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JobKeeper is due for a big shake-up next month, which means if you’ve been relying on it to get your business through these rocky times, you need to start planning ahead now.
With the small business ombudsman and many economists concerned about an “insolvency tsunami” hitting small businesses, it’s critical that you start thinking about your ongoing funding plans now to avoid being swept up in the tide.
JobKeeper support is set to end for many businesses on September 27, while it will continue for other eligible businesses under a reduced amount until March 28.
So with that in mind, you may want to start assessing your business’s ability to make loan repayments, pay staff without JobKeeper support, take care of ATO debts, as well as any other financial obligations.
Businesses that have been drawing on JobKeeper should start asking the below three questions, says Wayne Smith, Group Executive of SME lender Scottish Pacific.
1. What support will I lose, and has my business got the cash available to replace it?
2. What payments will I have to make from October or March that I’m not making now?
3. Do I have any pressing creditors ready and able to take action against me once they are able to?
The unfortunate fact is that over the coming months many businesses will have a funding gap and have to face some very tough decisions.
“Your answers to (the above) questions will guide whether you seek extra funding or make a tough call on your business,” Mr Smith says.
“You don’t want the business to accumulate debt if it’s not going to be viable.”
Mr Smith says businesses can consider seeking rent reductions, JobKeeper, government grants, and ATO deferments.
“These initiatives have helped many businesses hibernate or trade through the tough times. However it’s important to consider how this will pan out when commercial evictions for non-payment of rent return, and creditors are able to present winding up petitions,” Mr Smith adds.
It’s important to note that the federal government’s Coronavirus SME Guarantee Scheme is being extended, with the initiative allowing lenders to provide eligible SMEs unsecured loans “more cheaply and more freely”.
Mr Smith says another option business owners could consider is Invoice Finance, which makes use of assets already in the business rather than using the family home for security.
“Put simply, using Invoice Finance brings forward payment of your invoices so you have cash in hand. You get 80% paid earlier, and the remainder later,” Mr Smith says.
Now may also be a good time to consider whether your business could benefit from a self-liquidating revolving line of credit facility, says Mr Smith, rather than further exposing yourself by taking on more loan repayments.
As mentioned earlier, if you think you might have a funding gap in your business, it’s good to act in advance – not when you’re scrambling to make ends meet.
So if you’d like to explore some funding options for your business please get in touch today – we’re here to help your business however we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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It’s been two months since HomeBuilder was first announced, and I’m sure many of us spent a bit of that time dreaming about an extra $25,000 to spend on a reno or new home. The good news is grant applications are now officially open.
All states have now opened application channels (see below) for the federal government’s new HomeBuilder grants, with ACT the only government yet to provide an application form (however you can register online).
The federal government scheme aims to assist Australians who want to buy a new home or begin work on eligible renovations by providing them with a $25,000 tax-free grant.
The scheme was announced as part of the federal government’s economic response to the coronavirus pandemic, with the stated aim of supporting more than 1 million builders, painters, plumbers and electricians across the country.
While many of the eligibility details were quickly revealed, there has been one key problem since the announcement of the scheme back in early June: there has been no way of actually applying for a grant.
But, there is now.
New South Wales: Revenue NSW is now accepting applications online. For more information on eligibility and the process, visit: www.revenue.nsw.gov.au/grants-schemes/homebuilder
Victoria: State Revenue Office Victoria is accepting applications online. For more details on eligibility visit: www.sro.vic.gov.au/owning-property/australian-homebuilder-grant
Queensland: In Queensland the Office of State Revenue is taking applications. For more info: www.qld.gov.au/housing/buying-owning-home/financial-help-concessions/homebuilder
Western Australia: For those in the west, Revenue WA is the place to submit your application. For more info visit: www.wa.gov.au/service/community-services/grants-and-subsidies/apply-new-home-construction-grant
South Australia: The South Australian Revenue Office is accepting applications. For more details visit: https://www.revenuesa.sa.gov.au/grants-and-concessions/homebuilder-grant
Tasmania: For those in the apple isle, The State Revenue Office of Tasmania is handling applications. You can visit: www.sro.tas.gov.au/Documents/HomeBuilder-grants-guideline.pdf
Northern Territory: The Northern Territory Revenue Office is now accepting applications. For more details visit: https://treasury.nt.gov.au/dtf/territory-revenue-office/homebuilder-grant
ACT: As mentioned, the ACT is yet to provide an application form, however you can register online. For more info visit: https://www.revenue.act.gov.au/covid-19-assistance/homebuilder-grant
So, that’s how you can apply for the HomeBuilder scheme. If you’re keen to proceed, the next thing to tackle is financing the project.
