Cash is king when it comes to the financial management of a growing company.
The delay between the time you need to pay your suppliers and employees and the time you collect from your customers is often a problem.
The solution is cash flow management. This means delaying outlays of cash while encouraging anyone who owes you money to pay it as fast as possible. Our most profitable business owners prepare cash flow projections for the next year...and often monthly. This allows them to see trouble spots before they happen and plan accordingly.
Improving cash receivable
Here are a few ideas to help you speed up cash collection:
Ask customers to make deposit payments at the time orders are taken;
Require credit checks on all new noncash customers; and
Issue invoices promptly and follow up immediately if payments are slow coming in.
Managing your expenses
Here are a few ideas to help you manage your expenses:
Take full advantage of creditor payment terms. If a payment is due in 30 days, don't pay it in 15 days;
Use your Bank funds transfer to make payments on the last day they are due; and
Don't always focus on the lowest price when choosing suppliers. Sometimes more flexible payment terms can improve your cash flow more than a cheaper price!
Preparing a cash flow forecast
We have helped many businesses prepare forecasts and can offer sensible and realistic advice on managing your cash. Please talk to us about how we can help!