

The challenges in managing late payments are not going to get easier, especially as we head into the Christmas period. Optimum Recoveries specialises in a relationship-based, humanistic approach to debt recovery. With a focus on preventive strategies, we can help you navigate the complex terrain of cash flow management, freeing you up to focus on your business.

If you wish to learn more about safeguarding your business finances this holiday season, don't hesitate to reach out to us. Your business's financial health is too important to be left to chance. Take control today and contact Optimum Recoveries for expert advice on debt prevention and cash flow management.

For more information, visit Optimum Recoveries. or contact Angela or Michael directly on P: 07 3166 8888

Stay vigilant and protect your business — it's the best gift you can give yourself this Christmas.

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