The Reserve Bank of Australia (RBA) has paused the interest rate rise cycle, providing some relief to both consumers and businesses. However, as Luke Fossett, General Manager of GoCardless Australia and New Zealand, points out, businesses should not let their guard down.
“Today’s rate pause is good news, but we’re not out of the woods yet,” says Fossett. “Businesses need to continue to monitor their finances closely and evaluate their payment strategy to better navigate the precarious economic environment.”
With consumers feeling the pinch of rising inflation, businesses can expect to see a decline in spending. This means that it is more important than ever for businesses to offer a seamless and convenient payment experience.
“Savvy businesses should use this time to cut their unnecessary costs while enhancing customer experience in small yet meaningful ways,” says Fossett. “This could include tweaking their online payment experience to make it more user-friendly or offering flexible payment options.”
Fossett also suggests that businesses consider reducing their reliance on debt during this time. This could mean avoiding credit cards or opting to collect payments through more cost-effective methods such as Direct Debit or PayTo.
“Banks and payment providers are rolling out PayTo across Australia,” says Fossett. “This will reduce transaction costs, increase cash flow and avoid payment failures.”
In the short term, these changes will help businesses to weather the storm. In the long term, they will provide a competitive advantage and boost profitability.
What Can Small Businesses Do Now?
Here are some tips for small businesses on how to navigate the economic uncertainty following the RBA interest rate pause:
- Monitor your finances closely. This includes tracking your cash flow, expenses and debt.
- Evaluate your payment strategy. Are you using the most cost-effective methods for collecting payments?
- Cut unnecessary costs. This could mean reducing your marketing spend, travel expenses or office space.
- Enhance customer experience. Make it easy for customers to pay you by offering flexible payment options and a seamless online checkout experience.
- Consider reducing your reliance on debt. This could mean avoiding credit cards or opting to collect payments through more cost-effective methods.
- Stay informed about the latest economic trends. This will help you to make informed decisions about your business.
