Trent Brown, Ezypay’s CEO talks to Sky Business about the impact of direct debits on cash flow for small to medium businesses.
In a recent survey, 10% of businesses are finding it significantly more difficult to obtain credit from the bank. 15% are finding it slightly more difficult. None are finding it easier to get money from the banks. All these make managing cash flow more difficult, especially for small businesses.
In the interview on Sky Business News, Trent Brown says it’s really difficult to obtain credit. According to the survey, 48% of businesses are negatively impacted by the credit crisis. As a consequence, in the last quarter, over 50% of businesses have seen reduction in sales and reduction in profitability. All of that happening and access to finance has been taken away is a really difficult time for small businesses.
Traditionally, small businesses have to rely on credit to grow. In the boom time, access to capital was so easy to get. Trent Brown says, what happened was lot of small businesses took their expenses up to their expansion capital rather than their regular sales. So as a consequence, now they are finding themselves in a bit of a debt spiral ‘cos the market has turned. They haven’t got that same access to capital and they need to find ways to actually meet their fixed income.
Access to finance is the biggest issue. A lot of businesses have seen that their customers are dictating to them that they want smaller finance terms. Yet that access to consumer finance in particular via the customers isn’t there. We’re supporting them in regulating their cash flow, ensuring they get it on time every time. That’s what direct debit does. You can actually take control of the customer relationship and not take before or after it’s due. But the day it falls due.
Effectively direct debit is a business relationship whereby you have the capacity to go into your customers’ accounts and actually take the money the day it falls due. For example, we collect about 98% of funds the day it actually falls due and we have a process that enables us to follow that up and it actually increases up that rate. On average, small businesses usually have a bad debt ratio around about 5%. We’re actually reducing it by 3 points. It’s a great way to ensuring cash flow.
It’s not for every business. But using direct debit as a prepaid lay by is something we see more and more.
Direct Debit with Ezypay
Ezypay was started in 1996 and it was the first company to do outsource direct debit and recurring credit card management. It was based on a small business owner actually needing to regulate his income and get matching expenses with that income level. As a consequence, he had a lot of businesses come to him and was asked to set up a service to collect that money progressively and deposited into their account and support them in following up. A lot of small businesses find that’s the hardest part. It’s actually following up payments when they are not successful. We do that end to end management.
Watch the full video to learn more.
The impact of the global financial crisis, cash flow and direct debits on small businesses could be reduced through direct debit with Ezypay way.