-Create a sales forecast. Though you might find it hard to do in the beginning, after running your business for a few months, you will should have a good idea of how sales will stack up month to month. Take a look at your inventory and know which items move quickly and which have been gathering dust for a while.
Have a benchmark for what you think will happen. Make sure to forecast out by month, category and what revenue you anticipate based on history. Make it more detailed. With these forecasts, you may end up finding the cash required to make purchases for your business.
-Manage Your Business Costs. In protecting your bottom line, you do not only need to focus on increasing your income, but you also need to reduce your expenses. The key to achieving a positive cash flow is to do understand simple things such your cost centres and review their numbers on a monthly basis against budgets.
-Work Out an Inventory Management Plan. After finishing writing out your sales forecast, it's now time to think about inventory. Make sure that you do not go overboard when purchasing inventory. Business management experts say "less is more". This is because lean inventory means that you are not investing precious cash in unnecessary, excess inventories.
-Make A Discount Incentive Program For Early Payers. Give rewards or incentives to any customers who pay on time or who pay before the due date. This strategy can help entice customers so you can get the ball rolling towards you all the time. Consider also offering a cash discount to customers that pay in a short period of time, designated by you, or to a customer who pays cash.
-Ask for Full or a Portion of Payment Up Front. Ask for at least a deposit up front as this is a great way to jump-start your cash flow and gets a firm commitment from your clients.
-Closely Manage your Receivables. Make a detailed "aging" schedule of what you are owed, by whom and for how long. Don't forget or hesitate on calling overdue accounts quickly, focusing first on the largest amounts due. Make sure to ask if there is anything you can do to expedite payment. If you can, introduce a automated debtors follow up system which will reduce the time required by administrative employees in following up clients that haven't paid.
Hi there,
ReplyDeleteWere having a few cash flow issues with our panel beating company. We are regularly waiting on insurance companies to pay is, which leads to cash flow issues despite our best efforts to speed things up. Have you had any expedience with debtor finance as a solution? if so would you recommenced it? We are looking into this company that provides Debtor Finance as a cash flow solution. I'd appreciate any feedback that anyone has had with this company or debtor finance in general.
Many thanks,
debtor finance (or invoice discounting) is another great way to keep your cash flow healthy, especially for some small business owners and those who deal with insurance company all the time, it is much more faster and effective than the traditional bank loan, and you do not have to encourage your customer to make early payment by offering them more discount.
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