Support for small businesses in managing cash flow
May 2024
RDA Yorke and Mid North is encouraging all small and medium businesses to think about how they manage their cash flow, with recent data 40 per cent of industry outreach respondents citing cost and margin pressures negatively impacting their business.
The combination of businesses coming off fixed-term lending arrangements over the last 6 – 12 months and moving on to higher variable rate lending, at the same time as cost escalation has hit businesses’ input costs and inflation is weighing on consumers, is weighing on many small and medium-sized businesses across South Australia.
“Through the data gathered via the RDA Yorke and Mid North Industry Outreach program, we’re seeing 40 per cent of businesses cite cost pressures as a key challenge for their business since January 2024. We want to encourage all small and medium-sized businesses to remain active in planning and monitoring their cash flow to ensure they are able to continue trading successfully through some fairly tough trading conditions.” said RDA Yorke and Mid North CEO Daniel Willson.
“We know the operators of these businesses have been working incredibly hard in their businesses since the COVID pandemic and through some really challenging labour market conditions. We would hate to see these operators, their businesses and staff to have all that hard work come unstuck due to avoidable mistakes around aligning the timing of their payments, or suffering from margin squeeze where they simply run out of cash rather than customers.” said Mr Willson.
“Our operators are highly capable and committed business people, but even the best operators need to take the time to plan and measure their cash flow to ensure they’re able to manage their solvency so they’re able to continue trading, and position for growth opportunities in the future.”
RDA Yorke and Mid North is encouraging all business owners and operators to ensure they are consistently and regularly reviewing their cash flow management, with staff available to help businesses connect with resources and expertise to help them in doing so.
There is a wide range of useful resources published by organisations such as the Australian Government’s business.gov.au website and the South Australian Government’s Office for Small and Family Business to assist business owners and operators to proactively manage cash flow effectively.
Key tips for managing business cash flow include:
Plan your cash flow
- Have a clear sense of the timing and scale of cash receipts and payments to ensure you are able to align payments and receipts, or to maintain cash balances to cover differences. Understanding your cash flow ensures you are able to meet obligations are they become due.
Maintain and review financial records
- Keeping accurate and contemporary records helps you to make properly informed decisions about managing your cash flow in a timely fashion.
Budget provisions to have money set aside when you need it
- Having planned your cash flows, setting money aside to meet payment obligations as required is helpful.
Adapt as required
- As you monitor cash flows, be prepared to change the way you manage payments and receipts to ensure you are able to manage your liabilities and cash balances effectively. Examples include delaying or prioritising discretionary spending, seeking to extend payment or repayment terms for trade creditors and lenders, managing inventory levels, or changing your invoicing cycles to bring more regular cash payments in.
Review as you go
- Consistently review your approach to managing cash flows, and speak with your advisers and other reliable sources of information to help you stay on track. Every business benefits from speaking with people who can help them make better decisions, so do not be shy about asking for help.
For more detailed and personalised support, RDA Yorke and Mid North’s B2B program (funded by the State Government’s Office for Small and Family Businesses) provides local businesses with heavily subsidised access to a range of expert business support services including cash flow management, and is available to help small businesses owners and operators to work on their business.
For more information, please contact:
Daniel Willson
E: ce*@yo**************.au
M: 0488 557 656
