Cash is King
Cash really is king – and never more so than when times are hard. Former Dragon Doug Richard warns that:
“If you’re out of cash and out of credit, you’re out of business.”
Are you going to let that happen to you? I thought not! Here are my top tips to keep cash flowing:
| 1. | Manage your cash flow closely. Ensure you have a good management accounting system in place to identify any potential issues and address them before they become serious; |
| 2. | Make sure you have credit facilities in place before you need them. You will be in a much stronger position then to secure what you might need. Choose a facility such as an overdraft that will not charge interest until it is required; |
| 3. | Take a look at the government-backed Small Loans Guarantee Scheme, as a relatively low-risk form of finance. The government guarantees 75% of the loan value and it can be used to support cash flow. See www.berr.gov.uk |
| 4. | Investigate your eligibility for business grants – SEEDA offers two interesting ones: See www.seeda.co.uk |
| 5. | Tightly control the credit you offer your customers – set sensible credit limits, ensure they are not allowed to exceed these and continually review them based on payment history and external agency recommendations; |
| 6. | Invoice as soon as possible and have a robust debt collection process in place; |
| 7. | If your cash flow needs a boost, consider offering a discount for early settlement of invoices; |
| 8. | Where possible, negotiate favourable terms with suppliers; |
| 9. | Manage costs closely and cut where necessary. Resist the temptation to cut marketing expenditure, but review the effectiveness of your activities to ensure you are making the best use of that investment; |
| 10. | Work with a top-class Business Advisor who can ensure you focus on the long-term health of your business. |
