In a recent episode of the Fear and Greed business podcast, Sean Aylmer sat down with Wayne Morris, CEO of Fifo Capital, to discuss the challenges faced by small and medium-sized businesses (SMEs) in today’s economic climate. With rising interest rates, an increase in the minimum wage, a tight labour market, and ongoing supply chain disruptions, SMEs find themselves in what Morris refers to as a “perfect financial storm.” In this article, we’ll delve into the key takeaways from their conversation and explore the innovative financial solutions offered by Fifo Capital.
Wayne Morris draws parallels between the current challenges faced by Australian SMEs and the financial crisis he witnessed in the UK. While the specific issues may differ, the overarching theme remains the same — SMEs are grappling with cash flow and working capital challenges that threaten their viability.
One significant challenge is the extended cash conversion cycle, a measure of how quickly a company can convert its investments in inventory and other resources into cash flow. Lengthy cash conversion cycles can stifle a business’s growth and make it vulnerable to financial difficulties.
Morris emphasises the critical importance of cash flow for SMEs. He believes that businesses with healthy cash flow can weather economic storms even if they are not consistently profitable. However, when cash flow is disrupted, businesses face severe challenges.
Cash flow issues often result from delayed payments from customers and the need to pay suppliers promptly. These challenges have been exacerbated by the current economic conditions.
According to Morris, taking out working capital loans to address cash flow issues is akin to putting a band-aid on a larger problem. He argues that loans tend to prolong the problem, as businesses end up dealing with the debt on their balance sheets. Instead, Morris advocates for smarter solutions that are more transactional and tailored to each business’s needs.
Fifo Capital offers a range of financial solutions to help SMEs bridge the gap between paying suppliers and receiving payments from customers. These solutions include:
Supply Chain Finance: SMEs can use this solution to extend payment terms with suppliers while ensuring suppliers are paid on time. This allows businesses to maintain healthy relationships with suppliers without straining their cash flow.
Cash Flow Finance: SMEs can use this product to expedite payments from customers. It eliminates the hassle of waiting for slow-paying customers, ensuring steady cash flow for the business.
Trade Finance: This solution assists businesses in managing their cash flow when purchasing goods from suppliers. It helps SMEs avoid disruptions to their working capital.
Fifopay: The Digital CFO
Fifopay is Fifo Capital’s latest offering, acting as a digital CFO for businesses. This innovative platform leverages artificial intelligence to provide several key benefits:
In an environment where SMEs are facing numerous financial challenges, innovative solutions like those offered by Fifo Capital are becoming increasingly crucial. By streamlining cash flow management, addressing supplier and customer relationships, and providing real-time insights, Fifo Capital empowers SMEs to navigate the “perfect financial storm” and emerge stronger on the other side.
Are you an SME business owner or CFO, looking to maximise your company’s cash flow and boost your bottom line?
Discover how you can access valuable supplier discounts of up to 8% while optimising your working capital with our comprehensive training session.
Frequency: Monthly intake to accommodate your schedule.
Quick Setup: We’ll have you up and running with these powerful solutions in no time.
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