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Cashflow tip – Improving Cashflow in a Business
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Published on Thursday, 08 March 2018 12:15
There are several areas of your business can have an effect on cash flow, that is, how much cash is available. Here are 5 things to attend to when cash is low. Overall, controlling your expenses and increasing your sales, can improve your cash flow, and here’s more about how -
1. Review stock levels
By holding too much stock means you tie up cash and increase storage and insurance costs. Practicing good stock control is to keep stock at efficient levels to service customers, but not sit for months waiting to sell.
2. Manage customer and supplier accounts
Regularly follow up those overdue debtor accounts who owe you money. Manage debtors by having good credit policies and enforcing them, to keep your cash coming in.
You may also be able to negotiate longer payment terms with your creditors/suppliers. If you can get payment from your customers before you pay your suppliers, you will have zero out of pocket expense – easier said, but sometimes can happen.
3. Review banking products
Using the appropriate banking transaction products can have the money in your pocket sooner. Consider a mobile EFTPOS device, or investigate services to take payments over the phone or online.
4. Increase sales income
Review your pricing (time to increase?), use a new advertising campaign or improve your customer service and sell add-ons (would you like Fries with that?) to see if you can increase profits. You may also want to consider other ways to growing your business, such as complimentary products or services.
5. Reduce overheads
Think about reducing staff overtime hours and controlling overheads. Make your business more environmentally friendly may reduce costs such as power and water bills and minimise wastage. Remember to clearly communicate your policies on these items to your staff.
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