Cash is the oxygen that enables a business to survive. A business can survive for a short time without sales or profits, but without cash it will die.
However big your business, cash flow is critical to survival and future success. Big companies may have sophisticated in-house credit management techniques to help them, but smaller companies are often so focused on the day-to-day challenges of chasing business that cash flow management can sometimes seem secondary.
FWD can outline the steps that you can take when dealing with your customers, suppliers and stakeholders to improve cashflow. We can also highlight common cashflow problems and advise you how to avoid them.
No matter how effective your negotiations with customers and suppliers, poor business practices can put your cashflow at risk. Look out for:-
- Poor credit controls – failure to run credit checks on your customers.
- Failure to fulfil orders – if you don’t deliver on time, or to spec, you won’t get paid.
- Poor marketing – if your sales are static or falling, revisit your sales and marketing plan.
- Poor supplier management – your suppliers could be overcharging. Always try and negotiate.
- Poor control of costs – look where you can cut costs. Consider outsourcing non-core activities such as payroll services to FWD. Review your utilities contracts and all bought in business services to see whether it is possible to reduce costs by switching or re-negotiating.
- Inefficient ordering receipt – make it easy for your customers to order from you. Where possible, accept orders over the telephone, email or via your website. Ensure catalogues and order forms are clear and easy to use.
- Poor accounting – an efficient accountant can help to prevent a cashflow crisis. FWD understand how to tackle every aspect of a businesses cash flew management.
In a recent survey:-
- Small to medium sized businesses are the most prone to suffer from late payers (with 74 per cent stating that they accept late payment excuses).
- 10 per cent of organisations avoid chasing debts in the first place as they are worried about losing future business or simply feel too uncomfortable about broaching the subject.
- Micro businesses (businesses with one to nine employees) are the least likely to worry about debt recovery as 45 per cent claim they are always paid on time.
- 17 per cent of businesses would try to chase debts but avoid legal action as they believe it will be too expensive.
If you are interested in FWD’s cash flow management services then please contact us to find out more.