Ten tips to manage your cash
Myview
CASH is to a business what oxygen is to the body – it cannot survive without it.
Nothing is as important to the financial health of a growing small business as reliable access to the required level of cash.
If the cash dries up, the business will not be able to operate.
For this reason, every small business owner must have a detailed plan to ensure survival with a cash-flow budget, and they must stick to this plan diligently.
Below are some tips to assist with making sure that a business optimises its cash-flow planning. When working on cash-flow budgets, base your predictions on the historical figures and be conservative with any sales increases. Remember to take seasonality into account. With a new venture, use only the most likely, tangible sales that you will be able to make – not some abstract market-share calculation. Cut out all nice-to-haves from your overheads as well as any avoidable capital acquisitions. Check your expenses regularly. However, be careful not to cut too deeply, especially when it comes to marketing expenses, which often seem like luxuries but can be an indispensable investment for future sales. Develop and quantify the minimum cash reserves you need as a safety net and enough to cover the expenses of running your business for at least three months. This makes it easier to plan for and fund the expansions or capital investments you need for your business.
They fear that if they inform a client that they need the money, it would send a message that the business is in trouble or weak and this perception might complicate future negotiations.
A friendly but firm staff member can be tasked to chase the unpaid invoices. Make sure that information in invoices is clear and includes your debtor’s VAT number and your banking details so that it becomes easy for your client to pay you. Sell unused assets cluttering your work space to give your business a welcome cash-flow boost.