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How advisers can help SMEs with their seasonal cash flow issues

Seasonal cash flow worries for SMEs – what advisers need to know.

Tuesday, October 29th 2019, 8:00AM

by Adrienne Church

Adrienne Church is the general manager of Prospa New Zealand, the small business lending specialist.

While many New Zealanders start winding down ahead of the holiday season, the last quarter of the calendar year can actually be a stressful period for small business clients.

For some small businesses, the holiday season can be the most profitable time of year, which means more stock, more staff and more hours. For others, like the local CBD coffee shop, it’s the opposite and cash flow squeezes are common. 

It’s important to remember that small businesses face unique pressures depending on their industry and customer base. Advisers can help their clients identify and plan for these specific cash flow peaks and troughs, and provide the right solution for their funding needs.

In order to help small business clients manage their cash flow and set them up for success, there are a number of questions advisers should consider in the lead up to the end of calendar year:

1. What are the specific cash flow pain-points for your small business clients?

Knowing the answer to this question will enable you to better anticipate your small business clients’ funding needs - and provide them with the right solution, at the right time.

Think about the nature of different businesses, and when and why they are most likely to come under cash flow pressure. 

Retailers, for example, are likely to need capital to build stock levels in preparation for the Christmas buying period, or hire the staff needed to cover their busiest time of year. 

Meanwhile, construction and professional services firms will be facing the prospect of a quiet period – distracted by late payments while still having to cover salary costs and bills. Particularly in construction, small business owners may want to take advantage of supplier discounts on bulk purchases often promoted this time of year.

2. Are there other new opportunities within your current client list?

Take the time to review and analyse your residential client list, for example, with the goal of identifying any new small business lending opportunities.

This period should be seen as a chance to showcase the holistic suite of services and funding solutions you provide – and further strengthen your existing client relationships.

Not only that, but increasing these touch-points with your clients will make sure you’re front of mind for the start of next year too!

3. What more can I be doing to support my current small business clients? 

As far as possible, it’s also important to encourage clients to forecast their cash flow needs internally, so they can apply for a loan before the pressure really hits.

Many experienced businesses already do this, because they know and understand their seasonal ups and downs – but less experienced businesses may be at risk of getting caught short.

For many small business clients, if they reach this point, fast access to funding is critical. Advisers should keep this in mind, and ensure they have solutions available which can deliver on this.

The upside for small business is that the lending landscape, and funding options available, have changed dramatically over the last year.

SMEs are now able to access finance through alternative lenders who are focused on enabling business growth or smoothing out cash flow challenges – and can provide access to funds quickly and easily.

Advisers are in an ideal position to offer small business funding solutions that can provide breathing space. Consider how you can support your small business clients this quarter by identifying those cash flow pressures before they hit. For those going through a quiet period, you can help keep business moving, and for those facing a busy few months, you can help them seize these growth opportunities and contribute to higher returns.

Adrienne Church is the general manager of Prospa New Zealand, the small business lending specialist.

Tags: cash flow Prospa SME

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AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

Last updated: 10 July 2020 9:02am

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