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4 tips to better manage your cash flow

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Everyone would love to have not only the cash flow to pay all our bills on time, but also to be organised enough to do so. Ultimately we prioritise payments based on the importance of the supplier, credit terms, discounts offered for early/on-time payments, but most importantly on the financial penalties imposed on late payments.

Sometimes penalties/interest exceed the original fee or interest on credit cards in particular can be 20% or more, creating further cost for you. In addition where a credit card offers say a 55 day interest free period if the balance is paid in full, then that free credit can be taken advantage of, but only where the full balance is paid on time. If not fully paid, then the high interest rate will then apply.

In addition, some credit cards if paid late will charge interest at their high interest rate (often between 14% and 25%). If paid in full but say 5 days late, then the financial institution may charge interest not just for the 5 days late, but can go back by ignoring the interest free period due to non-payment, going back to the original transaction date. That means what you thought may have been interest for just 5 days may be for a much longer period, and be much more substantial.

Similarly, if a credit card statement is short paid by a small amount, the Financial Institution could charge back dated to the transaction date for the full amount of the monthly balance, so be wary of your credit card conditions and payment terms.

Apart from credit cards, there may be significant penalties or discounts that could be incurred or lost if not paid on time, and some of these mentioned payees may be fairly strict on the cut-offs, and don’t accept excuses. They include;

ASIC – ASIC annual review fees now cost $254 per annum for private companies, due on the anniversary of the creation/incorporation of the Company. If paid up to 1 month late, there is an automatic penalty of $78 and then anything more than 1 month late incurs a $323 fee (more than 127% of the original fee). Similarly any ASIC change of address (Director or Company) needs to be notified within 28 days with no fee, but if lodged late, they too will incur the $78 and $323 late fees as applicable.

Property Rates/Electricity Bills/Vehicle Registrations/Body Corporate Fees – These type of payments often offer a discount for on-time bill payment of between 5% and 15% so worth paying on time.

Credit Cards – As mentioned above, failure to pay the full balance of the monthly credit card statement will result in interest charges – often between 13% and 25% of unpaid balances. Sometimes if credit card balances have grown to a level where it is extremely difficult to make an impact by monthly repayments, then refinancing with property mortgages where equity exists will save thousands in interest and monthly repayment commitments. Contact Etairos Finance if you need assistance with this.

Telephone and Internet – If a telecommunications invoice is paid late, quite often you will incur a flat late payment fee of $15.

If cash flow restrictions exist, then it is important to be aware of the consequences of which bills have bigger financial penalties, and which ones could be prioritised to minimise these unneeded additional fees. If you have the money, but are sometimes hit with these financial penalties just for forgetting to pay on time, get organised by setting diary reminders (monthly/quarterly).

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