Improve Your Company’s Cashflow In 5 Simple Steps

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Improve Your Companys Cashflow In 5 Simple Steps
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• Making money is the sole purpose of most small
  businesses, and while many may still see
  themselves as being successful even if theyre
  not in profit at the end of each financial year,
  most small business owners will do everything
  that they can to get as much from the existing
  businesses cashflow, as they possibly can.
• There is in fact, a relatively simple and
  straightforward formula that can be followed when
  trying to increase your businesses profitability,
  but not all companies are adept at it.

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• All it requires is that you collect your
  receivables in a timely manner, and do everything
  that you can to minimise the speed at which you
  must pay supplierspreferably without spoiling
  your relationship with them in the process! But
  if youre looking for some more long term
  solutions to improving your cashflow, then follow
  our 5 simple steps
• 1. Forecasting is essential Where your cashflow
  is right now, and where you predict it will be in
  the future, is an important aspect of running a
  business that often gets

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• overlooked or misunderstood. There are costs
  associated with the growth of small businesses,
  and many arent fully prepared for these. A
  strong forecast can help cashflow become more
  predictable and easier to manage, and a rolling
  annual forecast often proves to be the best
  practice.
• 2. Study your receivables/payables gap Look in
  detail at the terms that you currently offer your
  customers, and see how these marry up with the
  terms that your suppliers offer in comparison to
  others in the business world. If there is too

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• large a gap between your average payable days and
  the average receivable days, then youll find
  yourself stuck and in need of working capital.
  Managing this gap better, could lead to an
  increase in your cashflow, and even result in
  discounts from suppliers.
• 3. Put a strong payment discipline into place
  Shortening your accounts receivable time span
  will mean that you need to look closely at how
  long it takes you to get paid, how active your
  collections are and if youre in touch with your

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• customers often enough. You will also need to
  identify if you are solving disputes swiftly
  enough and take a good look at how you resolve
  each one. Not only will each of these questions
  help you to get paid quicker once youve tackled
  them, but they could see customer relations
  improving tenfold. You should also tackle
  payments received, in the same manner that you
  makepayments, and by paying in a timely manner,
  youll find it so much easier to establish and
  build great relationships with suppliers and
  customers alike.

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• 4. Try to streamline your accounts payable
  Separating this element of your business into,
  suppliers, customers and inventories, will help
  you to better tackle your cashflow. Begin by
  breaking down your suppliers into those who are
  regular and those who are one offs, and youll
  find that the options for negotiations are far
  more expansive with strategic suppliers. Then
  take a good look at your customer base, and try
  to ascertain who are key customers, such as
  those who may generate good revenue, but are not

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• necessarily profitable versus those customers who
  may not hold the biggest accounts, but make their
  payments regularly and on time. Identifying
  customers who end up costing money, and those
  upon who you can rely for timely and accurate
  payments, could go a long way to helping your
  cashflow.
• 5. Persuade your customers to make payments
  upfront Setting targets for those employees
  responsible for collecting customer payments, may
  help incentivise them to encourage

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• customers to pay upfront. Try to implement a
  target system among your sales staff, too, and
  work towards achieving working capital objectives
  throughout the entire company.

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• At Heyer Associates we proactively assist our
  individual and small business clients in meeting
  their goals. Our key area of focus is ensuring
  that our clients remain compliant with federal
  and state tax laws by providing them with high
  quality accounting and tax services in Miami. If
  you are looking for bookkeeping services in Miami
  Heyer Associates would be a right option.