Be King of Your Cash Flow
Aug 12, 2014
Even profitable businesses can and will fail if cash flow is not managed properly. If you don't have enough money available to pay your lenders or suppliers, banks may foreclose and suppliers could cut supplies; or god forbid you can't pay payroll.!
There is alot that can impact on your cash flow. It is important to understand how customer payment terms, supplier payment terms, loan payments, future spending decisions and other items can affect your cash flow.
Stock Levels for Onsale
Holding too much stock ties up cash and increase storage and insurance costs. Knowing what stock to buy, when to buy it and how much is essential for good stock control. If you have local suppliers, check on their internal stock controls and buying procedures... maybe you can keep the risk with them until you need it for your clients and have minimal stock in store.
Managing Debtors & Up-To-Date Bookkeeping
Proper management of your Debtors will help you get paid faster and prevent bad debts. Prompt collection of debtors’ accounts will also help you maintain a healthy cash flow. Also providing a detailed invoice to arrive with your product or service can speed up customer payments. You should always issue your invoices promptly. If you need assistance with this, Tropical Business Solutions offers solutions and bookkeeping staff who can assist weekly to keep you on track.
Having reliable suppliers is an important part of providing your customers with quality products and services at competitive prices. You may be able to negotiate longer payment terms with your suppliers, if you can get payment from your customers before you pay your suppliers, you will have zero out of pocket – effectively an interest-free loan!
These are only some of the areas within your business that can be effective in reviewing your cash flow. If you are interested in further reviewing your business cash flow please contact us for a more detailed review.
Tropical Business Solutions
Director at Tropical Business Solutions.