Author Archives: Jenny Long

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Prevent Cashflow Problems

How To Prevent Cashflow Problems

If you want your business to survive and thrive, preventing cashflow problems is vital. According to statistics, the vast majority of new businesses that fail do so because they haven’t managed their cashflow properly.

We hope that the following tips will prevent you from falling into the same trap.

1. Ensure that customers pay you on time

It is imperative that you encourage quick payment if you are relying on receiving money from your customers to pay your suppliers. You will still have to pay them even if you have not been paid yourself.

You can stick and use a carrot approach to make sure that your customers pay you promptly. Try offering early payment incentives and quoting the Late Payment of Commercial Debts (Interest) Act of 1998 on your invoices. The latter allows you to charge interest on overdue payment.

2. Budget properly

Good budget management is a key way to prevent cashflow problems. Do avoid the temptation of spending money that you had not planned to spend when setting your yearly budgets. Question the likely return on investment (ROI) of any promotional activity before allocating funds to it.

3. Careful account management

Do you know when your invoices were sent out? Do you know who you are still waiting for payment from? Have you chased up late payments?
Managing your accounts carefully is an important aspect of preventing cashflow problems. When invoices were sent and paid so that you can see easily if any payments are outstanding, keep an invoice books detailing exactly.

4. Run credit checks on companies before doing business with them

Try offering early payment incentives and quoting the Late Payment of Commercial Debts (Interest) Act of 1998 on your invoices. The latter allows you to charge interest on overdue payment.

Vetting companies by performing credit checks or other tests is a very good way to find out if they are likely to pose a cashflow threat to you if you do business with them. Failure to research a potential client’s payment history means that you run the risk of not getting paid.

Good budget management is a key way to prevent cashflow problems. Do you know who you are still waiting for payment from? Have you chased up late payments?


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Cashflow Management

Key Business Issues for Small Businesses – Cashflow Management

Here are the Five Key Rules:

Many business people and entrepreneurs are extremely brilliant at what they do – creative, inspirational and enormously energetic. If they don’t recognise the realities of running a commercial business, the sad truth is that this counts for nothing.

Cashflow means Life or Death:

# Make Cashflow Management a fundamental and absolute priority – it’s the oxygen of your business.
# If you don’t want to do it, then make it an absolute priority for one of your team – and make sure they know what they’re doing.

Be clear about the Risk you are taking:

# Don’t make this a gamble.
# Don’t depend on any feelings of goodwill towards the client – it’s not a charitable donation.
# Find existing suppliers to talk to about their payment experience.

Be in Full Control of the Process:

# Be very precise about what the payment terms are.
# Get a payment up front – say 30% – and then 30% for achieving a clear milestone with the balance on completion.
# Build a factor for late payment into your pricing – say 10%.
# Offer a discount for prompt payment – but allow for it in your pricing.

The End Game:

# Use a third party to make chase up calls – friend or family – keeps you cool!
# Chase up after agreed payment date.
# If it stagnates, send out diarised letters 45/60/90 days.
# Think about the legal remedies you may have – in the UK, for example, the Small Claims Court if the debt is under ₤ 5,000.
# Use a debt collection agency.
Learn from the experience. What would you do differently next time?

Ensure the Client Understand your Regulations:

# Take time to find out what the client payment process is.
# Issue your invoices on time.
# Phone the client to make sure invoice has been received.
# Get to know someone who matters in the accounts department – they often respond to some TLC.
# Is your team totally aware of what they need to do here – are they making concessions on your behalf?
# Chase immediately they become overdue – but don’t assume the worst – is it can pay/snafu or can’t pay/cashflow?
When they will pay, # Get a clear commitment as to.


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Cash Flow Management

Cash Flow Management Can Help Your Business

For a business, no matter if they are a startup business or an established business cash acts as their lifeline; it is the one area that allows a business to survive. The amount of cash that a business has at its disposal often shows the health of a business. A business, especially a start-up business would be able to survive for a while without sales or profit but without cash it will fail.

In order to give your business the best possible chance you need to have sufficient control over the cash flow that is going into and out of your business. You obviously want to have more cash going into your business than out of your business but to ensure that this is the case you need to have a good grasp of the cashflow that your business has.

A crucial element to remember is that there is a difference between cash and profit. In order for a business to make a profit it needs to produce and deliver services or goods to customers before you actually make a profit so if you don’t have the cash to do this then you technically won’t have a business left to run. If you want more evidence of these just look at the facts; the reason that most businesses fail is poor cash management that has led to a business not being able to afford to carry on and poor cash flow is the reason that the majority of start-up businesses don’t make it past their first year.

