How important is collecting cash in Q2?

Well, it never seems to take long for someone to say “can you believe it’s October already?”

The smart-alec in me wants to say “well, yes, it happens this time every year.” But I know what they mean – the days, the weeks and the months seem to fly by when we’re all so damn busy!

And that’s why it’s important to get some rubber on the road right now.

You see, the second quarter is particularly important and never more so than this year.

With the Melbourne Cup and Christmas coming up, if you’re not ripping in now you won’t get close to your second quarter targets. If you’ve already slipped behind in Q1, putting that back-to-back with a poor Q2 means it’s backs to the wall for your full year targets.

Conversely, if you turn the corner into the new year in front, or on par with your targets, then you’re in a very good place.

Of course, profitability is one thing. But it’s only a measure on paper and you know it – cash is king!

If your sales drop away you’re prone to free-falling into the new year with a cash crisis. You need to work hard, send out your invoices and collect money before the end November. Those of you that have been in business a while will know that collecting cash in December and January is difficult. People are either away or pretending to be whenever you call looking for cash!

Why never more so than this year?

We are privileged to peek inside a lot of small and medium businesses and here’s what we are seeing – a real slow down in cash collections. Sales are chugging along, but debtors books are growing and so the ageing of those debtors is blowing out. Some industries more than others. But if that continues, even good, profitable businesses will begin to struggle.

I think the negativity in the press regarding our economy is driving some of this behaviour. People are trying to hold onto their cash in case the bears have got it right. And it’s a vicious cycle – if your customers aren’t getting paid, they can’t pay you!

So the message from me is to get onto it. There’s no time like the present.

If you are experiencing slow collections and you’d like to discuss what you can do about it, please give us a call on 1300 656 141.


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Neil Parker
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