Balancing the accounts is a ceaseless melee; money coming in - with that that’s going out (and at the very last moment where possible!). A toil for every company but for the most part, one that’s managed. Allowing cash flow to sustain and grow the business.
However, on occasion, an unexpected skirmish presents itself. Threatening a cash flow crisis. A customer into liquidation, an overlooked HMRC payment or an interruption to supply…
When cash flow problems surface avoiding collateral damage to the business is vital. The loss of a key employee could be unrecoverable.
To improve cash flow problems:
Cash Flow Problems: A 7 Point Plan
- Forecast. Ensure you have an up to date cash flow forecast to highlight the main cash flow issues.
- Cut costs. Be creative. Look at non-essential costs. Consider selling assets. Ensure your prices reflect their cost. Negotiate better prices with vendors. Raise the prices of products with low margins or consider dropping them. Upsell when you can.
- Cut stocks. Order less stock & sell stock discounted for cash.
- Negotiate payments to suppliers. Consider a company voluntary arrangement (CVA) or ask for a discount in return for a long term purchasing commitment. Consider a time to pay plan if you owe the HMRC.
- Reduce the credit period to customers. Maybe offer a prompt payment discount. Chase outstanding payments or even ask for early payment. Make immediate payment easier by accepting credit cards. The power of credit control.
- Reduce or delay expansion plans. Conserves cash short term.
- Finance choices. Your current financial services provider may offer a short term loan or if you have assets a revolving line of credit. A credit union differs to a bank in that they have different credit approval criteria.
Of all the options, choosing to do nothing is the severest. Creditors who may have worked with you lose faith and can start court proceedings to recover debts. If you receive a country court judgement or a winding up petition feel free to ring us 0121 201 1720 for some insolvency advice (it’s free). The sooner cash flow problems are addressed the more likely the survival of a cash flow crisis.
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