Why SMEs End up in Financial Headlocks


      Author: Bill Sparksman

      When starting a business distressing thoughts can pass through the mind of any entrepreneur. But like all aspiring business owners their eagerness to test the waters overrides their doubts.

      In the beginning pitching customers feels like accidentally diving into the shallow end of a pool head first. A triumph of finesse if you surface unscathed.. Which usually isn’t the case. The constant “No thank you’s” and the occasional “f@*k off” help sort the hard-nosed from the faint-hearted in sales. All too quickly, the thinner skinned business owners are eradicated, leaving behind those who are both emotionally and financially invested in their idea.

      After commencing trading owners face a competitive and unforgiving process in the first three years, which entails etching their product and brand into a position of relevance in the market. During this time self-belief and faith in their product is vital, as well as a good business plan and solid finance. The issue of cash flow and finance is often overlooked in the honeymoon phase of establishing a business, but no doubt it should be one of the first considerations for any new business.

      According to ASIC, an astounding 40% of small businesses will cease trading because of inadequate cash-flow. A statistic which is thrown at most aspiring business owners regularly. Which prompts anyone to think surely a 40% hit rate because of poor cash-flow must be an exaggeration, particularly in 2018, when an average 48 hour turn around on Invoice Finance approvals is heavily advertised on every corner of the internet – (Invoice Finance is selling an invoice to get 85% of its value in 4 hours, with the remaining 15% released when the bill is settled, minus a small fee).

      Which begs the question, if products like Invoice Finance exist, why are cash flow inadequacies so common for SMEs?


      Despite quick access to finance being available, the solution many business owners prefer to apply is to devote hours every week to chasing up outstanding invoices. The unfortunate truth is, most B2B customers sport an exhaustive list of excuses as to why they can’t pay within the agreed terms. And not even a crystal ball could predict when they will pay, if ever.

      In the mean time carrying the financial burden of months of unpaid invoices can become a risky juggling act which breeds an attitude of “We’ll just have to make do with what we have”. This mentality within a business creates uncertainty when taking on new opportunities, new staff and paying expenses, ultimately leading to the demise of many small businesses in Australia.

      At Invoice Compare.com, we frequently deal with business owners who face cash flow problems. We are passionate about countering Australia’s late-payment epidemic by releasing the cash tied up in our clients unpaid invoices.

      Our service is FREE, and we help you to compare costs to find the best deal to suit your business. To get in contact and be relieved of your future financial stress, please call us on: 0422 147 345 or email us at bill@compareloanz.com

      Alternately, visit www.compareloanz.com to see how we work.