Australia is a tale of two economies right now, depending on the state or sector your business is based in. Today we’ll run you through three cash flow tips for your business, whether it’s growing or struggling.

Covid-19 has really brought a two-speed economy to the fore in Australia.

For some businesses, the stop-start-stop nature of the pandemic has crippled cash flow and made planning ahead all but impossible.

Meanwhile other businesses, such as those in the digital space, are experiencing fast growth.

Your cash flow strategy this financial year will likely depend on how the pandemic is impacting it.

So below SME lender ScotPac has identified three cash flow management strategies for businesses that are growing, and for those that are struggling.

Three tips for managing growth

1. Find a flexible source of funding: strong cash flow is important for fast-growth businesses, which often have lots of cash tied up with debtors, ScotPac senior executive Craig Michie says.

“It’s important to find a source of funding that grows as your business grows. With invoice finance, as your debtors grow, so does the line of credit you can access,” he says.

“Another consequence of fast growth can be a demand on the business to put in place more capital assets, such as vehicles and equipment. In these situations, asset finance can help a business get the assets they need to support their rapid growth.”

2. Negotiate with suppliers: sometimes businesses can grow too fast for their suppliers to keep up with their demand for product.

If you don’t have the cash flow to pay your supplier for more product up front, you can attempt to renegotiate terms with them, or seek alternative finance options.

“One option for fast-growth businesses to have up their sleeves is to use trade finance. This ensures they can pay suppliers upfront so they can meet their increased demand for product,” Mr Michie says.

3. Cashflow forecasting is vital: cash flow is often described as the “lifeblood” of businesses.

Knowing what cash is likely to be coming in, and what’s likely to be going out, is therefore vital for not only keeping your businesses alive, but ensuring it will thrive.

“It’s not unusual for a small business to spend months winning big new clients, then realise they had not accounted for the cashflow implications of winning new business,” Mr Michie says.

“Putting in place a 13-week rolling cash flow forecast – which really would only take an hour with your accountant to set up, helps fast-growth businesses avoid cash flow issues.”

Three tips for getting through tough conditions

1. Get in touch with funders and the tax office: with a number of recent state lockdowns, and ongoing uncertainty in NSW, many businesses are doing it tough.

Mr Michie says it’s crucial for businesses struggling through adverse trading conditions to talk to their financiers asap.

“Do this early in the piece to get the best outcome. Talk to your funder about whether it’s possible to restructure or to put in place moratoriums,” he says.

He adds that SMEs shouldn’t put off talking to the Australian Tax Office either.

“Too many businesses make the mistake of thinking a problem ignored is a problem solved – getting on the front foot with tax obligations is vital.”

2. Look at your balance sheet: to help secure working capital for your business, Mr Michie suggests looking to the assets on your balance sheet.

“Balance sheet assets can be a hidden resource for many SMEs – your debtor’s ledger, unencumbered plant and equipment and even inventory can be used to bring working capital back into the business.”

3. Again, cash flow forecasting is vital: Mr Michie says that having a running 13-week cashflow forecast lets business owners spot any cashflow gaps on the horizon, with enough time to do something about it.

He suggests that this could include reassessing your cost base, negotiating with creditors to change terms or defer payments, or chasing up aged receivables.

Last but not least, get in touch

If you’d like to discuss how any of the above cash flow tips or finance options could help your business, get in touch today.

The sooner we can run through your options with you, the better placed your business can be in the 2021 financial year and beyond.

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.

Do you use a Buy Now Pay Later (BNPL) service like Afterpay or Zip? If so, be warned that one leading credit agency has made a big change that means your BNPL data will go onto your credit report.

BNPL transactions have risen rapidly over the past few years – so much so that they caught financial regulators and credit reporting agencies a little flat-footed.

But Equifax, one of the three main credit reporting agencies in Australia, looks to have caught up.

In a recent email to brokers and lenders, Equifax states that BNPL accounts and transactions will be included in credit reports from 24 July 2021.

“Expect to see two new BNPL account types available for accounts, enquiries and defaults,” the Equifax email reads.

So what does this mean for your credit score?

Don’t stress, time is on your side!

That’s because it’s still early days and Equifax wants to measure how much BNPL data could affect overall credit scores.

