2016 has seen the Australian stock market fall by around 8 per cent already, and the dollar has just hit its lowest point against the greenback since 2009.
According to The Australian Business Review, the American S&P against the ASX 200 has dropped by just over 8 per cent since December 30 of last year. Historically however, that does not necessarily mean that a stock market crash is imminent. Australian stocks have traded poorly for a number of years, and there has not been a major crash since 2008. As the owner of an SME, the fall in stock price will not be seen as favourable for the market overall. To safeguard your business against a significant crash, freeing up some working capital can put you on solid ground.
How invoice finance can help
The finance solutions offered by companies such as Earlypay allow an SME owner to take advantage of unpaid invoices from customers, rather than sit and wait for the money to be paid, missing out on potential opportunities or even forcing your company further into trouble. Freeing your cash flow is going to allow your business to either continue operating as normal, or even prepare for expansion and development.
It might be pressing for some business owners to to add an extra layer of security with the stock market looking shaky.
With the Australian stocks appearing unstable at the start of 2016, it might be pressing for some business owners to add another layer of security by transferring their unpaid invoices into working capital.
If the stock market continues to fall, business owners will be wanting to take matters into their own hands and make sure that their companies are secure. On the other hand, if companies fall into the ailing stock market and are unable to recover, they will attempt to downsize or sell some assets in order to have their own cash flow that will allow them to stay afloat.
With the help of invoice finance, businesses can avoid waiting for the stock market to dictate which way their finances go, and instead secure themselves no matter what the ASX 200 does.
Mark Harper from Bank of Queensland Finance says "it's hard to grow when there's so much capital tied up in your stock".
With the stock market looking ominous, companies aren't going to be simplifying cash flow because they have too much stock remaining unmoved, but because they are needing security.
Early this week, Australian shares were down almost 1 per cent after only two hours of trade according to ABC, and with stocks being able to change so quickly, debtor finance is becoming more attractive to companies wanting added security for themselves.