subject: 5 Tips for Managing your Cashflow [print this page] 5 Tips for Managing your Cashflow 5 Tips for Managing your Cashflow
Calverton Factors have sponsored the London Ice Sculpting Festival since it started four years ago. This year it was bigger than ever, held in London Docklands, with artists from all over the world competing. The sculptors are real artists and their work was truly amazing. But all their art was transient by its very nature and the better the weather the quicker it melted away. In his acceptance speech the prize winner from Portugal suggested that the prize money would go the same way as his sculpture i.e. it would disappear very quickly!
I am sure we all have that feeling; we seem to be doing well and our businesses feels busier but the bank statement says something very different. We should add to the old adage of turnover being vanity and profit being sanity cash is reality. So why is it that most small and medium sized businesses only give a passing thought to evaluating and projecting cashflow and that most just hope for the best? The following paragraphs detail some basic ways to manage and improve a business's cashflow:
1.Financial Information: The benefits of timely and accurate management accounts are more prevalent than ever. A basic cashflow forecast is essential and this should be your starting point for negotiations (if necessary) with your bank.
2.Your Bank: Visit you bank manager early. You should take with you up to date accounts, forecasts (particularly a cashflow forecast) and aged debtor and creditor lists. Your aim should be to confirm your facilities for the next 12 months.
3.Credit: Begin to think of your cashflow as the most valuable part of your business. Every time you grant credit to your customers it is costing you cashflow (as well as real money). Every time you negotiate credit with your suppliers it improves your cashflow (and saves you money).
For new customers ask them to pay on invoice, or in 14 days, before you go to 30 days that's from invoice date NOT end of month following. To help customers pay quickly offer them discounts for early settlement.
4.Credit Control: A good credit controller is worth their weight in gold and, more than anything else, good credit control is about consistency. Credit control should work to a system of statements, letters, telephone calls and, only if very necessary, legal action. Implement a system of consistent and regular contact with your customer remember most people are happy to pay; you just need to make sure you are first on list.
5.Invoice Factoring: Invoice Factoring provides early payment against the value of a business's invoices. It also provides immediate access to a highly experienced and capable credit control team. As well as providing upfront cash against the invoices, the Factors will credit check customers, chase for payment and if required insure the customers against non payment.
Calverton Factors is an established and independent invoice finance company based in Milton Keynes, UK. If you are looking for finance facilities from 50,000 to 500,000 then please feel free to contact usfor more information at www.calvertonfactors.co.uk.
