On October 7th 2014, my ebook: Cash Flow - Advice for business owners and finance managers will be published for ipad, iphone and kindle and will be available from amazon.com. This blog entry is a sample from the ebook. There are 20 topics like this one covered in the ebook.
If your cash flow is under severe pressure there are some simple steps that you can take to regain control of what appears to be a downward spiral.
The first step is to stop and think. Then start to gather information about the cash position.
· List all of the payments you need to make to suppliers, payroll, the tax man, the landlord etcetera and schedule them by due date.
· Prioritise the payments. There will be many that you can delay and some you can’t, such as payroll, phone bills etc. Schedule the payments by week due.
· List any unbilled sales.
· Produce an up to date detailed debtors aging.
You should now know the cash going out of the business and how much you can expect to come in. This will enable you to prepare an eight week weekly rolling cash flow forecast.
You need to act on boosting cash inflows. Call your customers to accelerate cash collection.
Start calling for the largest and oldest debts and work in to the smallest and most recent so that use of your time is maximised.
Consider offering an early payment discount to secure cash sooner.
Turning sales into cash starts with invoicing. Consider invoicing in advance or partially in advance. For example, invoice 50% on commencement of work or placing of order and the balance on completion.
Invoice frequently during the month rather than at month end. This can bring cash in up to 30 days earlier.
At the same time how can you stem cash outflows? Go back to your prioritised payment list and approach selected suppliers and creditors for extended terms.
Ask for extra time to pay PAYE and VAT. Your landlord may agree to a rent holiday or to being paid rent monthly instead of quarterly in advance.
If you agree extended terms, make sure you honour them so that you do not lose credibility with your suppliers.
Delay incurring expenditures and cut costs.
As a first step, why not pick the phone up and call John or email him and arrange to meet up.
John's website is: http://www.nomizon.co.uk
His credentials: http://www.linkedin.com/in/johntoppin