And that’s where we can help.
If you’d like a hand obtaining finance to pay for the new home or reno you’ve been dreaming of, get in touch with us today – we’re here to help make your HomeBuilder dreams a reality.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
If you’re a small or medium-sized business owner in need of an affordable loan then we’ve got good news: the federal government is expanding the Coronavirus SME Guarantee Scheme to allow businesses to borrow more and for a wider range of purposes.
The scheme, which is in phase one until September 30, allows lenders to provide eligible SMEs unsecured loans of up to $250,000 for up to three-year terms.
It’s got pretty good traction too, with more than 15,600 businesses accepting loans worth $1.5 billion to date.
As such, phase two has just been announced to further assist Australia’s economic recovery from coronavirus.
The Coronavirus SME Guarantee Scheme basically involves the government guaranteeing 50% of each new loan issued to SMEs by eligible lenders.
This allows lenders to offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association (ABA).
In a nutshell: SME Guarantee loans will soon be larger, longer-term and for a wider range of purposes.
The second phase of the scheme will kick off on 1 October 2020 and will be available until 30 June 2021. Here are the key changes taking place:
– Loans can be for a wider range of investment, beyond working capital
– Secured lending now permitted (excludes commercial or residential property)
– Maximum loan size increased to $1 million (up from $250,000 per borrower)
– Maximum loan term now five years (up from three years)
– Lenders can now offer a repayment deferral period.
This is where it can get a little confusing: the federal government has approved 44 lenders to participate in the scheme, which is a lot to choose from.
Fortunately, we can sit down with you and look at your business’s financing needs to help make your decision easier.
So if you’d like to discuss your eligibility and any other details of the scheme, get in touch today – we’re here to help you work through it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
On your marks, get set, go! The race is on for limited spots in the federal government’s First Home Loan Deposit Scheme, which kicked off again on July 1.
The scheme allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI) – which can save you up to $10,000.
But here’s the catch: only 10,000 spots are available this financial year.
That might sound like a lot but 3,000 spots went in the first 10 days last time.
Usually, first home buyers with a deposit of less than 20% have to fork out for LMI when taking out a home loan.
But under the federal government’s FHLDS, eligible first home buyers with only a 5% deposit can purchase a property without having to pay for LMI.
Now, it’s important to note this is not a handout – it’s a government guarantee to help first home buyers break into the property market with a smaller deposit.
But the good news is that it is available alongside other state and federal government first home buyer schemes that are currently running.
More details on eligibility and property price caps can be found on the scheme’s website www.nhfic.gov.au.
If you’re thinking about purchasing your first home soon and are considering applying for this scheme – give us a call today.
While 10,000 spots might sound like a lot, the starter’s gun has already gone off and hundreds of first home buyers could apply for the scheme every day in the first two weeks alone.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Keen to buy a vehicle or another asset for your business and immediately write off the cost? You’ve got just a few days left to take advantage of the $150,000 instant asset write-off for this financial year.
While the federal government recently extended the scheme to 31 December 2020, those keen to claim the deductions sooner rather than later will want to beat the June 30 EOFY deadline.
A few months back the federal government increased the instant asset write-off threshold from $30,000 to a whopping $150,000 as part of its coronavirus economic stimulus package.
Under the scheme, businesses with an annual turnover of up to $500 million can immediately write off the cost of assets such as vehicles, tools, equipment and – thanks to the recent $150,000 threshold increase – heavy vehicles, tractors, and machinery.
Basically the scheme allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.
This can help with your cash flow, as getting the cashback sooner means you can re-inject it straight back into other parts of your business.
As mentioned above, the end-of-financial-year is fast approaching.
The good news is that even if you get the ball rolling on it now, and still miss the deadline by a day or two, you’ll have peace of mind knowing that you’ll qualify the next financial year under the 31 December deadline.
So if you’d like help obtaining finance for an asset then please get in touch – we can run you through more details of the scheme and present you with financing options that are well suited to your business’s needs now, and into the future.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent.
