During difficult financial times, it is extremely important to manage the financial health of a business, which includes liquidity – the availability of liquid assets, such as cash.

Cash is king

Why do I need to manage my liquidity?

Most businesses will have a portion of their value tied up in investments and assets, such as real estate, inventory and equipment. But to succeed and fund everyday operational expenses and growth, it is important to have some liquidity built into your balance sheet.

Efficient liquidity management will ensure your business is able to access cash when you need it to pay for goods and services, make payroll, and invest in new opportunities that may arise.

Even profitable companies can fail, by purchasing inventory or incurring production costs long before customers pay for the goods or services, creating a shortfall in available cash to pay the bills.

A short-term demand on funds is covered by having cash on hand to continue operating.

As companies grow and expand, they usually spend even more on new employees, new facilities, new inventory and new equipment, but if they have to wait too long to get paid by their customers and if they don’t have extra cash on hand, they could get behind on their obligations and end up with extra debt or even in bankruptcy.

Liquidity management is a function that enables a business to meet their financial obligations through either cash flow, funding activities, and/or capital management, and grow.

What pain points are SMEs experiencing at the moment?

Managing your business cash flow

If there is a sudden urgency for short term cash flow solutions to maintain liquidity and protect the business.

A number of finance products and strategies can assist in this instance.

Consolidate debt

Combine your existing loans into a lower interest rate product, saving the business interest rate payments over the long term.

Government grants & stimulus packages

There are a number of stimulus packages for businesses who have been impacted by COVID-19, as well as ongoing Government grants which are available to eligible businesses who want to invest in expansion, research and development, exporting or innovation.

To find out more head to the Australian Government website or check out Australian Government extends support for SMEs.

Insurance premium funding

To spread out the repayments for your business insurance rather than paying it in one lump sum. It’s simple, cost effective, and frees up cash flow to be utilised in other parts of the business

Surety bonds

Businesses are using Surety Bonds to meet collateral commitments. The benefit of a surety bond is that it doesn’t count against a company’s overall borrowing capacity and it frees up cash for other uses in the business.

Business loans

Look at your current financial position and your short-term cash flow needs to assess whether or not a business loan would help. An example of a short term finance solution would be a line of credit or an overdraft facility.

Consider other finance products

Such as debtor finance or asset-based lending to release pressure from accounts receivable; asset finance for inventory accounts; or supply chain finance and dynamic discounting for accounts payable.

Navigating your changing business landscape

Meet the specialists

Finance specialist
Brad Spencer

Brad’s career in the banking and finance industry spans more than three decades. During that time, he has had a variety of roles across Australia and gained broad experience in providing all types of lending solutions from personal lending to equipment finance, business & working capital solutions, and property investment & development funding.

Before joining Ledge, Brad was a relationship manager with one of the major banks, and he has since added to his wide financial experience by completing Certificate IV in Finance and Mortgage Broking.

M: 0481 196 496
E: brad@ledge.com.au

Connect with Brad on LinkedIn

Legal specialist
Murray N. Thornhill

Murray is an experienced, skilled and efficient commercial dispute resolution lawyer. He leads and co-ordinates our litigation, commercial and property teams – Murray’s practice focuses on dispute resolution for SME’s and individuals in construction, insolvency, employment, and trusts and estate litigation.

He has represented clients in most Courts and tribunals in WA and the Federal and High Courts, and has also advised substantial charities, school associations, principals, board members and other non-profit bodies on their unique legal challenges. He is also an experienced presenter & educator on a range of legal issues to industry and to professional and government bodies. Murray is a Notary Public with experience in all aspects of notary work.

P: 08 9322 1966
E: murray.thornhill@hhg.com.au

Connect with Murray on LinkedIn

Insurance specialist
Tracey Thorn

Tracey Thorn has over 20 years’ experience in the insurance industry. She has a comprehensive understanding of the insurance landscape and works with clients to provide bespoke insurance structures, strategies and risk management solutions for their businesses.

With the ability to negotiate complex claims, manage business interruption reviews and conduct contract reviews, Tracey’s depth of knowledge has enabled her to cultivate strong and trusted relationships with her clients. .

M: 0481 293 889
E: traceyt@knightcorp.net.au

Connect with Tracey on LinkedIn

Accounting specialist
Ross Prosper

Ross’s expertise in tax and business advisory spans the spectrum of accounting, business structuring, superannuation and complex tax advice. He works with a broad range of clients including family owned small to medium enterprises and large corporate groups.

When providing solutions to clients, Ross takes a “big picture” view and ensures that structuring is thoroughly considered from the outset. By considering the implications that structuring decisions will have at various points in a business’s life cycle – particularly at the point at which a business will cease operating, be sold, or passed onto the next generation – Ross offers clients a holistic perspective that has helped many to recognise potential opportunities.

M: 0407 440 535
E: rprosper@perth.bentleys.com.au

Connect with Ross on LinkedIn

Join in the conversation

Navigating Your Changing Business Landscape: Finding Opportunity in the current Climate is a series presented by Ledge Finance, HHG Legal Group, Knightcorp Insurance Brokers and Bentleys that aims to educate and provide practical strategies to soften the financial impact of the pandemic as you begin to revive your business. Collectively we will discuss ways to minimise risk and find opportunities as you navigate the changing business landscape that is the post COVID-19 world.

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