by Capital Tree | Oct 13, 2023 | Uncategorized
Cash flow is the lifeblood of every business, so managing it effectively is essential for sustained growth and success. While maintaining a healthy cash flow can be challenging, especially for SMBs, business loans can open up plenty of new opportunities. Let’s explore how business owners in Australia can use commercial loans to enhance their cash flow management strategies.
The down low of cash flow management
Before diving into the benefits of business loans, it’s worth getting to grips with the basics of cash flow management. ‘Cash flow’ is simply the movement of money (inflows and outflows) in your business – income, expenses, investments and more. Proper management requires careful tracking and optimisation of your cash flow to ensure you can always meet your financial obligations.
Many SMBs face cash flow challenges throughout their working lives. From late payments to seasonality to unexpected expenses, what’s most important is identifying these challenges as soon as possible – so you can deploy the best possible solution for the problem.
Utilising business loans
Business loans can serve as powerful tools for managing your cash flow gaps and seizing potential growth opportunities. Here are some ways you can leverage business loans:
- Bridging cash flow gaps: Short-term cash flow gaps due to delayed payments or unexpected expenses can be eliminated with the right business loan. By securing a loan, you can get access to funds quickly to help you cover immediate financial needs, preventing further disruptions.
- Managing seasonal demands: SMBs prone to seasonality – such as hospitality and retail businesses – often face periods of high demand followed by slower months. With a business loan, you can better manage cash flow during these slow periods while continuing to cover expenses, retain your employees and invest in marketing strategies to drum up more business.
- Inventory and equipment financing: Business loans can be used to fund inventory purchases or help you buy essential equipment. With funds at the ready, you can purchase inventory in bulk and potentially negotiate better deals with your suppliers.
- Expanding operations: When opportunities to expand crop up, such as entering a new market or launching a new product, the right business loan can give you the necessary capital when you need it most. And a successful expansion can boost your revenue potential, increase your market share and put you head and shoulders above the competition.
How to pick the right business loan
Before applying for different business loans, it’s most important to do your research and find the right financing solution. Here are some top points to consider:
- Interest rates and terms: Compare the competing interest rates and repayment terms offered by various lenders. Opt for loans with competitive rates and flexible repayment options tailored to your business’s cash flow cycle.
- Loan amount and duration: Review your business’s financial needs and choose a loan amount and duration that align with your cash flow projections. Don’t borrow more than you need – this will help reduce interest costs and repayment burdens.
- Lender reputation and support: Choose a reputable lender who understands the Australian business landscape and your particular industry. Lenders that provide excellent customer service come in all shapes and sizes – from traditional banks to online platforms.
Thinking about how a business loan could help your SMB? With the right approach, business loans can be powerful tools to boost your cash flow management and drive long-term growth. Let us help you get started by connecting you with an expert commercial broker. Chat to us online or call 1300 669 856 to find out how we can help.
by Capital Tree | Oct 3, 2023 | Uncategorized
After making the decision to use a broker to find the ideal lending solution for your business, you may struggle to determine the best person for the job. With so many options at your disposal, it pays to do your research and then sit down with any prospective broker before they get to work. Unsure what to ask them? Here are five questions that will tell you whether they are a good match for you and your business.
1. “What is your experience like with business loans?”
Some financial brokers only operate in certain industries, while others have experience with only a certain size of business. If the lender doesn’t understand your sector or the type of funding to help your organisation run smoothly, they may not be able to match you with the most appropriate loan type.
It’s important to scrutinise their background – asking for a few references can also help you get a better understanding of how they operate and whether they will align with your individual needs.
2. “How will you match me with the most appropriate loan?”
Unfortunately there are dodgy operators in every industry, and financial broking is not immune. To avoid getting caught up with a broker who doesn’t have your best interests at heart, make sure you find out how they will advise you of the best lending option – rather than just worrying about the commission they will make by pairing you with an unnecessarily large loan.
3. “What fees do you charge?”
It might seem awkward at first, but remember that this whole business relationship is based on money. So don’t be afraid to ask about costs upfront. Most financial brokers will charge a percentage on the rates they can lock in for you from the lender, but this isn’t always the case.
Be sure to ask about how much of a commission they charge, as well as whether they only charge the lenders rather than the client. To avoid any ambiguity, get everything down in writing and keep copies of the agreement.
4. “How many lenders will you approach?”
The best brokers are trusted partners of multiple banks and other lenders – not just one or two where they can get a hefty commission. Ask to see information on all the types of lenders they have access to, and find out whether they can get multiple lenders to compete for your business in order to attract a lower interest rate.