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You’ve probably heard the federal government is giving $25,000 grants to eligible Australians looking to build or substantially renovate their homes. Today we’ll look at what that means for first home buyers when combined with state and territory schemes.
If you’ve been umming and ahhing about purchasing your first home for a while now, we have great news: you’d be hard-pressed to find a time when there were more government incentives to help you enter the property market.
For starters, there’s the federal government’s First Home Loan Deposit Scheme, which can help you buy your first home with a deposit of just 5% without having to pay lenders mortgage insurance (LMI) – so that’s one major cost out of the way.
Well, each state and territory (except ACT) has a first homeowner grant program, with most grants between $10,000 and $20,000.
On top of that, the federal government will give eligible Australians $25,000 to build or substantially renovate homes as part of the new HomeBuilder scheme (however, at this stage it’s still unclear whether or not this amount can go towards your initial deposit).
Last but certainly not least, most states and territories have stamp duty discounts or exemptions for first home buyers too, which can save you tens of thousands of dollars – another hurdle cleared!
Below, we’ll break down exactly what’s on offer in each state and territory and just how much these government initiatives could help put you within reach of a deposit on your first home.
First homeowner grant: $10,000 for new homes valued up to $750,000.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: exemption on homes up to $650,000, partial concession on homes between $650,000 and $800,000.
With HomeBuilder, you could have: up to $45,000 in government support + stamp duty exemption.
First homeowner grant: $10,000 (urban) and $20,000 (regional) for new homes valued up to $750,000.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: exemption on homes up to $600,000, partial concession on homes between $600,001 and $750,000.
With HomeBuilder, you could have: between $45,000 and $55,000 in government support + stamp duty exemption.
First homeowner grant: $15,000 on new homes valued at less than $750,000.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: exemption on homes up to $500,000, partial concession on homes up to $550,000.
With HomeBuilder, you could have: up to $50,000 in government support + up to $15,925 in stamp duty concessions.
First homeowner grant: $10,000 on new or substantially renovated homes valued at less than $750,000 south of the 26th parallel (latitude), or less than $1,000,000 north of the 26th parallel. WA also offers $20,000 grants for new homes built on vacant land or off-the-plan single-storey developments.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: exemption on homes valued at up to $430,000, partial concession on homes up to $530,000. An off-the-plan unit rebate is available for more expensive homes.
With HomeBuilder, you could have: up to $65,000 in government support + applicable stamp duty concessions.
First homeowner grant: $15,000 on new homes valued up to $575,000.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: full concession on off-the-plan new or substantially refurbished apartments up to $500,000.
With HomeBuilder, you could have: up to $50,000 in government support + stamp duty concession.
First homeowner grant: $20,000 on new homes (reduced to $10,000 from 1 July 2020).
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: a 50% discount on stamp duty for established properties valued at $400,000 or less.
With HomeBuilder, you could have: up to $55,000 in government support.
First homeowner grant: none.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: first home buyers in the ACT pay no duty so long as their household income is below $160,00-$176,650, depending on how many dependents you have.
With HomeBuilder, you could have: up to $35,000 in government support + stamp duty exemption.
First homeowner grant: $10,000 for new homes.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: you can get up to $18,601 off your stamp duty costs.
With HomeBuilder, you could have: up to $45,000 in government support + up to $18,601 in stamp duty savings.
So, that covers the first home buyer schemes. If you think you might be eligible, the next thing to organise is financing your new home.
And that’s where we come in. Lenders will still want you to show some sort of genuine savings before they’ll approve a loan application, and we can help you get everything in order for that assessment process.
So if you’d like help obtaining finance to pay for the first home of your dreams, get in touch with us today – we’re here to help you any way we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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Great news for small business owners: the federal government has extended the $150,000 instant asset write-off to 31 December 2020, but you’ll need to act asap if you want to make use of the scheme this financial year.
A few months back, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a staggering $150,000 as part of its economic stimulus package.
Under the expanded scheme, businesses with an annual turnover of less than $500 million can immediately write off the cost of new or second-hand assets such as food vans, tools, equipment, and – thanks to the recent threshold increase – heavier vehicles such as trucks, tractors, and machinery.
Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.
Under the scheme, an asset must be installed and ready to use by the deadline (previously June 30) in order to be eligible.
So, by giving a six-month extension (to December 31) the government is giving under-the-pump businesses around the country “additional time to acquire and install assets” – which essentially means a little more breathing room.
