Who doesn't want more cash in their bank?
More cash = more options.
More options = less stress.
Less stress = better choices.
Better choices = a greater chance of success.
More Success = more cash
And round it goes!
You know the funny thing is those who say things can’t be done are so right. They’ve proved it. However, those that believed that things could be done were right too. They also proved it. I know which line of thought I would rather go down.
So, what has that got to do with improving your cash flow? Absolutely nothing but I just wanted to give you a boost of encouragement this week.
So right, cash flow… an area where there aren’t as many choices. Here are our 5 RightWay tips for better managing your business cash flow.
Do these and YOU WILL have more cash available!
Tip 1 - Perform a good forecast
Most things are predictable if you spend the time working them out. Sit down with your accountant (or get a better one if they’re no good) and do some good forecasting of where your cash is going over the next few months.
Tip 2 - Evaluate your customer termsf you are paying people 20 days after they invoice you and your customers are paying you 40 days after you invoice them, then that results in a big gap that you have to fund. If you fund it, then there's less cash for you. Tighten up your payment criteria.
Tip 3 - Enforce payments
This one's pretty simple, if people haven’t paid you then they either genuinely can’t (and you shouldn’t sell to them) or they’re taking the mickey. Tell them there are perfectly good banks out there that love being banks and last time you looked you’re not one of them. It’s great being charitable, but don’t confuse business with charity! Having flexibility is great especially with our current economic position, however, remember tip 2 - if you have a big gap between invoices going out and finance coming in then there is simply less money in your cash flow back pocket.
Tip 4 - Turn over your stock quicker
You either sell products or you sell your time (services). Either way, don’t let it just sit there. Turn it into cash quicker. Look at your badly performing inventory lines and get out of selling them. So much money can be tied up in slow-moving stock. The same principle applies to people selling services. Ensure your invoicing process is as quick as it can be. I know so many tradesmen who take forever to get their invoices out. Start a new routine, send them out immediately after the job has been completed.
Tip 5 - Make cash a priority
if you don’t then it won’t just look after itself. Cash is King in a business so make sure it gets to be treated like a King. Give it your best attention. Put some focus into how to turn your hard work and effort into more dollars in the bank.
Get those things right and you’ll have more cash around. That should help put a smile on your face.