The economic landscape has undergone a significant transformation this year, presenting unprecedented challenges for businesses as they seek to maintain financial stability amidst escalating costs.
Encouragingly, the Reserve Bank endeavours to mitigate inflationary pressures appear to be yielding positive results. There is an observable trend of price stabilisation, and interest rates have remained unchanged for the past two months. Nonetheless, both individuals and businesses have adopted a more conservative fiscal approach, which has reverberated across virtually every sector of the economy.
We’ve witnessed an upward trajectory of prices, however as recently reported by CreditorWatch, average invoice values have actually dropped by close to a third over the last twelve months. Because of this, business failure rates are predicted to rise by as much as 23 per cent in the next year. Meanwhile, credit enquiries, external administrations and court actions are all on the rise.
Many businesses are at a critical crossroads right now, hanging in the balance between survival and financial trouble. But the good news is, there are practical solutions available to help tackle these financial challenges and steer a path toward stability.
Three simple steps in times of cash flow uncertainty are:
Of course, all this is easier said than done! These tips will steer you in the right direction:
If you are unable to increase your prices, think about how you can offer more value by creating low effort and high return additional services.
You may also be losing money because of ‘maverick spending’ and team members failing to adhere to procurement policies. Smaller businesses can engage their accountants to conduct an expense review, while larger organisations may consider a more extensive analysis to pinpoint and rectify areas of excessive spending.
Advice for small businesses
There is no denying we are in complicated economic times. If cash flow and overdue accounts are an issue, get in touch with AFS & Associates today. We can help you identify the easy wins and help get your business back on track.