If you’re struggling to manage your cashflow, make sure you take a look at our FREE finance workshop from 8:30am on the 11th September, click here for further details.
In the meantime, here are some suggestions for stopping the stress from taking over, and putting you back in control when your business is going through a cash flow crisis.
Remember to step away
Staying too close to cash flow problems 24/7 will leave you feeling tired, unable to make clear decisions, and often saying the wrong thing. Whilst it’s important to try to maximize daily cash flow, it’s equally important to give yourself a break, so you come back feeling fresher.
Analyse key areas of your business’s performance
If areas of your business are eating cash but not returning regular results, then reconsider your investment in these areas. Is it worth spending £800 a month on your social media management if this channel isn’t generating sales for your business? Are you receiving regular feedback on results? Does the marketing message need to be revised? Ultimately, could the money be better spent elsewhere? Make sure that investments (time, as well as money) you make in your business are as efficient as possible, so that your cash is always making you more cash.
Control the credit you give
Sales aren’t necessarily cash! Being willing to let goods be delivered or services provided without immediate payment is potentially risky but often commercially necessary to achieve the sale. So, mitigate that risk by ensuring new clients are thoroughly checked out, with prices, terms and conditions of sale already agreed. Once trading starts, systemize your control of credit. For example, ensure invoices and statements are rolled out promptly, and identify any disputes quickly. Consider asking more challenging new clients for a partial payment up-front to test commitment. Be prepared to offer settlement discounts if you feel this could free up your cash flow without compromising margins unduly. Above all, build relationships with those responsible for paying you – when cash flow is tight, you’ll be glad you did.
Forecast, Forecast, Forecast!
Mapping out short-term cash inflows and outflows is a vital exercise when cash is tight. The exercise gives you a forward view, enabling you to quickly spot any shortfalls, so that you can potentially re-time other payments. Critically, you start managing your cash flow, which puts you back in control, and reduces your stress levels.
Could help come from outside?
If you are already doing all you can internally, re-financing your business may provide an extra lifeline, just when you need it. There may be a number of options that you can explore, depending on the state of your accounts. Just make sure you take professional advice from sources that truly understand your situation, with practical experience to back up that support.
Be straight with your staff
You need your team on side when you are facing a cashflow challenge. Why not provide them with a balanced view so that they know that you are both positive and realistic about the outcome? You will be amazed at how often they can help you with their own suggestions, so that they can become part of the solution.
Keep your trading contacts in the loop
No one wants to see a business fail, so keep talking to key business decision makers – treat them fairly and they may be able to provide additional support.
Maintain a balance
Ultimately, you need to be aware that there is only so much that you can do. The most important stress reliever is to balance positivity and realism. You can reassure yourself that you have explored all the opportunities to find the light at the end of the cash crisis tunnel.
Having faced cash adversity in the past, and achieved a positive outcome, I know how challenging this can be. If you feel a chat about your business issues could help, please contact me on 07774 548822 or email me at firstname.lastname@example.org
Written by Ralph Savage