The start of a new year brings with it many possibilities for businesses. And while the last couple of years has been challenging, and economic challenges are likely to persist, it doesn’t mean that 2023 can’t be a year of growth for SMEs. Whether you started your annual planning toward the end of 2022, or you’re focusing on growth plans now, there are key factors you should consider to make 2023 a successful year. This article outlines what SMEs can do to set up growth in the new year, including setting goals and accessing the funding they need to make these goals a reality. Keep reading to learn more.
At the time of writing, the inflation rate in Australia is expected to sit at 6.5 per cent annually for the next two years. This is a 0.9% increase from October 2022 and the highest rate since January 2011. For SMEs, rising inflation is impacting many expenses, such as utilities, rent, wages, and the inputs required to deliver goods and services. Now more than ever, it’s critical to get your business finances in order, so you can address any cash flow gaps as soon as possible. To identify these cash flow gaps, cash flow forecasting is key.
At a minimum, cash flow forecasts should be updated on a quarterly rolling basis. However, using your accounting software and integrations with your payments and ERP systems can help you to keep your forecasts updated in real-time. Not only does this allow for faster identification of cash flow gaps, but it also gives you time to secure alternative SME funding to bridge cash flow gaps and bolster working capital.
Once you have your finances in order and you’re clear on your business’s current state, think about how you’d like your business to look at the end of 2023. Perhaps there is a particular revenue goal that you’re targeting or maybe you’re looking to expand to new locations and upgrade machinery and equipment. Whatever your end goal is for 2023, you need to start with this in mind so you can work backwards and determine the steps to achieving it.
With your end goal for 2023 identified, you need quarterly goals that you and your team can work toward. These quarterly goals may include a range of key performance indicators (KPIs) including the desired reach on marketing campaigns, new leads, new accounts, quarterly revenue targets, or even initiatives to boost cash flow. The key to achieving your quarterly goals is ensuring the relevant people across your business have the resources and understanding they need to do their specific roles. These resources may include upgraded technology, plus governance and communication processes to track progress and proactively identify problems.
It doesn’t matter what your growth goals are for 2023 if you don’t have adequate working capital and cash flow to achieve these goals. With Australian SMEs still paid an average of 6.4 days late, putting systems and processes in place to reduce your payment times can strengthen your cash flow. Simple ways you can this include using the latest technology to send e-invoices, offering early-payment discounts to customers, and securing trade finance facilities that shift the risk in transactions to your financier. Importantly, the solutions you choose to put in place should be determined by the cash flow problems you’re facing.
Using the first step outlined above to complete cash flow forecasting and get your business’s finances in order will help you to identify any problem debtors, how and when cash flow is often tight, and where the bottlenecks occur in your invoicing and payment processes. If your business is struggling with late payments and overextending trade credit, put alternative funding channels in place now, so that you can proactively manage your finances in 2023 and ensure you have the capital to achieve your growth goals.
No matter what your business goals are in 2023, getting funding in place before you need it is wise. Whether you’re looking to expand to overseas markets, strengthen your financial safety nets, or add new products and services to your business, Moneytech’s finance facilities can help. Not only do our financing facilities help SMEs get access to the working capital they need to operate, but it provides business owners and leaders with the resources they need to grow.
Explore Moneytech’s funding solutions and see how our facilities can help your business get set for growth in 2023. Contact us today, and one of our experts will be in touch to discuss your options.
This article is for information purposes only and does not constitute financial advice. You should speak to a qualified finance professional about your unique situation before making any decisions about financial products.
