WARNING: The Fast Cash Flow Loan vultures are circling closer

As a presenter and panellist at the annual Sydney Accounting Expo in March, I expected to hear conversations on topics from Tax Debt to spiralling operating costs (and I did).  

What I DIDN’T expect was to hear so many concerns from so many people about the growing dangers of Fast Cash Flow Loans – and the rate at which they’re sucking vulnerable SME businesses into a financial death spiral.  

It wasn’t just finance providers who were worried about “the competition” – it was a key topic of real concern for many of the accountants and business advisors I talked with in conference breaks.

A new mind-bending financial nasty is currently in play

In the finance industry, we remember the 2015-16 Payday Loan scandal where people were sucked into expensive, impossible-to-repay loans.  Older players also remember the various consumer lending scandals that led to the 2009 Consumer Credit Protection Reform Package.  

The human race comes complete with its own predators built in.  Unscrupulous lenders regularly  find a new weak point that enables them to sell crippling high-interest, short-term loans to the financially stressed.  Right now they’re targeting SMEs facing increasing cash flow shortages.

Their latest gambit is to offer 24-hour Fast Cash Flow Loans – loans they push out to struggling SME operators as “the answer” to their cash flow woes.   It’s been a growing issue in the last year (as I pointed out last June “How to get off the short-term loan treadmill”) and it’s getting worse

These “easy” unsecured Fast Cash Flow Loans can sound compelling – but they mostly come with:

• Interest rates from 25% to 50% of the loan amount outstanding.
• Costs that include the 10% commission vendors pay brokers on the whole loan.
• No interest rate limits – because businesses aren’t protected by consumer protection law.

It gets worse, too. 

While you can’t get more than one  Fast Cash Flow Loan from one finance provider within three months, you can be sold loans from multiple vendors by the same broker.  This means that – when the first round of high interest repayments bites – you can be sucked into stacking a second loan on top – to pay the interest on the first loan (and then another one!)   

The best case scenario for businesses trapped in this situation is an endless hamster wheel of crippling debt repayments. The worst case is the end of a good business that took decades to build – and the destruction of the financial future of the business operators (and often their employees).

“Common sense” evaporates in a crisis

Few SME operators have deep financial expertise  – and  it can take just one major customer going bust  to  go from “OK” to “looming catastrophe”.   The shock of that catastrophe can be mind-numbing.

In the throes of the shock and embarrassment of that financial catastrophe – instead of sensibly picking up the phone to consult their trusted advisors for solutions  – SME operators can end up panic-buying Fast Cash Flow Loans from the vulture standing on their doorstep.

Business costs and uncertainty are sky-rocketing today – with both local and global causes.  Interest rates, tax debts, payday super, overseas wars, price rises and local fuel shortages all add to business costs and deep uncertainty.

How do you protect your business from Fast Cash Flow Loans?

ALWAYS get a second opinion on finance – ALWAYS!

If someone offers you “fast cash” – GET A SECOND OPINION.   Pick up the phone to your accountant. Or a financial planner in your business network. Or an expert Working Capital Strategist.

Or pick up the phone now and call me on 📞 0407 477 555

DON’T let panic open the door to the vultures, CALL SOMEONE.

Put a smart Cash Flow Management Strategy in place BEFORE you need it

You’re not there yet?  You don’t feel that you have a cash flow problem?  That’s good, AND….

What’s your plan if your biggest customer goes under tomorrow?  How will you respond?

How robust is your current Cash Flow Strategy?  Which practical tools do you have in place? 

PLUS what benefits are your missing out on today? Productivity? Stress reduction? Innovation?

In today’s world of 30/60/90 day credit terms and ongoing economic tumult, practical Cash Flow Management Tools and a sound Working Capital Strategy are essential.  

If you don’t already have these productivity tools in place, it’s time to make time to protect your business. If you have them – but they’re more than 6 months old – then book a  review of your existing strategy.

Get good business financing advice BEFORE you need it – and escape the vultures

In a world where small businesses carry big customers and their big invoices on long credit terms, good cash flow financing is essential for success.    

When you put the right tools in place – even if they cost a bit – then you’ll reap the productivity and innovation benefits they ALSO offer.

Yes, you’ll pay reasonable fees – like any business productivity tool – but if you act strategically and get independent advice based on expertise and sound strategy, you won’t get fleeced by vultures..

Panic-induced Fast Cash Flow Loans can be disastrous

“Needing finance” isn’t a management failure  – not in a world where big customers get long credit terms.  Today practical, strategic business financing is essential to business growth and resilience. 

The right financing strategy and expertly selected, effective cash flow tools will help your business grow and prosper. If you don’t have them, you risk getting sucked into toxic, expensive Fast Cash Flow Loans in a time of panic.

The best way to avoid bad business financing is to put good business financing strategies in place before you feel like you need them.

It’s by far the most productive way to escape the vultures.

Book a Working Capital Strategy session with me today – or pick up the phone now and call 📞 0407 477 555 (even if you DON’T feel that you have an immediate cash flow problem).