As a corporate advisory director, I’ve had a few years’ experience guiding Australian, New Zealand, USA, UK & other SE Asian businesses through financial challenges, experiencing firsthand how cashflow issues can often kill even the most promising business. Today I just wanted to share some straightforward, effective solutions that can really help & make the difference. Some practical steps:
First and foremost, streamlining operations is crucial. Take a good hard look at all your business processes and take steps to eliminate inefficiencies. This might involve automating certain tasks, reorganising workflows, changing timetables, simplifying the business.
Next, customer credit management. It’s amazing how many businesses have lax credit control. Implementing a robust credit check system for new customers and adjusting credit terms for existing customer, based on their current payment history.
Customers; don’t shy away from pricing adjustments. If your costs increase, it’s perfectly reasonable to pass some % on. However, be strategic about it, consider offering early payment discounts for prompt on-time payments.
For customers with long-term contracts, implement staged payments, based on completion of specific easily measurable project milestones. This ensures a steady cash positive cashflow throughout the project.
Supplier – negotiate better trading terms. You’d be surprised how often a simple conversation can result in more favourable payment terms or even early settlement discounts.
When it comes to operational improvements, distinguish between essential and non-essential expenditure. It’s a simple concept, but one that’s often overlooked. Cut the fat, but be careful not to trim the muscle of your business.
Set up a savings deposit bank account, interest rates are still relatively high. So regularly squirrel away, regular, even small amounts of cash to build a crucial buffer for unforeseen adverse future events.
For those grappling with existing debts, my advice is clear: negotiate with debt holders and funders well in advance. Proactive communicating in advance always helps avoid unnecessary urgent last-minute deliberations, which often end unfavourably.
Set up an accurate cash flow forecast, with regular reviews. This is your financial crystal ball, providing valuable insight into future issues, so you can address them before they bite you.
Successful Cash flow management isn’t difficult or time consuming. Implementing simple easy fixes, can significantly improve financial health.
Want to take control of your cash flow? Book a complimentary business cash flow check with Keith Wilson, Director at CAAA Corporate Advisory, and get expert insights tailored to your business.
Book your free cash flow check with Keith on 02 9299 1200 or send an e-mail to keithwilson@caaa.biz today.