As the great James Bay once said “Tried to keep you close to me, But life got in between” he wasn’t actually talking about money but we’ve all had that feeling – where does it all go?!
Am I being robbed?!
Do I purchase things from Ebay in my sleep? I SWEAR I didn’t buy that strange thing that’s just arrived 😉
Getting a bit serious now though, if this is you, there could be reasons why your cashflow is poor and it’ll be easy to fix, this, I assure you!
Poor Cashflow can be a make or break situation, so use these tips to get in shape.
Sales are too Low
If your income from Sales is not sufficient to cover your costs then you might be in hot water. If you need a bit of help understanding whether this is the case, Account-ant is more than willing to help. If you think there is a problem, then it pays to not wait until year end. Let’s nip it in the bud now!
Profit Margin (that’s the difference between what it costs to make vs what you sell at)
There’s loads of ways that this could be improved. Review your materials? Are there better ways to buy them? Are you paying unnecessary overtime in order to make your product?
There’s so many ways to improve this so perhaps that would be the perfect subject for another blog post!
Accounts Receivable (That’s Customers Paying you)
Are they paying you on time? If not, you should send a gentle reminder, followed by a stern reminder if the issue persists.
Accounts Payable (That’s you paying your Suppliers)
Are the payment terms shorter than the terms you give your customers? Could you renegotiate terms with suppliers? Are you entitled to any discounts?
Inventory
Full shelves but empty bank account means you are buying your stock too early! Can you place your orders a little more timely?
What about stock in process? Are your processes a quick as possible to convert that stock into saleable goods?
Overheads
This is where budgeting is key. Review every item that is going out of your bank, is it necessary? Can it be downgraded or put on hold? Are you spending lots on fuel? Could a fuel card reduce your overall cost?
These options can all be explored by going through your costs with your Accountant.
Financing your Business
Are you relying on credit cards or overdrafts. Could you refinance with your bank? Are there Grants available (Account-ant particularly loves helping with grants!)
Still a bit worried
Don’t panic, let’s sit down with some coffee and cake and work through it together. It’ll save you time and stress in the long run.