There are ways to find the cash within your business and it is interest-free. Cash is King in business during good times or during a not so great economy period.
Cash is a very important resource. Plan your cash flow requirements carefully. Work out how much cash is needed to pay suppliers and business expenses each month.
Look at whether the current sales receipts sufficient to cover your business outgoings. If your answer is no then you should consider preparing a break-even analysis on your products and services to see the minimum sales you shall make each month to break even.
Sometime, It may be that you need to increase or decrease your selling price a little to achieve the volume of sales to meet your break-even point. Other times, it may be that rescheduling more staff during peak times to serve your customers and reduce the number of staff during non-peak would do the trick.
Take care of your customer.
Offer your existing customers discounts and incentives to keep them happy. Retaining good customers are required effort and sincerity.
For new customers, carry out some creditworthiness check before granting generous credit terms and consider shorter credit terms or no credit at all.
There are many credit agencies out there like Experian, Credit Safe, Noddle and Equifax that you could use to perform a credit check on your new customers before granting credit or give a loan.
This is to minimize the risk of your business unable to recover debt from your new customers. A general rule of thumb is excellent credit rating customer has a lower risk of unrecoverable debts.
Review your debtors
You must keep your customers’ ledger up to date in order to know the true figures owing from your customers. Make sure you call your customers to follow up on due and overdue payments and send reminders.
If there are signs of these customers facing cash flow problem, there are likely that these debts will turn bad and will eat up your profit or even give you a loss. To reduce these risks, offer instalments plan and consider stop supplying in credit until their payments are up to date.
You may also consider charging interest on late payments. However, you must inform your customers of this clause existed in the sales contract. Also, on-going creditworthiness check is recommended.
Compare forecast versus actual trading result
It is always good to prepare a forecast for your business. Normally forecast is prepared on a 12 months basis. Be realistic when preparing your forecast sales and expenditure. This forecast can serve as a performance target and also give you the overall picture of your business and tell you the safety margin.
Regular review of forecast versus actual trading results will help to highlight your business activities that require your attention.
Keeping company accounts up-to-date
It is important that you keep your accounting records up-to-date especially your cash in hands and your bank accounts. If you are using accounting software to maintain your company accounts this is even better for you as you can easily retrieve your profit and loss account and your balance sheet every month to see how your business is performing by a press of a button.
Do not forget to submit your confirmation statement with Companies House. This document has nothing to do with your company accounts. But it is a criminal offence if you did not file the statement at all.
Control your business expenditure
Think about the possibility of terminating service contracts that do not offer a competitive advantage to your business. Consider asking your existing suppliers for discounts or incentives or even downgrade the services to basics plan to save up if possible.
Review the currents overheads for the possibility of cut down.
Dispose of idle business assets
Think about disposing of some of the unused or idle business assets such as vans, office furniture and computers to get some cash.
Do not hold stock in the warehouse
There is little use of holding on to large stock in the warehouse with the view that selling the stock now does not make you a good profit. Doing this will only tie up your cash in stock. Eventually you have to pay your suppliers whether or not your stock is sold. Consider selling the stock at a discounted price to generate some cash and also reduce the need to write off the stock due to obsolete.