It’s not from lack of profitability. It’s not from a lack of customers. Or poor customer service, or bad marketing or even from negative reviews… Though all these things can contribute.
No, the number 1 reason that businesses fail according to ASIC is from a lack of cash flow. Helping you get paid is the reason that we exist – everything we do can be linked back to improving your cash flow.
You’ve probably heard the term “Cash flow is king” so, what is cash flow, how does it cause a collapse and what can you do to avoid a lack of cash flow in your business?
Cash flow refers to the net cash coming into and out of a business. Cash coming in from customers, creditors, grants, loans and the like is called inflows. And cash going out to employees, the ATO and suppliers etc is called outflows.
Cash flow is different to profit in that profit is the cash left over after all expenses have been paid, whereas cash flow is the sum of all cash both inflows and outflows within a business.
Cash flow is a good indicator of a businesses strength. If your business wants to finance a new piece of machinery for example, a bank or lender will most likely want to see a cash flow forecast (and a credit report), to assess your ability to service the debt.
If you don’t get paid by your customers, you can’t pay your suppliers. That is a lack of cash flow.
You can have a solid number of customers and great profitability, but if customers do not pay you on time then that lack of cash flow means you now have less cash to pay your obligations (tax, employee pay, suppliers) and this can very quickly compound into a fatal, unrecoverable spiral for a business.
This downward cash flow spiral can happen very quickly with very few businesses finding their way out.
If you then have no cash and cannot pay your bills, your business is technically insolvent. Your suppliers or the ATO for example may send you a statutory demand for payment, if no payment is made, they can apply to place your business into liquidation to recover what they are owed.
Once the liquidators are involved, you no longer have control of the process or the outcome.
Don’t let overdue invoices age – time and inflation make invoices worth less. We know from experience that the sooner an overdue debt is escalated to us, the more likely we are to recover that cash for you. We recommend escalation at 90 days.
Use accounting software to track your cash flows and automate invoice reminders, we recommend MYOB or Xero. These applications can also load your overdue invoices directly to us for resolution.
Understand what your cash flow looks like from month to month to help ensure that you can spot problems early enough to act. Your accounting software should be able to do this for you. We have an in-depth guide available here.
Ensure your terms of trade are current, legal and clearly set out obligations, allowing you to conduct credit checks and pass any recovery costs onto your customers in the event of a default. Our Business Support Specialists can help.
Take the guesswork out of bringing new customers on. Our Credit Reports will give you objective data to make an informed decision as their credit-worthiness.
Our Business Support Specialists can share information and experience on the best ways to protect your unique businesses cash flow and understand your risk exposure.
We are a full service credit management agency that has been supporting Australian businesses for over 30 years. As a specialist in debt resolution and developing business terms and conditions of trade, we have the tools and expertise to help minimise the risk to any business that offers credit. For a free no-obligation consultation, get in touch with your local Business Support Specialist.
EXCELLENT Based on 176 reviews Sean McGovern28 August 2025Trustindex verifies that the original source of the review is Google. Great team to work with. Aimee Kemp19 August 2025Trustindex verifies that the original source of the review is Google. Friendly, professional team and always able to help and assist when needed. Administration Administraion15 July 2025Trustindex verifies that the original source of the review is Google. From the dealings we have had - Staff Always helpful and informative. A pleasure to work with. Thank you Lucy Tripney2 July 2025Trustindex verifies that the original source of the review is Google. Philip worked with us to build a Privacy Policy for our business. Can't fault the efficient and friendly communication and follow up to get this created and implemented effectively. Sheryl Murray18 June 2025Trustindex verifies that the original source of the review is Google. Terry Foley from EC Credit has again helped us with Updating all aspects of our business to ensure that we are compliant and up to date with all current legislation. Both Terry and his team have been amazing to deal with. Would recommend to all Op professional11 June 2025Trustindex verifies that the original source of the review is Google. ⭐⭐⭐⭐⭐ Excellent Service and Results We’ve had a great experience with EC Credit Control. Their team is professional, efficient, and effective in recovering outstanding debts. Communication has been clear throughout the entire process, and they handled everything with integrity and persistence. They made a difficult situation much easier to manage and delivered results quickly. Highly recommended for any business needing reliable debt collection support! Annette O'Brien5 June 2025Trustindex verifies that the original source of the review is Google. Terry Foley from EC Credit Control helped us to obtain our new Terms of Trade for our Air Conditioning company. We found Terry very thorough, efficient and knowledgeable. He explained everything really well to ensure we are properly covered in every aspect and continues to assist us in matters with customers. Highly recommend Terry and his team for your Terms of Trade.Verified by TrustindexTrustindex verified badge is the Universal Symbol of Trust. Only the greatest companies can get the verified badge who has a review score above 4.5, based on customer reviews over the past 12 months. Read more
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