Thanks to the post-pandemic economic challenges and the ongoing geopolitical turbulences, the cost of doing business has sky-rocketed – even in Australia.
Unsurprisingly, these high-cost-creating circumstances have had a direct negative impact on small businesses and home enterprises as well.
While it’s true that the SME sector has been bravely navigating through the countless issues created under constrained Australian economic conditions since the start of COVID, recently they have been faced with a new disturbing challenge in the form of a growing gap in cash flow!
Is there a practical solution for this? We looked for possible answers…
The impact on SMEs
The data collected from recent reports referred to by Accountants Daily show that:
- 9 out of 10 small businesses are struggling with negative cash flow.
- An average small business is at the risk of experiencing 4.2 months of revenue issues due to the expenses being larger than the income.
- 1 out of 5 SMEs endures bigger expenses over revenue for almost half a year.
- In 2021, almost 92% of SMEs experienced at least a month of negative cash flow.
As a result of this ongoing chronic cash flow stress, many small business owners have had to cut costs drastically. This happened in the form of minimizing staff, and investment and even reducing business hours, which end up compromising a business’s growth, quality deliverance, and survival.
So now what? There’s a solution that can remedy most of these key cash flow issues: eInvoicing.
What is e-invoicing?
In simple words, e-invoicing enables invoices to be transmitted electronically between a buyer’s and supplier’s Accounting software using a standardized framework – in Australia, we use the Peppol network which is an internationally-approved standard.
Can e-invoicing help Small Businesses?
E-invoicing is a game-changing digital and financial tool that can benefit SMEs. Apart from resolving most of the administrative and technical issues traditional invoicing creates, e-invoicing ensures:
- Instant invoice delivery – Eliminate invoice exchange delays through swift and streamlined operations.
- Safe invoice delivery – Eliminate the threats of email scams and safeguard your business details.
- Zero duplications and errors – Avoid duplications and errors usually caused by manual data entries.
- Faster payments – Start enjoying on-time payments and the use of automated notifications.
- Easy traceability – Keep track of your invoice movement and their progress, always.
- Cost-saving – Email and PDF invoices cost about $28 per invoice to be processed. An e-invoice costs only $9.
- Time-saving – No more laborious operations – your invoices are automatically delivered.
E-invoicing also has the capability to simplify the record-keeping process for a bookkeeper or an accountant and support them in creating a better financial strategy by providing accurate overviews of the invoice processes and the overall finances.
Adopting e-invoicing is a key step toward solving the ongoing cash flow issues SMEs face. It can help strengthen their cash inflow and even help inject money back into the business.
By using an ATO and Peppol-accredited Service Provider like Link4, you can become e-invoicing ready without disturbing your ongoing operations – Link4 offers a completely free sign-up with zero costs as our starting package.
Interested in learning more? Feel free to reach us at [email protected].