It’s not from lack of profitability. It’s not from a lack of customers. Or poor customer service, or bad marketing or even from negative reviews… Though all these things can contribute.
No, the number 1 reason that businesses fail according to ASIC is from a lack of cash flow. Helping you get paid is the reason that we exist – everything we do can be linked back to improving your cash flow.
You’ve probably heard the term “Cash flow is king” so, what is cash flow, how does it cause a collapse and what can you do to avoid a lack of cash flow in your business?
Cash flow refers to the net cash coming into and out of a business. Cash coming in from customers, creditors, grants, loans and the like is called inflows. And cash going out to employees, the ATO and suppliers etc is called outflows.
Cash flow is different to profit in that profit is the cash left over after all expenses have been paid, whereas cash flow is the sum of all cash both inflows and outflows within a business.
Cash flow is a good indicator of a businesses strength. If your business wants to finance a new piece of machinery for example, a bank or lender will most likely want to see a cash flow forecast (and a credit report), to assess your ability to service the debt.
If you don’t get paid by your customers, you can’t pay your suppliers. That is a lack of cash flow.
You can have a solid number of customers and great profitability, but if customers do not pay you on time then that lack of cash flow means you now have less cash to pay your obligations (tax, employee pay, suppliers) and this can very quickly compound into a fatal, unrecoverable spiral for a business.
This downward cash flow spiral can happen very quickly with very few businesses finding their way out.
If you then have no cash and cannot pay your bills, your business is technically insolvent. Your suppliers or the ATO for example may send you a statutory demand for payment, if no payment is made, they can apply to place your business into liquidation to recover what they are owed.
Once the liquidators are involved, you no longer have control of the process or the outcome.
Don’t let overdue invoices age – time and inflation make invoices worth less. We know from experience that the sooner an overdue debt is escalated to us, the more likely we are to recover that cash for you. We recommend escalation at 90 days.
Use accounting software to track your cash flows and automate invoice reminders, we recommend MYOB or Xero. These applications can also load your overdue invoices directly to us for resolution.
Understand what your cash flow looks like from month to month to help ensure that you can spot problems early enough to act. Your accounting software should be able to do this for you. We have an in-depth guide available here.
Ensure your terms of trade are current, legal and clearly set out obligations, allowing you to conduct credit checks and pass any recovery costs onto your customers in the event of a default. Our Business Support Specialists can help.
Take the guesswork out of bringing new customers on. Our Credit Reports will give you objective data to make an informed decision as their credit-worthiness.
Our Business Support Specialists can share information and experience on the best ways to protect your unique businesses cash flow and understand your risk exposure.
We are a full service credit management agency that has been supporting Australian businesses for over 30 years. As a specialist in debt resolution and developing business terms and conditions of trade, we have the tools and expertise to help minimise the risk to any business that offers credit. For a free no-obligation consultation, get in touch with your local Business Support Specialist.
EXCELLENT Based on 158 reviews Mancuso Constructions Info13 March 2025Trustindex verifies that the original source of the review is Google. Peter and the team at EC Credit Control made setting up our Terms of Trade seamless and ensured we’re protected. Great service and support—highly recommend! Blue Xplus21 February 2025Trustindex verifies that the original source of the review is Google. reliable and professional in their job. Help Me iT&D19 February 2025Trustindex verifies that the original source of the review is Google. Excellent company to deal with. Straight forward with their fee structure and they get the job done 👍 My friend recommended EC to me and it was a great outcome, will use them again. Darren Hall21 January 2025Trustindex verifies that the original source of the review is Google. We have been with E.C. Credit Control for over 18 years. We have always found them very professional, friendly and helpful in all our dealings with the whole team. I would Highly Recommend them to anyone requiring debt recovery. The whole process is very simply with them doing all the hard work with the new Terms & Conditions, Template Letters & forms They work very hard to get a great result. They keep you in the loop of what is happening and always easy to talk to. 5 Stars all the way ***** Chloe Luhrs19 December 2024Trustindex verifies that the original source of the review is Google. We’ve been working with EC Credit Control for years, and they have always been a massive help with chasing outstanding payments and sorting out any issues quickly. We recently had them update our terms of trade, and they were fantastic; prompt, detailed, and really made the process simple. Couldn’t recommend them more for credit management and support. Wayne Moore10 December 2024Trustindex verifies that the original source of the review is Google. I've used EC Credit Controls services for nearly 10 years now. The Terms of Trade supplied by them have saved me tens of thousands of dollars and stress over those years, I rarely have issues getting paid anymore! Probably one of the best services I have ever introduced into my business hands down! Highly recommend their services if you have trouble with those clients that have no intentions of paying, it weeds them out very quickly! John Boumelhem6 December 2024Trustindex verifies that the original source of the review is Google. Monika was extremely helpful and explained a lot of things clearly and professionally. I can definitely say that I have learnt a lot from her and what Monika and EC have offered my business has been great. Martin Mace5 December 2024Trustindex verifies that the original source of the review is Google. EC Credit Control, and in particular, Tanya Pascoe, have provided us with excellent customer service. Tanya was top level with our on-boarding and after-sales service, and continues to go out of her way to help with any of our queries. Jason Burnett28 November 2024Trustindex verifies that the original source of the review is Google. Highly recommend! We have been dealing with Tanya Pascoe With terms of trade, subcontractor agreements and monies owed. She is very prompt and easy to deal with. We have been using EC Credit control for over 10 years and they have never let us down. Thank you.Verified by TrustindexTrustindex verified badge is the Universal Symbol of Trust. Only the greatest companies can get the verified badge who has a review score above 4.5, based on customer reviews over the past 12 months. Read more
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