“The new BNPL Comprehensive Credit Reporting (CCR) account types will be quarantined from scores in the short term to prevent any unintended and inappropriate impact on scores. As data builds up over time, we will reassess,” Equifax explains in a FAQ here.

But, Equifax adds, BNPL accounts and transactions will be included in CCR scores as soon as they believe it is sensible to do so.

“We are moving cautiously as we have never seen these types of accounts before, so it is not possible to evaluate and reflect the relationship between [BNPL accounts and transactions] and risk accurately,” they add.

“Equifax will monitor the risk of these accounts as the data accumulates over time.”

But that doesn’t mean lenders won’t be paying attention

It’s worth reiterating that lenders will now still be able to see BNPL transactions and accounts in your Equifax credit report, and according to a parliamentary joint committee this week, they’re already paying very close attention.

Liberal MP and committee chair Andrew Wallace put the following to Zip Co co-founder and chief operating officer Peter Gray: “I have heard that if banks see repayments to buy now, pay later providers, the banks take a very dim view of that person’s credit assessment.”

Mr Gray responded by saying banks would “absolutely” see BNPL providers in a negative light, before later stating: “I can confirm to the committee that the number one reason for [people] closing their [Zip] account is because their bank has told them they need to, to proceed with the mortgage.”

Get in touch today

If you’re worried about what a BNPL account – or multiple accounts – could mean for an upcoming finance application, get in touch with us today.

We’ll be able to run through it with you and give you some pointers on what you can do to get things sorted before applying for finance.

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.

Drive or walk around your local suburb mid-morning on a Saturday and chances are you’ll pass a few freshly banged up ‘Auction’ signs. But is Saturday actually the best day to auction your home? New data suggests perhaps not.

We all love a good auction story.

You’ve probably got a mate or two whose favourite dinner party story is the time they crushed all their competitors’ hopes and dreams with a final $10,000 sledgehammer bid.

But for every tenacious bidder, there’s usually an equally pleased vendor.

So what day of the week can sellers generally attract the most bidders to their auction?

The day with the most bidders

Auctions held on Tuesdays at 5pm attract the most active bidders – at 5.9 bidders per auction – according to national data collected by Ray White from 23,100 auctions over the past 12 months.

This is significantly higher than the average of 3.2 bidders per auction, which also happens to be the average number of bidders at auctions held on Saturdays at 11am (the most popular auction time).

That said, results do tend to vary in each capital city.

“Looking at all auctions held over the year, Tuesday at 5pm is the best time to sell. However in Adelaide and Melbourne, it may also pay to look at Friday night,” explains Ray White Chief Economist Nerida Conisbee.

“In Sydney, it is Sunday morning and in Brisbane it is Monday night. Perth is the only market where a standard midday Saturday auction would yield the most active bidders.”

The day with the highest clearance rates

A large number of bidders, however, doesn’t always translate to higher clearance rates.

When it comes to clearance rates, it turns out Friday is the day to beat, according to Ray White Group’s national auction day clearance rates.

Friday 1pm boasts the highest clearance rate at 91.2%, while Saturday 8am comes in at a close second with 90.5%.

“Most auctions in Australia are held on Saturdays between 10am and 1pm,” explains Ms Conisbee.

“[However] holding an auction at a time that is less standard can work to your advantage if selling – there is simply less competition from other properties going to auction at these times,” she adds.

Upgrading or downsizing? Get in touch today

If you’re in the process of selling your current home to upgrade, or downsize, to another property, get in touch with us today to discuss your finance options.

Every family is different – just like every home loan is different. Our job is to find the right match for you.

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.

As if Australian business owners hadn’t faced enough challenges this past year – now the dreaded annual insurance and workers compensation premiums will soon arrive in mailboxes. Here’s how to smooth ‘em all out (and get an early bird discount!).

If you’re a business owner, you know there’s no shortage of big bills you’ve got to keep one step ahead of at this time of year.

And your annual insurance premiums are no exception, whether that be for professional indemnity insurance, product liability insurance, public liability insurance, or any other general business insurance policy.

Throw your workers compensation premiums into the mix and you’ve got quite the annual financial hurdle to overcome.

