Eyes on cash flow over holiday season
(12 December 2011 – Australia) National Australia Bank (NAB) is reminding Australian businesses to take steps to ensure they effectively manage cash flow throughout the holiday season.
NAB business executive general manager Daryl Johnson said cash is like oxygen for business owners and keeping a close eye on cash flow is important.
"Mismanagement of cash flow can have dire consequences on businesses that are waiting for invoices to be paid, as how quickly cash is collected from debtors (or debtor days) pile up and costs continue to rise.
"It is also important to remember that managing cash flow does not just apply to those industries linked to consumer spending. Regardless of the sector, cash flow will be affected either directly or indirectly during the holiday season given many businesses trading hours are irregular and suppliers take a break.
"In light of this, there are some basic steps businesses can take now to ensure their cash flow is managed efficiently during busy periods to allow their business to grow," he said.
Top tips from the bank include accurate record keeping, developing and implementing solid collection plans, training staff to collect payments on time, understanding and negotiating invoice terms and offering easy payment options.
Johnson said these are all good ways to ensure customers pay their invoices on time and that cash flow is properly managed.
"Each additional day it takes a business to receive payment has a measurable financial impact. Australian businesses recently recorded one of its worst ever figures when it comes to paying their debts on time.
"Business owners who need extra help to get them through those debtor days should speak to their business banker about invoice financing options, which provide them with an agreed percentage of the value of an invoice immediately.
"But the most important thing to remember is that the more disciplined a business is in collecting debts, the more likely they are to be paid on time, helping to lower your costs and maximising cash flow," Johnson said.
"Mismanagement of cash flow can have dire consequences on businesses that are waiting for invoices to be paid, as how quickly cash is collected from debtors (or debtor days) pile up and costs continue to rise.
"It is also important to remember that managing cash flow does not just apply to those industries linked to consumer spending. Regardless of the sector, cash flow will be affected either directly or indirectly during the holiday season given many businesses trading hours are irregular and suppliers take a break.
"In light of this, there are some basic steps businesses can take now to ensure their cash flow is managed efficiently during busy periods to allow their business to grow," he said.
Top tips from the bank include accurate record keeping, developing and implementing solid collection plans, training staff to collect payments on time, understanding and negotiating invoice terms and offering easy payment options.
Johnson said these are all good ways to ensure customers pay their invoices on time and that cash flow is properly managed.
"Each additional day it takes a business to receive payment has a measurable financial impact. Australian businesses recently recorded one of its worst ever figures when it comes to paying their debts on time.
"Business owners who need extra help to get them through those debtor days should speak to their business banker about invoice financing options, which provide them with an agreed percentage of the value of an invoice immediately.
"But the most important thing to remember is that the more disciplined a business is in collecting debts, the more likely they are to be paid on time, helping to lower your costs and maximising cash flow," Johnson said.
Subscribe