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Cash flow tips to improve your business

Posted on January 24, 2018 by admin

Poor cash flow is one of the biggest reasons why small businesses fail.

A healthy cash flow allows you to operate your business free of hassle; allowing you to pay your staff and bills on time. Having enough working capital to meet your business’ needs can help you stay out of debt and in business.

Consider these three tips to improve your business’ cash flow:

Create a forecast
Predict your sales and outgoing expenses for the year. You may do this by looking at last year’s sales figures and adjust accordingly. When estimating inflow, account for GST rebates, tax refunds, additional equity added to the business via owners, government grants, loans paid back, etc. Calculating outflows means you need to factor in administrative and operative costs. Also, consider expenses such as buying new assets, ‘one off’ fees, loan repayments and so on.

Reduce overheads
Consider leasing major assets instead of purchasing them to avoid tying up money in assets that will depreciate over time. Look for ways to cut back on spending such as lowering electricity bills and seeking better deals on insurance and internet costs. You may choose to negotiate payment terms with your suppliers, for example, extending your time frame to pay quarterly.

Control your invoicing
Issue invoices on time and be prepared to follow up on them if you are taking cash flow seriously. Send the invoice separate from other documents and make sure it is sent to the right person. For speedy payments, make it easy for customers/clients to pay you by providing multiple payment options. Automate reminders in your accounting software to notify overdue customers.

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Avoiding mortgage default

Posted on August 26, 2020 by admin

As individuals struggle with cash flow through the coronavirus, the Australian Bankers Association records that repayments on almost 500,000 mortgages have been deferred for six months. While repayments can be delayed, they cannot be avoided altogether.

Lenders can send you a default notice the day your repayment is overdue. However, they could also wait until your repayment is overdue by 90 or more days. When you receive a default notice, you are given 30 days to repay the amounts you have missed in addition to the regular repayment on your loan. Individuals who are struggling with their home loan repayments can avoid mortgage default by considering the following.

Contact your lender
Lenders are generally willing to work with you through financial hardship. Don’t be afraid to contact your lender to discuss your situation and find out what options are available for you. Lenders are often willing to negotiate short-term variations to repayment schedules that both parties can agree to. However, make sure that you do not agree to unrealistic repayment conditions that cannot be met.

Many Australian banks are offering a six-month deferral on mortgage repayments (including interest) for customers who are experiencing financial hardship as a result of COVID-19. If this is you, contact your bank to see if this is an option.

Apply for a hardship variation
Mortgage holders may be able to change the terms of their loan or temporarily pause or reduce their repayments under a hardship variation. A hardship variation can still be requested after you receive a mortgage default. To apply for one, contact your lender’s “hardship officer” and tell them that you wish to change your loan repayments due to financial hardship. This will usually require you to explain why you are struggling to make payments and to estimate how long your financial problems will continue to determine how much you can afford to repay.

After submitting a hardship variation request, your lender must contact you within 21 days with the outcome of your request. They may ask you for more details regarding your request; in this case, they must contact you again within 21 days from when you provide the additional information.

Consider selling your home
Selling your home is a tough decision, but in some cases this may be the better option if your circumstances are unlikely to improve. If you get to the point where your lender takes possession of your home and sells it, it’s likely that you won’t make as much as if you sold it yourself. When you sell your house on your own terms, chances are you will get a better price and avoid having to pay the legal fees passed on by your lender. Inform your lender if you decide to sell your home; they may ask for proof, such as a copy of the contract with your real estate agent or property advertisements.

Renting out your home until you can afford to make repayments again may also be an option if you are able to live somewhere else during this period.

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