5. “How will you use my personal information?”
At a time when data breaches and cyberattacks are becoming more frequent, you need to take a proactive approach to protecting your information – especially sensitive data involving your finances. Because you will be sharing confidential information during the application process, ensure your broker uses secure software programs and that they don’t store any physical copies of your data in easy-to-access places.
At Capital Tree, we’ll match you with a business finance specialist from within our trusted network, who will work with you one-on-one to find a fast and affordable solution tailored to your business needs. Contact us today or call 1300 669 856 to start asking these important questions and get one step closer to securing much-needed funding.
by Capital Tree | Aug 11, 2023 | Uncategorized
In a hypercompetitive market, you need every advantage you can get in order to stay ahead of the competition. One of the best ways to achieve this is by investing in the right technologies at the right time. Whether it’s a remote tool for the new hybrid workplace or AI to eliminate time-intensive, repetitive tasks, here’s what you should be embracing in your business.
Embrace a hybrid work environment
If there’s one silver lining to the pandemic, it’s that more organisations have realised they don’t need to keep staff on-site to maintain productivity and collaboration. On the contrary, research shows that people who work remotely or in a hybrid environment are producing even better results than before COVID-19 drove everyone to work from home.
While that’s good news for staff, it means businesses need to adapt to the ‘new work norm’. Thankfully, technologies like video conferencing software and remote-onboarding platforms are helping to ease the transition.
Invest in cybersecurity
Did you know that nearly two in three businesses think they won’t ever be targeted by a cyberattack? But the truth is that cybercrime rose by 600% during the pandemic. So it’s no longer a matter of if but when you will have to thwart a malicious attack.
That means every business – no matter the industry – should be investing in robust cybersecurity software and training staff about how to spot phishing and ransomware scams. The alternative means not just reputational and financial damage, but loss of customers over the long term.
Leverage social media for brand expansion
If you haven’t already embraced the social media revolution, you may be missing out on lucrative opportunities with new audiences. While you will need to tend to your social channels like a garden, the payoff can be even greater than traditional advertising.
90% of people buy from brands they follow on social media. And with more than 20 million social media users in Australia alone, that’s a market with incredible potential to make profits.
Utilise AI for efficient operation
Technology is also helping businesses by reducing the repetitive tasks that would usually take hours – or even days – to complete every week. Take accounting firms, for example. Artificial intelligence is already automating tasks like reconciliation, updating financial records and creating financial statements from client data. Rather than eliminating jobs, this actually frees up human staff to work on more client-facing, income-generating tasks.
Integrate the right technologies for your business
If any of these technologies could supercharge your business in 2023, it’s time to start integrating them into your workplace and training up staff on how to use them. However, any investment in new technology requires funding.
As a business owner, it’s vital you adapt to changing work trends and technology is set to play a key role in the future of work. However, cash flow woes and razor-thin margins can hamper any necessary investment, which is where Capital Tree comes in. We can pair you with an expert commercial broker who will assist you in finding the most relevant technology for your business needs and then find an appropriate loan to fund that investment.
Looking to strengthen your business model by adopting powerful new technologies? Contact Capital Tree today or call 1300 045 647 to find out how we can help you get the funding you need.
by Capital Tree | Apr 20, 2023 | Uncategorized
Running a small business can be extremely rewarding. No boss, more control over your work hours, the joy of seeing your products or services inspire your clients. But business ownership also comes with a few drawbacks, and for many Australian small business owners, it’s the finances that are the hardest to manage.
Taking smart steps to properly manage your finances can stabilise your company while reducing the impact of seasonal fluctuations. Here are four ways you can better manage your small business finances.
1. Keep your personal and business banking accounts separate
Especially at the start of your journey, it’s easy to lump all your finances into one account. But as your business grows, this can complicate matters. Instead, separate your personal and business accounts so you can get a clearer and more organised financial picture. This will ultimately make it easier to manage the business and achieve financial success. Here are some reasons why you should make the change today:
- Improved record-keeping: Easier to track business income and expenses, which can simplify matters at tax time and reduce the risk of errors.
- More credibility: Separate personal and business banking accounts can demonstrate to your customers, suppliers and partners that the business is financially responsible and professional.
- Protects your assets: It can help protect your personal assets in the event that the business is sued or experiences financial hardships.
Having separate business and personal bank accounts can also make it easier for small business owners to access financing. Lenders typically require clear financial records and having a separate business bank account can help them assess your creditworthiness, making the whole loan process more straightforward.
