Tips for Improving Cashflow

Even if you have not prepared your Cashflow budget you may get benefit from some of these suggestions which are by no means a complete list of actions you may take.

Accelerate Your Cash Inflow from Customers

• Review your customers' credit history before the sale is made
• Consider whether you can reduce your trading terms
• Ensure your follow up of past due customer payments is swift and effective
• Issue invoices promptly - ensure your invoices are adequate to expedite payment and are not the cause of a delay in payment
• Ensure you send monthly statements - these serve as a summary and reminder
• Consider customer deposits or upfront payments prior to sale

Delaying Your Cash Outflows

• Talk with your suppliers to obtain maximum credit terms when setting up a trade account
• Use your credit card to take advantage of an interest free period and delay your payment
• If you have a cash shortage, contact your supplier and ask for additional time to pay or suggest a payment plan

Other Actions that will help your Cashflow

• Holding excessive stock keeps vital cash out of the business. Review your stock levels to ensure you hold stock for the least amount of time between when you purchase and when  the item is sold
• Review your slow moving stock and see if you can return them to your supplier for a credit on your account or sell at a discount to create cashflow.
• Review your profit margin to ensure you are obtaining the maximum profit on sale of goods/services
• Consider an increase in price even if only initially a small rise
• Review your overheads to see if any costs can be reduced or eliminated
• Identify some non-core assets which can be sold to inject cash into the business