Fortunately, a financing option exists that can ease your cash flow headache and help you become eligible for an early bird discount on your workers comp premium.

Have you heard of Insurance Premium Funding?

Insurance Premium Funding (IPF) enables you to split your insurance payments into manageable, affordable, monthly amounts that won’t cripple your business’s cash flow like an annual lump sum payment can.

Basically, any business that has an insurance premium of more than $5,000 has the ability to use IPF if they need to.

The insurance premiums are normally financed over 8 to 10 months to ensure the premium is fully paid before its renewal, and there is generally no security required with IPF.

Workers comp early bird payment discount due soon

One insurance premium that IPF is commonly used for is workers compensation.

That’s because in some states (including NSW, Victoria and Queensland), employers who pay their annual premium in full are entitled to a 3% to 5% early bird discount.

But to qualify for the early bird discount, workers comp premiums need to be paid in full before the early bird due date arrives (typically around August/September).

So, by using IPF to make this payment upfront you can secure the early bird discount, which helps to offset the cost of IPF.

By taking this path, you can smooth out your business’s cash flow and redirect capital into income-generating investments.

Find out more

If you’d like to find out more about financing options for IPF then get in touch today – especially if you want to be eligible for the workers comp early bird discount.

There’s no shortage of financial hurdles for businesses to overcome during these difficult times, so we’d love to help you out 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.

One of the most exciting things about moving into your own home is doing whatever you want with it, such as growing your own veggie patch. But did you know more than a third of Aussie backyards are contaminated with lead? Here’s how to get your soil tested for free.

Gardening is a bit like your journey into property ownership.

You spot a patch you like, start with modest seedlings/savings, and then with a little hard work, watch it grow into a yielding crop/asset.

A pre-COVID study shows that more than half of Australian households grow some of their own food – including fruit, vegetables and herbs – either at home or in a community garden.

And that figure is likely to have increased since lockdowns inspired many of us to get our hands dirty in the backyard.

But there’s just one problem you may have overlooked

You know those healthy vegetables you’re growing for your friends and your family to enjoy?

Well, it turns out that in more than 35% of yards, the soil those veggies are grown in is contaminated with concerning levels of lead (more than 300 mg/kg), according to a new study based on Macquarie University’s ongoing VegeSafe program.

The study found that homes that were aged, painted, situated near traffic-congested areas or located in the inner-city had the highest soil lead concentrations.

How to get your soil (and household dust levels) tested

The good news is that there’s a free and easy way to get your home’s soil tested.

Simply head over to the VegeSafe website to find out more, or get straight into participating in the soil analysis study here.

Participants receive a formal report with their soil results and are provided with information and advice about what to do in the event that they have soils containing elevated concentrations of metals and metalloids.

The program does ask for a modest $20 donation from participants and, while it’s not mandatory, it is appreciated and helps support the program.

It’s also worth mentioning that the same group also run a similar DustSafe program, which aims to inform residents of potentially harmful metals and other contaminants in and around their home.

Got a patch of land you have your eye on?

So, that’s how you can safely navigate a veggie patch.

If you’re looking for some sage guidance (see what we did there?) in terms of financing the purchase of that particular patch of land, get in touch and lettuce help you out today (sorry not sorry!).

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.

After 18 straight RBA cash rate cuts it can be easy to dismiss the notion that interest rates might rise again. But if the cash rate returned to mid-2019 levels, how much extra would an average new mortgage holder expect to pay each month? Let’s take a look.

They say what goes up, must come down.

But does what goes down, have to come up? Well, the big banks think so – and sooner than many expect.

While the RBA held the official cash rate at 0.10% this month – and reaffirmed its position that it does not expect to lift the cash rate until 2024 – there is growing speculation the next cash rate hike could come as early as late 2022.

In June, Commonwealth Bank and Westpac predicted a rate hike around late 2022 to early 2023. In fact, they expect the official cash rate to hit 1.25% in the third quarter of 2023 and 2024, respectively.

Meanwhile, NAB this week hiked its 2-,3- and 4-year fixed rates by up to 0.10% for owner-occupiers paying principal and interest.