Some examples of the cashflow that will be coming into your business include the following:

1. The payment for goods/services from your customers
2. Any bank loans that you may have taken out
3. The interest that you collect on investments and savings
4. An increased bank overdraft or loan

Some examples of the cash that will be coming out of your business include the following:

1. The purchase of any stock, raw materials or tools that your business needs
2. Your staff wages, property rent and all of your daily operating expenses
3. Any repayments of loans that your business may have
4. Any dividend payments
5. Reduced overdraft facilities

For a business, whether they are a startup business or an established business cash acts as their lifeline; it is the one aspect that allows a business to survive. In order to give your business the best possible chance you need to have sufficient control over the cash flow that is going into and out of your business. You obviously want to have more cash going into your business than out of your business but to ensure that this is the case you need to have a good grasp of the cashflow that your business has. In order for a business to make a profit it needs to produce and deliver services or goods to customers before you actually make a profit so if you don’t have the cash to do this then you technically won’t have a business left to run. If you want more evidence of these just look at the facts; the reason that most businesses fail is poor cash management that has led to a business not being able to afford to carry on and poor cash flow is the reason that the majority of start-up businesses don’t make it past their first year.

In order to help you with your cashflow management it is a good idea to keep an up-to-date record of all of your cash so that you can see exactly what is coming in and going out of your business. By doing this you can find ways of potentially improving the cashflow of your business.

If you want to have a good cashflow within your business you need to ensure that your pattern of income and your business spending habits allows you to have cash available as well as being able to pay the bills on time. Cashflow depends on the timing and amounts of money flowing into and out of the business each week and month.


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Avoid Cashflow Problems

Avoid Cashflow Problems: How to Guide

Cashflow problems are the primary reason why more than 70% of UK businesses go under in their first year. This statistic is fairly shocking, the reassuring fact is that there is a lot that companies can do to manage their cashflow effectively.

We have put together our top tips to help you avoid cashflow problems and become a business success story.

1. Always run credit checks on companies that you do business with

Many people think or forget that it’s not important to vet companies before doing business with them. Doing so is an important method of avoiding cashflow related problems further down the road.

There are a lot of ways to run credit checks such as ordering an online credit rating from credit reference agencies or checking your potential customer’s payment record.

You expose yourself to the risk of not being paid if you have not checked up on a potential new client.

2. Encourage prompt payment

If you have not been paid by your customers, you will have to pay your suppliers even. Encouraging your customers to pay you promptly is therefore an effective way to avoid cashflow problems.

Try offering favourable payment terms to people who pay early and refer to the Late Payment of Commercial Debts (Interest) Act of 1998 on your invoices. This regulation allows companies to charge interest on overdue amounts.

3. Manage your budget carefully

Before you do allocate funds, make sure you know what the return on investment is likely to ensure and be that you can afford to spend the money in question.

It might sound good but obvious budget management is a key step to good cashflow management. Do not be tempted to spend money on promotional activity that has not been accounted for in your marketing plan.

4. Manage your accounts carefully

Do you know who owes you what and when payment is due? Keeping an invoice book detailing when invoices were sent out and to whom, as well when they were paid is a simple yet effective way of keeping on top of your finances and avoiding cashflow problems.


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Small Business Guide to Cashflow

Small Business Guide to Cashflow

The first step in good cashflow management is to set cashflow targets. By maintaining a cashflow and preparing forecast that you update regularly (cashflow is an ever-changing situation) you are able to get an idea of the financial outlook of your business for the next six months or so. Many businesses have gone under not for profit issues but for cashflow issues and this is where your focus should be: on cashflow and not profit.

The first step in good cashflow management is to set cashflow targets. By maintaining a cashflow and preparing forecast that you update regularly (cashflow is an ever-changing situation) you are able to get an idea of the financial outlook of your business for the next six months or so. This cashflow forecast will demonstrate to your credit controllers that you are giving this area attention and create the opportunity to assign cashflow responsibilities out to appropriate people within your team.

Another aspect which your business may have some control over is customer payments. The customer payment process should be made as easy as possible. Offering your customers ways of paying that are more suitable and timely to your business like paying online and deterring customers from paying by check is a good way to ensure a good cashflow.

Your business will have control over certain factors which affect cashflow. Your business will have the power to control when invoices get sent out. If you issue the invoice by email this process will take much less time and there will be an easily accessible record of the invoice.

In some instances you may be able to make direct debits the norm for your business. Establishing direct debits will allow your business to scale without an increase in the cost of collection.

Ultimately the best way to stay on top of cashflow is to pay it the attention that it deserves. Many businesses have gone under not for profit issues but for cashflow issues and this is where your focus should be: on cashflow and not profit. If your cashflow is OK then your profit will most likely follow in the same pattern, of course don’t ignore your profit but.

The next thing to think about is establishing agreed payment terms once you have your cashflow forecast in the bag. When payments are going to be overdue and manage your cashflow situation, once you know payment terms it will be so much easier to know.

Cashflow is described as “The total amount of money being transferred into and out of a business”, it is a lot more about the amount of cash your business has at that moment in time than metrics like profit. Cashflow can cause big problems for small businesses, specifically for seasonal businesses. That painful time between invoicing and payment is felt by most small businesses but if you pay attention to your business’ cashflow this pain can be minimized.

