03 Jul Managing your Cash
Halfway point – what’s the plan for the rest of the year?
Today is the first ‘work day’ of July, which marks the halfway point to the calendar year. This is a great time to check to see if you are on track. Have you achieved your goals and objectives for the year to date? If not, why not? What are you going to do with the remaining 6 months of this year that is going to move you closer toward your goals?
Not clear if you’re on track, or not clear what your objectives are? The Spanish born philosopher Lucius Annaeus Seneca said it well: “if one does not know to which port one is sailing, no wind is favourable”
If you aren’t sure what needs to be done to make the most of the next 6 months, get in contact with us for a discussion around your objectives and goals.
Managing your cash
Most organisations set out to make a profit, but often cash flow gets overlooked. That is, until the cash runs out! Many profitable enterprises are cash poor. In fact, a number of surveys suggest that cash flow issues are the number 1 cause of stress for small business owners – if you’ve ever been in a cash flow pickle, you just might know what I’m talking about…
So, what are some things that you can do to manage your cash flow?
1 Plan for it
It sounds obvious, right? But many small businesses fail to effectively plan and forecast for the peaks and troughs in their cash flow. For example, many businesses struggle through January as the nation is in holiday mode, but here’s the thing – it happens at the same time each year! Does your organisation have a quieter time of the year/month or a predictable dip in income? What can you do to plan for it ahead of time?
2 Invoicing quickly
Want to get paid quickly? Then send your invoices quickly. When customers receive an invoice immediately after a piece of work is completed (or as soon as practical afterward), they are more likely to pay promptly and less likely to default on payment.
3 Chase up outstanding debtors
Unless you’re a bank, you probably aren’t in the business of financing other people’s businesses. For many organisations, slow paying customers means it’s a struggle for them to pay their suppliers or team on time. If you are in a position to do so, it is great to be a little more lenient to customers who might be experiencing a few cash challenges themselves, but this shouldn’t come at the expense of you being able to meet your obligations. Even if you can be supportive, regular contact – ideally over the phone or in person – will help keep the debt front of mind for your customer.
4 Manage your spending
Do you know what all the payments going out of your account are for? Are all of them necessary? Many individuals and businesses are subscribed to services or paying for products that they have stopped using. Are you?
5 Cash is king
Whether it is a little cash set aside, a wealthy relative or a credit facility that you can dip into in times of emergency, it is better to be prepared in advance, rather than trying to scramble at the last minute when a cash crunch hits. When is the best time to get a credit facility in place? When you don’t need one!
If your cash flow is causing you to lose sleep, contact us for a cash flow review.
