Income is king in the world of the small company and unless you are particularly keen on using expensive forms of credit it is probably a good idea to adopt good working practices right from the start to keep cash moving.
Be aware and forewarned. Only by keeping completely on top of your available money situation will you be able to deal with any kind of potential problems before they get out of hand. You will likely have included a cash flow prediction in your original business plan, may waste this, update it weekly and don’t ignore systems that can get this process easier; look at accounting software program that incorporates a reporting tool as this will allow you to access the relevant numbers at the touch of a button. It really is however pointless having instant access to great information if you fail to respond to what it tells you. Look for looming cash flow issues and address them early.
Market Effectively. One potential reason for poor cash flow could be stagnating sales. Go back to your original marketing strategy and revise your strategy. If you don’t reach your customers, existing and brand new, things are likely to grind to a stop.
Easy Payment. Once you have reached the customers and convinced them to order, allow it to be as easy as possible for them to part with their cash. User-friendly systems like telephone and internet ordering are a must and when there is a way to pay accept this; card payments, direct debit, position order. Make things as easy as possible for individuals to give your business what it is owed.
When customers don’t pay out you will need an efficient strategy in place to recuperate debts as quickly as possible if you don’t want to end-up in a cash flow crisis, but among the best ways to avoid the situation of poor debtors is to run credit investigations before extending credit to anybody.
Supplier Management. Use suppliers with whom you’ve negotiated advantageous transaction terms where possible and ensure fast delivery, if every link in the cash flow chain is not working efficiently problems can and will arise.
Production Efficiency. Even if your customers all pay on time and your supplier is happy to wait for payment for months, cash flow problems will surface if you don’t get paid at all because you haven’t delivered. Assess the quality of your product regularly and maintain stock quantities sufficiently.
So , king or not, cash flow is something that can easily be handled and certainly doesn’t have to be a get worried. If you take care to put the right procedures in place early there is no reason at all that your small business can’t have excellent cash flow
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