Learn how Profit First can maximise profits and streamline operations for retailers and wholesalers...
Landing a big business client seems like the holy grail for a lot of small business owners, however, is servicing this account all that it’s cracked up to be?
Following an independent payment times review, the Albanese government has accepted all the recommendations and is committed, to the tune of $8.1 million, to cracking down on noncompliance, speeding up payment times as well as naming and shaming those big businesses that fail to pay small businesses within terms.
The review was headed up by former Labor politician and economist, Dr Craig Emerson. As part of the findings, it is suggested that the government holds large businesses to account when small businesses are so often held to ransom when it comes to payment times and terms.
Minister Collins says “This is a matter of fairness. Big businesses should not take advantage of 2.5 million small businesses by failing to pay them on time”.
The government’s aim is to support initiatives that will prioritise better outcomes for small businesses when it comes to faster payment times, improved cash flow, reduced financial costs and admin.
Ready to revolutionise your business's financial approach? Join us on a journey to financial success by embracing the Profit First Methodology. Partner with us now and pave the way for a brighter financial future.
Some small businesses already use the government’s ‘Payment Times Reporting Scheme’ which was launched in 2021. It is essentially a database for large businesses and governments enter times to report their payment terms and times for small businesses. In doing so small businesses are able to access history and information on a business’s standard payment terms, actual payment times and the use of supply chain agreements.
One customer advised us of a client of theirs, a large beverage company whose standard payment terms were 90 days. ‘These terms were non-negotiable and would put a lot of strain on our cash flow. As a small business trying to cover costs whilst waiting for the payments to come in, 3 months after the delivery of goods took place, was very stressful!”.
This is where we ask, is it worth doing business with the big guys? Of course, the answer is dependent on each individual business and its goals, but if you have a cash flow strategy in place to help manage your money then the answer should be yes!
Implementing a system such as Profit First can be a game changer when it comes to cash flow as well as other areas of your business. When you utilise the tried and tested principles you will achieve tangible, deliverable positive results. Here at Profit First Accounting, our CEO Vanessa Fiducia is a masterly level certified Profit First Professional. This means that your business can receive expert advice and guidance on how to best manage your business’s cash flow. Whether we suggest you introduce the basic principles of Profit First to ensure that your money is being allocated and spent across the different areas of your business, or a more advanced ‘Drip Account’ (a strategy used for irregular income, and distributes money over time.) system. If you would like to discuss how your business’s cash flow can be overhauled, when you can say goodbye to the panic and anxiety related to thinking ‘where will the money come from to pay this…” then please get in contact with us.
Another way of combating the perils of working with big business is honing your negotiating techniques. We suggest that you have your 3 P’s of negotiating ready:
When dealing with big business, always be prepared. Utilise the ‘Payment Times Reporting Scheme’. Know what position your business cash flow is in, and how long you can carry an account for.
Ask the questions that will affect your business. Be an active listener.
Have your initial offer ready, be prepared to compromise, and also know your last offer.
As part of our service at Profit First Accounting, we also offer business coaching. We are invested in ensuring your business is successful. If you feel like you need some more assistance when it comes to negotiating, please book a call.
As you can see there is not just one magic spell to ensure that your business is a success. There are many strategies that you can incorporate to maximise profitability and longevity. We are the experts so you don’t have to be. It is great that the government is taking a stance against Big Business, but in the meantime, whilst we wait for the legislation, book a call today so we can get your business to thrive the way you intended it to!
Explore our latest blog post..
