Helping Your Cash Flow
Setting up a good credit control system needn’t be complicated – it’s really all about getting paid as soon as possible – but it’s essential to put some procedures in place. The basics include setting clear credit limits and payment terms for your customers, sending out invoices promptly and firmly chasing all debts when due. You should also stay on top of customer payments and be quick to stop offering credit to bad payers.
Put simply, sales forecasting is all about predicting what’s ahead so you can prepare for cash flow peaks and troughs and knowing your business fluctuations in your market. Remember it’s better to be overly cautious than optimistic – that way, you’ll hopefully avoid nasty surprises.
Cutting unnecessary costs and spend
Think about what you are spending. Does the business really need this to grow?
Negotiating good terms with suppliers
If possible, try and negotiate good payment terms with large suppliers & lenders, this will help with your cash flow. Try not to pay to early if you have the money in the bank unless discount is offered. Keep on good terms with lenders. Times might be tight and it’s harder to get a loan than it used to be but it still pays to keep on the right side of the bank. Always keep your books up to date so you can show your figures, just in case you need to borrow – and don’t forget, if you’re struggling with repayments, talk to your lender/supplier rather than burying your head in the sand about the debt. Try to extend payment terms.
Being realistic about your business
Sometimes you need to take a step back to see things clearly and running a business is no different. If you’re always struggling and your cash flow statement is poor, ask yourself why. Are your sales too low? Are your products poorly priced? Can you chase payment more quickly? Be level-headed about your venture and its future – if you’re not making a profit, you might need to rethink things.