manage your businesses cash flow

Posted by:

With thanks to the O2 Ideas Room for blog posts…

Cash flow is the lifeblood of any business and these days is even more important than ever.

Below are a number of simple approaches to use when operating your business.

1.     Minimum Stock Levels. Keep your stock to a minimum. Only hold the stock that you know you can sell in the next 60 days. A business that normally holds 100k of stock, reducing this by 25% will inject 25k into the business.

2.     Cash is King. Stay on top of your Debtors! Customers will only pay you if you ask for the money. Remember the person who calls loudest will get often paid first. If you don’t like calling for money, have someone else call them.

3.     Improve Supplier credit terms. Renegotiate with your suppliers for the maximum credit terms they can afford. If you are a consistent good payer they are more likely to show a willingness to negotiate

4.     Avoid any large prepayments. Pay for expenses as you incur them rather than paying in advance. Examples of these could be rent or rates.

5.     Use assets to release cash. Look at the value in your business and how you can lever finance against this. You could use invoice discounting to release cash tied up in invoices. However you need to calculate the cost carefully of this form of finance looking at the bank fees in addition to the interest charge.

6.     Regular management accounts. By getting regular financial information on the performance of your business, you can see where your business is at right now. This can help better decision making for the business.

7.     Build a relationship with your bank. Use their services that they have developed to assist businesses. Talk to your bank manager and ask him about new services and offerings. Currently there is a €100m European Investment Bank available to SME’s ad discounted variable rates.

8.     Grants and Loans from the Enterprise boards. Before you make any investment, look and see if there is assistance available that your business could avail of.

Ideas Room


Add a Comment

You must be logged in to post a comment.