More businesses suffer demise due to cash flow problems than anything else.
“The creditor hath a better memory than the debtors.” James Howell.
It’s all about getting paid as soon possible and to do that you need to have procedures in place:
“Life is just a series of peaks and troughs, and you don’t know whether you’re in a trough until you’re climbing out, or on a peak until you’re coming down.” David Brent.
By predicting what’s ahead you can be well prepared for leaner times.
“Whoever has the gold makes all the rules.” The Golden Rule.
Examine every purchase and know where every bit of cash is coming from.
“The buyer needs a hundred eyes; the seller but one.” Italian proverb.
It’s worth enquiring if you can extend your payment terms.
“It is always wise to look ahead, but difficult to look further than you can see.” Sir Winston Churchill.
It’s important to monitor your stock closely and order only what you need.
“Finance is the art of passing currency from hand to hand until it finally disappears.” Robert W. Sarnoff.
Spend wisely and don’t be tempted to splash out on new equipment when the orders are coming in.
“The two most beautiful words in the English language are ‘cheque enclosed’” Dorothy Parker.
It always pays to keep on the right side of the bank.
“Let us all be happy, and live within our means, even if we have to borrow the money to do it with.” Artemus Ward.
One way to control cash flow is to utilise invoice discounting where a third party buys your invoice and releases cash based on its value.
“Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.” Peter Drucker.
Don’t ignore the warning signs! It’s easier to work out payment terms before you build up debt. Classic signs that your cash flow is suffering could be:
“The best preparation for tomorrow is to do today’s work superbly well.” Sir William Osler.
Sometimes you need to take a step back and take an overview and ask yourself a few questions.
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