All that said, there’s still time to make the most of the scheme this financial year.
By doing so, you can immediately claim all the tax deductions you would have claimed over the life of the asset.
This can help with your business’s cash flow, as getting the cashback sooner means you can re-inject it straight back into other parts of your business.
So if you’d like help obtaining finance before the June 30 EOFY deadline, please get in touch.
We can present you with financing options for the instant asset write-off scheme that are well suited to your business’s needs now, and into the future.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You might have heard that the federal government will give eligible Australians $25,000 to build or substantially renovate homes as part of the new HomeBuilder scheme. Today we’ll look at who exactly can qualify for the initiative.
The $680 million program, which is part of the federal government’s economic response to the coronavirus pandemic, aims to support more than 1 million builders, painters, plumbers, and electricians across the country.
It’s also a win for many Australians wanting to buy a new home or begin an overdue reno, as the $25,000 grants are non-taxable and will complement existing state and territory first homeowner grant programs, stamp duty concessions and other federal schemes.
So, without further ado let’s see whether or not you might be eligible.
To access HomeBuilder, owner-occupiers must:
– be an individual, not a company or trust;
– be aged 18 years or older;
– be an Australian citizen; and
– have an income of less than $125,000 per annum for an individual applicant, or $200,000 for a couple (income caps are based on 2018/19 tax returns or later).
Additionally, you must enter into a building contract between 4 June 2020 and 31 December 2020 to either:
– build a new home as a principal place of residence valued up to $750,000 (including land); or
– substantially renovate your existing home as a principal place of residence, with renovations valued at between $150,000 and $750,000, and with the dwelling not valued at more than $1.5 million before the renovation.
Construction must be contracted to commence within three months of the contract date.
All dwelling types – including houses, apartments, house and land packages, and off-the-plan dwellings – are eligible.
However, HomeBuilder cannot be used for additions that are unconnected to the principal place of residence, such as swimming pools, tennis courts, outdoor spas and saunas, and detached sheds or garages.
HomeBuilder is also not available for investment properties or to owner-builders.
The $25,000 grant will go directly to the applicant, not the contractors.
Renovations or building work must be undertaken by a registered or licensed building service contractor.
To help protect against inflated quotes and pricings, the registered or licensed builder must be able to demonstrate that the contract price for the new build or renovation is no higher than the cost of comparable works done back in July 2019.
To find out more about what the HomeBuilder grant might mean for you, check out the case studies at the bottom of this Treasury HomeBuilder factsheet.
They run through scenarios involving a house and land package, a renovation, an off-the-plan apartment, knocking down and rebuilding a house, and building on a vacant block.
So, that covers the scheme’s eligibility details. If you’ve ticked the above boxes, the next thing to tackle is financing the project.
And that’s where we can help.
If you’d like help obtaining finance to pay for the new home or reno of your dreams, get in touch with us today – we’re here to help make your HomeBuilder dreams a reality.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Interested in a $10,000 business grant? How about buying a much-needed asset and immediately writing off the cost? Here are four looming deadlines your business may need to start moving on ASAP.
We understand that navigating the challenges of COVID-19 is probably taking up your every waking hour at present (and possibly the non-waking hours, too).
But there are several fast-approaching deadlines for accessing COVID-19 support that you may want to start turning your attention towards if you haven’t already.
Fortunately, few things make a person move faster than a looming deadline – so you’ve got that on your side (and us!).
Small businesses struggling as a result of the COVID-19 pandemic can apply for much needed help through the Small Business Relief Fund, managed by the Council of Small Business Organisations Australia in partnership with Salesforce.
But here’s the catch: applications are only open for a week and close at 5pm (AEST) on Monday June 1. You can apply here.
There are 67 grants of $10,000 each designed to assist businesses that are recovering from the effects of the pandemic.
Most states are also offering $10,000 support grants and assistant packages you can apply for with a June 1 deadline, including NSW, Victoria, WA and SA.
Time’s ticking for your business to make use of the $150,000 instant asset write-off before the end-of-financial-year June 30 deadline.
A few months back, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a whopping $150,000 as part of its economic stimulus package.
Under the scheme, businesses can immediately write off the cost of assets such as vehicles, tools, equipment and – thanks to the recent threshold increase – heavy vehicles, tractors and machinery.
Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.
