23rd May, 2022
The ability to receive cash for yet-to-be-paid invoices is making cashflow management easier for business owners this end of financial year.
With the amount of debt owed to the Australian Tax Office (ATO) having grown of the past year, savvy business operators are looking for more ways to better manage their cashflow.
Traditionally, good cashflow management means making sure there’s a net positive amount of money flowing into the business, but as market volatility continues to hit hard, this isn’t as straightforward as following up on unpaid invoices.
When customers are slow to pay due to their own cashflow problems, this puts pressure back on your business. To counter this, invoice financing such as that offered by Butn essentially provides business operators a line of credit against those unpaid invoices.
Coming out of lockdowns and weathering the impacts of natural disasters has made MYOB customers like Carolyn Claridge, Director of Finest Compliance familiar with cutting edge cashflow management techniques.
As a safety and compliance consultant working with civil construction companies, her business has been hit hard by the knock-on impacts of business shutdowns and rising supply chain costs.
“Everything took a bit of a backseat under COVID,” Claridge recently informed us. “At one stage I thought I was going to have to fold, but I managed to stick it out in the end.
“There was plenty of scrimping and saving, but we’re finally beginning to see the light at the end of that long tunnel.”
Employing two of her daughters in her business, Claridge was forced to look towards JobKeeper as one way to paper over the gaps in business revenue during those lean times, but ongoing market volatility has placed continued pressure on her clients, and that had a direct impact on her revenue.
“My clients were having to put off their own trainers and assessors, and I had clients ringing me crying saying ‘I don’t know what to do!’.
“I couldn’t invoice many of them knowing they were having to stand down their staff, so I spent plenty of time consoling and consulting over the phone or on video chat – but I couldn’t charge for any of that.”
As a result, Finest Compliance was facing a challenge resulting from constrained cashflow. And, with the money owing to the ATO, Claridge needed a solution that could help her stay ahead of her bills.
“My clients had gone from paying in seven days to 30 days and it stayed like that.
“That’s a big hit with me trying to get money in every week so that I can keep the lights on.”
Luckily, Claridge had already become aware of Butn’s offering from within her MYOB platform.
“After doing a little research on Butn, I took the leap to click the invoice financing link in MYOB.
“After chatting about it with my daughters, we’d decided we’d only use it on larger invoices from clients we know would pay but were unlikely to pay very quickly.”
Claridge’s first experience using invoice financing with Butn was on a $3,500 invoice.
“I clicked the link and filled out a form and, honestly, by close of business that same afternoon the money arrived in my account.”
CEO of Butn, Rael Ross said this was an increasingly common experience for business operators seeking new solutions to cashflow woes.
“We see many clients chasing a standard business loan, then realising once they have the loan and they get another order of goods or services, they have run out of money (even after the previous loan), they can’t fund it and are tapped out,” said Ross.
“Also with a standard loan product, weekly, fortnightly or monthly payments are due, which in itself can affect cashflow for a business.
“With invoice finance, the monies tied up in your invoices are released when the goods and services are delivered.”
And in Claridge’s experience, there’s no additional complication should the invoice payments you’re waiting on arrive sooner than expected.
“Their customer service has been absolutely lovely and I haven’t had a problem with them.
“Then, whenever the client pays, I just get onto Butn straightaway and say, ‘Can I pay you now?’ and the response is always, ‘Yeah, not a problem!’.”
In the lead up to EOFY, business operators are looking for ways to make sure their financial position is in as good a condition as possible, while also looking to service plans for future contingencies.
Ross said this is bearing out in Butn’s customer data, as business operators seek to create stockpiles where possible and hedge against future price rises.
“The past financial year has been depressed due to the pandemic and other factors,” he said.
“We are seeing an uptick in funding and transactions now as the economy continues to open up and boom, especially in the lead up to the EOFY.
“Stock piling is also becoming common due to constraints in shipping and supply issues.”
All of this is leading business operators to seek more access to capital that they can use in a timely fashion without adding significant costs in the form of interest and repayments.
“It’s all about cashflow and just keeping my creditors at bay,” said Claridge.
“Using Butn helps me keep up with the payment plans I’ve organised with different creditors and all that sort of stuff.
“All of that means Butn actually helps me build my credit rating, because I’m able to stick to my commitments with the payment plans I’ve made, including those I have with the ATO.”
With loans and financing available directly within your accounting software*, MYOB Business is now even more powerful when it comes to EOFY. Get good busy this tax time by taking out your FREE 30-day trial, today.
*MYOB is an investor in and has a paid partnership with Butn Limited (ACN 644 182 883) (Butn) for the provision of invoice financing services by Butn to MYOB customers. All applications are subject to approval in accordance with Butn’s onboarding criteria and onboarding process, including any agreement that is signed by you setting out terms and conditions between yourself and Butn. MYOB receives a flat fee plus a volume-based fee and bonus from Butn based on the net revenue Butn earns from MYOB customers using Butn services.