In recent times many businesses are not able to build up sufficient reserves to overcome short term cash-flow issues. If this is the case, then cash-flow management becomes even more important. However there are a number of steps that can be taken in order to improve cash-flow and to assist businesses through these funding gaps:
- Financial Information: The benefits of timely and accurate management accounts are more prevalent than ever. A cash-flow forecast is essential as this will enable you to pinpoint the months where cash becomes tight and what the shortfalls are.
- Credit: Begin to think of your cash-flow as the most valuable part of your business. Every time you grant credit terms to your customers it is affecting cash-flow (and real money). Every time you negotiate extended credit terms with your suppliers it improves your cash-flow (and saves you money). For new customers ask them to pay on invoice, or in 14 days from invoice date, and certainly before you go to 30 days end of month. Help customers pay quickly by offering them discounts for early settlement. It could be worth considering penalties for late payment.