This is something you’ll want to get moving on as soon as possible though, as the asset needs to be used, or installed and ready for use, before EOFY to be eligible.
If you’d like to find out more, feel free to get in touch or visit the scheme web page here.
SMEs in need of working capital due to the coronavirus outbreak can access unsecured loans through the government’s $40 billion Coronavirus SME Loan Guarantee Scheme.
Because the government will guarantee 50% of the value of each new loan, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association.
Participating lenders are already accepting applications from SMEs, so if you’re looking to bridge a gap in your business’s cash flow, please give us a call.
We’re more than happy to discuss your eligibility, more features of the scheme, and how you can apply before the 30 September 2020 deadline.
Due to the coronavirus pandemic, the ATO has extended the lodgement date for 2018-19 income tax returns lodged through a tax agent to June 30, 2020. The extension applies to individuals, companies, partnerships, and trusts.
But while it might feel you have a full month left to lodge your return, remember that there will be a bottleneck when it gets to crunch time, and your accountant has a lot on their plate at the moment.
So, as with the deadlines above, it’s imperative to get the ball rolling on this now to avoid the $850 late lodgement penalty.
If there’s any way we can help you beat any of the above deadlines – in particular, the instant asset write-off scheme and loan guarantee scheme – then please don’t hesitate to get in touch. We’re here to help you and your business any way we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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Promising news for SMEs this week: supply chain financing provider Greensill has given late-paying companies formal notice that it will ditch them if they continue to extend their payment terms beyond 30 days.
This is good news for SMEs because cash flow problems – which are often caused by, or exacerbated by, late payments – are one of the biggest reasons for small businesses failing.
Well, back in February, supply chain financing (SCF) provider Greensill informed all Australian clients that they must not push out payment terms to SME suppliers beyond 30 days.
The multi-billion-dollar company, founded by Bundaberg-born, London-based financier Lex Greensill, says virtually all of its clients in Australia have complied (keyword: “virtually”, but more on that soon).
“Greensill has allowed a period for the remaining clients to complete their internal reviews stemming from our request,” a Greensill statement says.
“We have given formal notice to those clients that their SCF facilities will be discontinued unless they ensure that they do not use our SCF facilities to push out payment terms to SME suppliers beyond 30 days.”
Australian Small Business and Family Enterprise Ombudsman Kate Carnell has the answer on that one.
She says it’s clear Greensill’s statement is in relation to its dealings with contractor UGL, owned by construction firm CIMIC – Australia’s biggest construction company.
“UGL has reportedly extended its payment terms to its small business suppliers to 65 days from the end of [the] month the invoice is lodged, offering supply chain finance to those that want to be paid earlier and are willing to take a discount on the invoiced amount,” Ms Carnell explains.
“This is an example of clear misuse of supply chain finance as outlined in our recently released Supply Chain Financing Review. Practices such as this are harmful to small businesses, especially in the current challenging environment.”
The promising news is that according to the AFR, CIMIC has now put its controversial SCF scheme “under review”.
SCF, also known as supplier finance or reverse factoring, can free up cash flow for both the SME business that sends the invoice to be paid, and the company that owes the money.
It does this by the SCF provider acting as a facilitator between the two.
Here’s a quick example: let’s say Big Business Inc (buyer) orders some machine parts from Little Joe Traders (supplier).
Little Joe then sends the invoice to Big Business Inc, which approves the invoice and confirms that it will pay the SCF provider for the invoice at the invoice’s maturity.
Little Joe then has two options: 1) Patiently wait for the invoice’s payment terms to be met and paid in full; or 2) Get paid earlier by the SCF provider, but at a discounted rate.
Often Little Joe’s decision will depend on his cash flow requirements at the time.
Normally nothing. When done right “it’s an excellent concept for both buyer and seller”, says Clive Isenberg, chief executive of Octet, which specialises in supply chain financing for smaller companies.
But the risk, as Mr Isenberg points out, is that if your business is supplying the big end of town, you can become overly reliant on them and have to play by their rules.
“You are being constantly pressurised to follow the way they’re going. You’ve got to agree to their payment terms,” he told the AFR.
As you’re well aware, business cash flow solutions aren’t exclusively for the big end of town.
There are plenty of products that cater to SMEs’ many different needs.
So if you’d like to explore some of the options available to your business, then please get in touch – we’re happy to run you through them.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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