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SMEs warned of back-to-school slump

Staff reporter
08 February 2017 1 minute readShare
Man with empty pockets

The head of a debt recovery agency is warning SMEs that the back-to-school period often delivers a slump in revenue, in what he refers to as the “graveyard month”.

According to Roger Mendelson, CEO of Prushka Fast Debt Recovery, SMEs should expect revenue drops in February as back-to-school costs and a Christmas/holiday hangover combine to tighten household budgets.

“Many householders go into the month of February trying to pay off maxed-out credit cards, Christmas bills and unanticipated back-to-school costs,” explains Roger.

“Many consumers just don’t have cash to spare at this time and this has a flow-on effect for businesses, which can expect a slump in sales for February and March.”Man with empty pockets

While many business owners actively plan for a quiet January, Roger says it is actually after January that many businesses experience the greatest squeeze on their finances.

“Most SMEs don’t account for this February slowdown, which results in what I call ‘graveyard month’: the period from late February to early March, which is the most common time for businesses to collapse,” he says.

Roger quotes ASIC figures showing that more than 1,600 businesses fell into administration in February and March 2016. He says a key reason for this is revenue constraints.

For SMEs grappling with the prospect of leaner times in the weeks ahead, Roger has this advice:

• Map out your outstanding debts;
• Write down your anticipated expenses over the coming two months;
• Don’t underestimate the power of a phone call! Follow up any debts older than 30 days, and get the debtor to advise when they will be able to make payment;
• Minimise unnecessary expenditure until after March;
• Go through old written-off debts and refer them to a collection agency as soon as possible.

SMEs warned of back-to-school slump
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