How Australian Manufacturers Can Improve Cash Flow

Industries Manufacturing

Manufacturing workers looking over performance on computer on production floor

Recent boosts in orders and upcoming tax cuts, effective from July 1 2024, suggest an improved outlook for Australian manufacturers. Yet, challenges like labour shortages and high operational costs persist, making smart financial strategies essential for sustained success. Below, we outline key actions you can take to navigate these challenges effectively.

Understanding the Current Landscape

Recent data reveals a 20% increase in new orders during the June quarter, marking a significant turnaround. Yet, despite these positive signs, manufacturers are battling ongoing high costs and labour shortages. To thrive, they need to adopt smart financial strategies that go beyond conventional methods.

Strategic Financial Management Steps

Optimise Your Payment Terms

Negotiate Better Terms: Revisit your supplier agreements. Negotiating longer payment terms can improve cash flow, helping you manage expenses more effectively and maintain liquidity for daily operations.

Boost Your Business with Payables Financing

Increase Efficiency and Stability: While receivables can be unpredictable, effectively managing payables can provide a stable foundation for financial operations. Payables financing allows you to leverage your existing obligations to unlock additional liquidity, enabling you to tackle unexpected costs or seize new opportunities without straining your cash flow.


Maintain Flexibility with Supply Chain Financing

Ensure Continuous Supply Chain Strength: Implement supply chain finance to pay suppliers early without depleting your cash reserves. This strategy supports a robust supply chain by maintaining your operational flexibility, crucial in variable market conditions.


Regular Financial Reviews

Adapt and Improve Continuously: Continuously monitor and adjust your financial strategies in response to economic changes. This proactive approach ensures resilience and readiness for future challenges.

The Power of Effective Payables Management: Effective payables management enhances supplier relationships and unlocks financial advantages like early payment discounts. These benefits can significantly reduce costs and boost your financial capacity for growth.

Takeaway

In today’s competitive market, managing finances effectively is more crucial than ever. Adopting strong payables management practices empowers manufacturers to not just survive but thrive.

With Fifo’s expertise, we can help streamline your financial operations to enhance cash flow and drive business growth. Reach out to our team to explore how we can help your business do more, win more and grow more.

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