Small business

Cash flow is crit­i­cal to business sur­vival. PAUL DAVIES lists strate­gies to max­imise your cash flow.

Travel Digest - - EDITORIAL -

Man­age the fi­nan­cial re­sources of your business

Ask for a larger de­posit on all book­ings. Re­tain funds as long as you can be­fore pay­ing sup­pli­ers. Get your cus­tomers on credit card or full pay­ment upon book­ing. Pay your monthly cred­i­tors later than usual. Use your company credit card to ex­tend your time to pay sup­pli­ers. Ask your sup­pli­ers for ex­tended credit terms – pay­ment over three months or longer. Change your GST to a pay­ments ba­sis and six months if pos­si­ble. Put aside 20 per cent to 30 per cent of your re­ceipts to pay GST and tax. Check your tax cal­cu­la­tions and put off pay­ment un­til you have funds or pay your tax with your GST. Put sur­plus funds in a high in­ter­est ac­count or on de­posit. Ask staff to work ex­tra un­paid now and take time off later.

Get fund­ing in place early for the low sea­son

Man­age your fund­ing: Re­quest a tem­po­rary over­draft well be­fore you need it. Ob­tain a loan us­ing the eq­uity in your prop­erty. Ob­tain a loan us­ing the eq­uity in your In­surance pol­icy. Ob­tain a line of credit for emer­gen­cies well be­fore your may re­quire the funds. Flexirent any com­puter pur­chases. Ex­tend the credit limit on your credit cards.

What longer term struc­tural changes can you make to im­prove cash flow?

Long- term so­lu­tions: Match your long- term as­sets with long- term debt so you have the cash to pay your bills. En­sure that you have good sys­tems in place to cap­ture and bill ev­ery book­ing. Bill your ser­vice as soon as it is de­liv­ered. De­velop your web pres­ence to get cus­tomers di­rect and im­prove your mar­gins. Pre­pare ac­count­ing re­ports monthly to keep a close check on your business. Pre­pare a bud­get / cash flow so you know how much to put aside for the low sea­son. If you are a tour op­er­a­tor – open a trust / travel bank ac­count – to en­able bet­ter man­age­ment of funds. Only take out what is yours.

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