Small business owners are being warned to plan ahead for tight cash flow and less orders, as Australians reduce their spending, resulting from Christmas debt and back-to-school expenses which impacts their wallets, according to Roger Mendelson, CEO of Prushka Fast Debt Recovery.
He says small businesses should expect less income in February and early March as Australians recover from over spending during the summer break. “Many householders have gone into the month of February trying to pay off maxed-out credit cards, Christmas bills and unanticipated back-to-school costs,” he adds. “Many consumers just don’t have cash to spare at this time and this has a flow-on effect for businesses which expect a slump in sales for February and March”.
“Many SMEs don’t account for this February slowdown which results in what I call ‘Graveyard Month’; the period from late February to early March which is the most common time for businesses to enter a period of terminal decline”, he adds.
The Australian Securities and Investment Commission figures demonstrates that more than 1,600 businesses faced external administration in February and March in 2016. Mr Mendelson warns businesses that aren’t making the appropriate moves to secure their cash flow could find themselves in trouble by the end of February.
“Years ago, banks would often play a vital role in smoothing cash flow during this time by providing unsecured loans. Today, this is no longer the case. The banks aren’t interested unless the application is backed by real estate security,” he said. Mr Mendelson strongly recommends business owners not to ignore the possibility of a slowdown, but to properly budget for the month of February, so that supplier costs don’t go unpaid.
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https://www.kochiesbusinessbuilders.com.au/small-business-cash-flow-crisis-costing-australian-economy-76-billion/
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