Most owners spend the week inside the business rather than on it. Quotes go out, the roster gets fixed, the supplier who short-delivered gets chased, and by Friday the bigger questions have been postponed again.
Those questions are where the money is. A day spent trimming small operating costs might save a few thousand a year. A morning spent on pricing, debtor terms and supplier terms can move far more, permanently, without adding a single customer.
What follows is roughly ordered by effort against payoff. None of it is clever. All of it is the sort of thing that gets pushed to next month.
Price, because nothing else moves margin as fast
If you have not reviewed prices in the last twelve months, start here. Wages, insurance, freight, materials and finance have all risen, and inflation has stayed elevated through the past year. If your rates have not moved with them, you have taken a real pay cut and called it holding market share.
Do it selectively rather than across the board. Rank jobs, products or customers by gross margin and look at the bottom quarter. Some need a price rise, some need a different scope, and one or two are worth losing. A 3% lift on a business running a 10% net margin is roughly a 30% lift in net profit, which no cost-cutting exercise will match.
Give notice and put it in writing. The customers who leave over 3% are usually the ones costing you most to serve.
The money already owed to you
Your debtor ledger is the cheapest source of working capital you have, and in most businesses nobody actually owns it. Pull an aged receivables report and work out your real average days to collect, not your stated terms. “30 days end of month” lands closer to 60 in practice, and if your average runs well beyond that, you are funding the gap.
The fixes are unglamorous:
- Invoice the day the job is finished, not at month end. Days lost here are days lost at the other end.
- Make sure the invoice carries what the customer needs to pay it: purchase order number, signed docket, correct entity, correct email. Most late payments start as an invoice sitting in a query pile.
- Give one person responsibility for collections, with a written follow-up sequence at 7, 14 and 30 days past due.
- Enforce the terms you already have. Stop-supply provisions and interest on overdue accounts sit unused in most trading terms.
Bringing average collection in by ten days on a business invoicing $500,000 a month frees up roughly $165,000. That figure is illustrative; run it on your own ledger.
Supplier terms nobody has renegotiated
Look at your top ten suppliers by annual spend. When did you last ask any of them for anything? Three questions are worth putting to each. Can we move payment terms from 30 days to 45 or 60? Is there a rebate at our current volume, or at a volume we could reach by consolidating? What is your settlement discount if we pay in seven days?
That last one is worth the sums. A 2% discount for paying 30 days early is a high effective return on money you are simply moving forward. Whether you can take it depends on having the cash free, which is why supplier terms and debtor terms are one conversation.
Get a comparable quote on your two or three highest-volume line items too, if only to know the market rate before your next review.
Overheads, assets and stock that aren’t earning
Print twelve months of bank and card statements and mark every recurring debit. Nearly every business finds software seats for people who left, two tools doing the same job, and a plan that renewed unnoticed.
Do the same for insurance. Premiums have risen sharply and most policies roll over untested. Have your broker re-market the program once a year, and check your sums insured match reality in both directions: under-insured on new plant, over-insured on gear you sold.
Then look at what you own. Every owned asset costs you repayments, registration, insurance, servicing and inspections whether it works or not. Go through the plant and vehicle list and ask what utilisation each item runs at. Anything idle most of the year is cheaper to hire when needed, and selling it turns a cost into cash. A sale and leaseback does the same on gear you must keep.
Stock is the same problem wearing an asset’s clothing. Age your inventory the way you age your debtors. Anything untouched for twelve months is not stock, it is a decision you have avoided, and discounting it to clear usually beats carrying it another year.
Staff time spent on work that doesn’t earn
Wages are the largest operating cost in most Australian businesses, so structural improvements are worth more here than anywhere else. The question is not whether people work hard, but whether the hours point at work that earns.
Look at how rostering sits against actual demand by day and hour, how much time goes to rework and to quoting jobs you never win, and how much administration exists only because a process was built around a system you replaced years ago. Your accountant can usually supply wage benchmarks for your industry; if you sit well outside them, understand why before you touch anything.
Doing it in order
Work down the list rather than across it. Price first, then debtors, then suppliers, then recurring overheads, then assets and stock, then how labour is deployed. Each one funds the next. Anything with a tax or structuring angle is worth a short conversation with your accountant first.
Once that work is done you will know whether what remains is a margin problem or a funding one. If the business is sound but the cash arrives too late to be useful, that is structural and needs a different fix. Flexible Capital deal with that gap every day, and are worth a call once you have taken the easy wins yourself.