2. Establish an easy to follow filing system for your business finances
Having a good filing system is essential if you want to manage your finances effectively, remain compliant and make informed business decisions. A proper filing system makes it easier to comply with Australian tax law and regulations, while also helping you keep track of your income, expenses and cash flow.
Perhaps most important of all, accurate financial records are crucial to your business planning and forecasting. They will provide valuable insights into your business’ financial performance and help identify any areas for improvement.
3. Use cloud accounting software
You likely already have some form of accounting system in place, even if it’s manual data entry into a physical ledger. But switching over to a digital solution, especially one that is cloud-based, can provide ample benefits:
- Improved accuracy: Accounting software will automate many routine financial tasks that are prone to errors, helping to ensure greater accuracy of your financial records.
- Efficient record-keeping: Makes it easier to keep track of income and expenses, monitor cash flow, manage taxes and BAS, and reconcile bank statements.
- Better visibility: Provides real-time visibility into the financial health of your business, which allows you to make informed decisions and respond to market changes swiftly.
- Time savings: Automating routine financial tasks and having a clear and organised filing system can give you valuable time that would be better spent on other income-generating tasks.
- Planning and forecasting: Provides valuable data and insights that can be used for business planning and forecasting.
4. Don’t let the thought of credit cards and loans scare you
Every small business goes through ups and downs. It’s an unfortunate fact of business life that you will likely deal with seasonal fluctuations and cash flow challenges. Rather than letting these financial burdens overwhelm you, think of them as support tools.
Credit cards can provide a quick fix to financial hardships. If you choose a card with a good rewards system, you can even get a range of benefits from them. However, you will need to pay off your debt quickly or risk incurring an even greater cash burden.
Business loans are much more valuable over the long term. They can provide you with access to the capital you need to cover business costs, fund growth, or invest in new equipment or technology. Loans can also help you invest in new opportunities, such as expanding into new markets, launching new products or hiring additional staff. Rather than a ‘quick fix’, business loans can be used to increase the value of your company.
by Capital Tree | Apr 20, 2023 | Uncategorized
With an eye-watering number of interest rate hikes in 2023 and the cost of living only getting more expensive, it’s a tough environment for small businesses right now. These challenges are compounded even further when you consider that business loan repayments have been going up and up this year as well.
So if you are already trying to balance razor-thin margins, how can you get some financial relief on your loan? Here are some tips to reduce the amount of interest you are paying.
Rising interest rates means more pain for business owners
While we always knew interest rates would eventually rise, few could have predicted just how aggressively the RBA would apply those increases! While millions of homeowners are already feeling the pinch, spare a thought for the business owners who are trying to earn a living while paying even more in interest on their loan repayments.
If you’ve been searching for ways to save a few dollars wherever possible, here are four tips to help you reduce the amount of interest you pay on your business loan:
1. Make a few extra repayments
There’s no denying that a higher interest rate can impact your ability to repay your business loan. When setting up your loan, it’s worth asking about any additional features that may be included, such as having a business offset account. By putting funds into this account, you can lower the amount of interest you’ll have to pay while still having access to that money should you need it.
Alternatively, speak to your lender about paying extra on top of your regular repayments every cycle. Be aware, however, that some loans may be set up in such a way that you will pay a fee for additional repayments – in which case it may not be worth it in the long run.
2. Consider making loan prepayments
If business is booming or you receive an unexpected cash windfall, you might look into the benefits of paying off your loan in advance. While you may not be able to eliminate your loan entirely, by taking out a sizeable chunk of what’s left on the loan you can minimise the interest you pay over the coming months and years.
Much like making additional repayments, however, you will need to check with your lender if there is any prepayment fee. This is usually a percentage of the outstanding amount on your business loan, so if there is still a large amount left then it may not be a worthy use of your extra funds.
3. Shop around for competitive loans
Just because one lender set you up with a business loan in your time of need, that doesn’t mean you are beholden to them for the life of the loan. In fact, it’s actually more responsible from a business perspective to keep your options open.
There’s no harm in scouring the market and comparing what different lenders can offer you. Especially if your current lender’s interest rate has skyrocketed recently, it might be worthwhile to find a more cost-effective one. Contact Capital Tree to find out how we can match you with a broker who can help you switch to a new lender and get a lower interest rate on your business loan.
4. Negotiate terms
In the competitive world of commercial lending, few things are set-and-forget. On the contrary, there is always room for negotiating your rate – especially if you already have a personal or business bank account with your lender. Partnering with a financial broker can make it easier to reduce your business loan’s interest rate and improve your cash flow in the near term.
