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5 PRACTICAL TIPS TO
MANAGE FINANCIAL
STRESS IN 2024
Many business owners are currently
experiencing the challenges of navigating
through tight financial waters. This period
can often present significant cash flow
hurdles for business owners alike.
A Treasury report in 2022 suggested
that Australian small and medium-sized
business owners are grappling with
deteriorating mental health and well-
being stemming from financial strains
within their businesses, particularly
pertaining to cash flow management
apprehensions.
Here are 5 practical tips on how business
owners can manage their financial stress
more efectively.
1. MONITOR YOUR WORKING
CAPITAL
Working capital is vital for businesses,
especially those reliant on debt and
hefty fixed expenses. Borrowed funds
may have been allocated for purchasing
equipment, leading to regular repayments
or lease obligations. In times of cash flow
constraints from customers, this can pose
challenges.
2. ASSESS YOUR BUSINESS
LANDSCAPE
Review your business environment on
a quarterly basis. This entails assessing
market dynamics, ensuring accurate
pricing, monitoring KPIs, and determining
an appropriate wages-to-revenue ratio.
Questions to consider include whether
wage increases align with sales price
adjustments and staying informed about
competitors’ strategies. Promptly address
profit impacts from supplier price hikes.
Evaluate profitability of products or
services and be willing to discontinue
unprofitable ones. Prioritise time and efort
based on financial value.
3. HANDLE DELAYED PAYMENTS
Some customers may delay bill payments,
so ofering various payment options
can help manage irregular payments.
Clearly communicate trade terms,
emphasising upfront payments to cover
staf and material costs. Minimise covering
staf wages before receiving customer
payments.
4. SET ASIDE FUNDS FOR TAXES
Insufcient funds for GST payments at
the end of a cycle can pose significant
challenges. Regular tax payments
are preferable to accumulating
insurmountable amounts. While having a
financial bufer is ideal, many SME owners
live paycheck to paycheck.
5. SEEK ASSISTANCE
Various factors can lead a previously
financially stable company into
significant cash flow challenges. While
online accounting services like Xero
are useful tools that can help, they are
not comprehensive solutions; accurate
data input is crucial. Remember to
ensure company accounts are properly
maintained for an up-to-date financial
picture. Business owners often lack
sufcient capital and may rely heavily on
cash flow for growth or seek investors for
scaling up. If facing insolvency, seeking
advice from an accountant and possibly a
commercial lawyer can be worth the fees.
Original Article by Gill South:
https://blog.myhr.works/en-au/5-
practical-tips-to-reduce-financial-stress-
in-2024