7 Tips On Small Business Cash Flow

© Copyright One Sherpa Pty Ltd 2008

7 Tips on SMALL BUSINESS

CASH FLOW


Good CASH FLOW is the life blood of any small business.


Without it, business owners struggle constantly to find enough resources to keep the business going


Tip 1. Get a weekly copy of your bank statement

Many business owners do not ever review their bank statement and leave it up to their book keeper to do all this for them.


As a result it’s ‘out of sight - out of mind’ when it comes to the awareness of cash and they only

look when a crisis occurs.


Tip 2. Review your invoicing procedures

If you are not efficient in getting invoices out to customers then you’re unlikely to get money back from them efficiently.


You send a message to your customers with your invoicing procedure so if it is haphazard or late your customers are likely to take the same attitude to paying you


Tip 3. Review your terms with your customers

What terms do you sell on?

Do your customers adhere to those terms or just pay when they feel like it?


When was the last time you checked the actual terms in your business or reviewed them with your customers?


Tip 4. Clean out old inventory

Many business owners hate the pain of dealing with old inventory because it usually represents a mistake which can be hard to own up to.


As a result the inventory builds up and ties up money in goods sitting doing nothing


Tip 5. Review your payment procedures

Do you have a disciplined and formal method of paying your suppliers?

Do you time your payments with receiving money from your customers?


Do you wait for suppliers to call before paying?

Are there particular days of the week or times in the month when you make payments?


Tip 6. Review your terms with your suppliers

When was the last time you negotiated terms with your suppliers?

Do the terms with your suppliers match the terms you give you customers?


If you buy on 30 days and sell on 60 days then you will always have a cash flow deficit particularly if your business is growing strongly


Most business owners are completely focused on making a profit until they run out of cash

Tip 7. Don’t focus solely on making a profit


This means focused on the costing and pricing without considering their working capital and how the money flows in their business.


While making a profit is important, having money in the bank is more important because when there is no more money you’re broke!!


SEVEN TIPS ON SMALL BUSINESS CASH FLOW

Tip #1 - Get a weekly copy of your bank statementTip #2 – Review your invoicing proceduresTip #3 – Review your terms with your customersTip #4 – Clean out old inventoryTip #5 – Review your payment proceduresTip #6 – Review your terms with your suppliersTip #7 – Don’t focus solely on making a profit


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