Banks can increase fixed rates as a way of heading off potential RBA rate hikes. Generally, the shorter the term of the fixed-rate that’s increased (ie. if 2-year fixed rates are increased), the sooner a bank may believe the next rate hike will be.

So if the big banks are onto something here, how much extra money should you be factoring into your monthly mortgage repayments if the official cash rate rises to 1.25% by 2023/24?

How much extra the average mortgage holder could expect to pay

The first thing to note is that the last time the RBA’s cash rate target was at 1.25% was June 2019 – so not that long ago (but boy, was it a different world back then!).

Modelling from Canstar, published on Domain, shows the average variable mortgage rate would lift from 3.21% to 4.36%, based on the current margin between the two rates.

Now, if you took out a $500,000 loan tomorrow, and the cash rate hit 1.25% in 2024, that modelling estimates your monthly repayments would jump $300 to $2464 per month.

ABC News modelling suggests a similar scenario – repayments up $324 per month.

That’s despite reducing your remaining loan balance to $468,770 after three years of repayments, and assuming the banks only add on the cash rate increase – and not any extra.

And then there’s of course the possibility that further RBA cash rate increases could soon follow.

If, for example, the average variable loan rate increased to 7.04% in 2031, where it was just a decade ago in 2011, Canstar estimates that same borrower who took out a $500,000 loan would pay $900 more in monthly repayments than they do now – even after a full decade’s worth of repayments.

We can run you through your options

It’s hard to imagine that interest rates could rise from the comfort of the current record low cash rate.

In fact, you have to go back as far as November 2010 to when the RBA last increased the cash rate (to 4.75%). We’ve had a run of 18 straight cuts since then.

But the big banks aren’t basing their modelling, predictions and fixed-term rate increases on nothing – and it pays to pay attention.

So if you’re worried about what rate increases could mean for your household budget in the coming years, get in touch with us today and we can run you through a number of options.

That might include fixing your interest rate for two, three, four or five years, or just fixing part of your mortgage (but not all of it).

Every household is different – it’s our job to help you find the right mortgage option for you!

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’d like to buy your first home with just a 5% deposit and pay no lenders mortgage insurance (LMI), then you better act quick, as thousands of first home buyers are expected to rush to apply for the limited spots up for grabs.

And if you’re a single parent with dependent children, a similar scheme now allows you to purchase a home with just a 2% deposit without paying LMI, regardless of whether or not you’re a first home buyer.

In total, there are three federal government schemes that each released a fresh round of 10,000 spots on July 1.

Below we’ll unpack each of the schemes.

The First Home Loan Deposit Scheme (first home buyers)

The First Home Loan Deposit Scheme (FHLDS) allows eligible first home buyers with only a 5% deposit to purchase a property without forking out for LMI.

This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.

Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

As with the other two schemes below, there are just 10,000 spots available for this scheme this financial year – and in previous years they’ve been allocated within a few months. So you’ve got to get in quick!

The New Home Guarantee scheme (first home buyers)

The New Home Guarantee scheme allows eligible first home buyers to build or purchase a new build with a 5% deposit.

All in all, it’s a fairly similar scheme to the FHLDS.

One of the key differences, however, is that the property price caps are higher (see here), to account for the extra expenses associated with building a new home.

The Family Home Guarantee scheme (single parents)

The new Family Home Guarantee allows eligible single parents with dependants to build or purchase a home with a deposit of just 2% without paying LMI.

Unlike the two schemes above, you don’t have to be a first home buyer to qualify for this scheme.

Here’s a quick example of how it works.

John is a single parent with two young sons, Chris and David. John has found the perfect home for $460,000 but has struggled to save enough for the standard $92,000 deposit (20%) required while paying rent.

However, with the Family Home Guarantee, and on the success of his application with a lender, John could move into his dream home sooner, with just a $9,200 deposit (2%).

Get in touch today

With the three no-LMI schemes now open, we can’t stress enough the importance of applying for them as soon as possible to avoid disappointment.

In recent years the 10,000 spots in the FHLDS have been snatched up within a few months, and we’ve had more than a few hopeful applicants reach out to us when it’s too late.

So to help avoid disappointment, get in touch with us today and we can help you determine which scheme is most suitable for you, and then help you apply for finance with a participating lender.

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.