If your business can afford to do so, than it is really time and energy saving to be able to use technology to manage your cashflow. Budgeting software is another great way for small businesses to stay on top of cashflow.

Cashflow is defined as “The total amount of money being transferred into and out of a business”, it is much more about the amount of cash your business has at that moment in time than metrics like profit. That painful time between invoicing and payment is felt by most small businesses but if you pay attention to your business’ cashflow this pain can be minimized.


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Join a Small Business Association

Business networking

Business networking can be a valuable tool in your business survival and success. One of the most cost effective ways to build strong relationships with your customers, suppliers and other industry stakeholders is to join the right type of association.

Join associations that your customers, or potential customers, belong to; as well as other industry and business stakeholders (such as suppliers, competitors, your community). Also look at associations where the end customers participate if your customers sell to others. Typically the cost of joining an industry association is not that high; and is, in fact, relatively inexpensive when you consider that you will be able to directly reach customers (and often reach them in a way that is more effective and meaningful in building relationships).

Once you’ve joined, you need to attend association meetings and participate in association events. To be even more effective: join the association board or an association committee.

In addition, you will gain valuable contacts and have better access to business resources for your industry. The benefits to members of joining associations include:

Excellent ability to connect with customers and other stakeholders in your industry;
Association membership will also provide you opportunities for contact with potential customers and with suppliers (who may provide you with referrals to prospective customers).

Industry educational programs:

Access to hard-to-find industry research and statistics (these often include invaluable benchmark studies and business performance metrics).

Industry conferences:

Group discounts on business services (such as cell phone programs, merchant discount programs, gas discounts, courier programs, and more).

Supporting the industry association to act officially or unofficially as lobbyists for the industry they represent to all levels of government.

Some industry associations have certification programs for individuals (such as the certified sales professional program) and for companies (such as programs that certify companies that have achieved a certain professional and/or business level).

And, often membership in an association will give you access to the membership list (your new contacts list) once you become a member.

Other business associations to consider are your local Chamber of Commerce, your Board of Trade, the Small Office Home Office (SoHo) organization and whatever else is available in your area. These business associations provide you with a broader business network and business community; you need to assess whether or not you can build a partnership or alliance with other business owners for concentrated effort and success (for example, a local business improvement initiative could be undertaken with a group you meet through one of the business associations you belong to).

Of those business owners that join associations, many owners will attend association meetings or events, listen to the speaker, and depart as soon as humanly possible. While they will hopefully have learned something from the speaker, they will not have benefited in the most important way – building their own personal business network or business community. When you build a strong personal business network; your business will benefit from it.

In addition to industry and trade associations, you need to consider special interest group associations (such as women in leadership; professional groups – such as certified general accountant, sales executives etc.). Those associations might not include your customers, but they certainly will include competitors (who you need to learn about and understand). Consider interest group associations as your own small business advisory; ask for help, for information, for access to resources.

Joining an industry or small business association is a highly effective small business strategy and needs to be on your list of top marketing tactics. Once you’ve joined, you need to attend association meetings and participate in association events. To be even more effective: join the association board or an association committee. In addition to industry and trade associations, you need to consider special interest group associations (such as women in leadership; professional groups – such as certified general accountant, sales executives etc.). Of those business owners that join associations, many owners will attend association meetings or events, listen to the speaker, and depart as soon as humanly possible.

If you don’t join your industry or small business association, you can be sure that one, or many, of your competitors will. Do you really want your competitors to have access to your customers and to be able to build a strong relationship through association participation?


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Profitable real estate investments

Profitable real estate investments

One of the most profitable real estate investments you can make is the purchase of multi-family homes or apartment buildings. Whether you choose to live in one unit and rent the rest out, our you choose to rent out all of the units both multi-family homes and apartment buildings can increase your passive monthly income, as well as your net worth, exponentially.

Why Choose Multi-Family Homes or Apartment Buildings?

Both multi-family homes and apartment buildings offer you, the real estate investor, the unique opportunity to own property which is generally at a lower risk to you than a single family home. Additionally, both offer you the ability for obtaining monthly passive income as well as appreciation in equity in the building itself. There is generally a strong demand for multi-family homes and apartment buildings by seasoned real estate investors.

How to Choose the Right Property?

Choosing the right property to invest in is a matter of evaluating the value of the property you are considering and the incomes it generates. You would be well advised to do your due diligence on the property and review its income potential and possible yearly expenses.

How Much of a Down Payment is Required?

Generally the purchase of a multi-family home or apartment building will require up to 30% down versus the lower down payment requirements that come with purchasing a single family home.

How Do I Qualify for a Mortgage for the Balance of the Purchase Price?

Generally, to qualify for a mortgage loan for the balance of the purchase price you will be asked to offer a personal guarantee for the loan. This can many times be interest in another property or in your own personal residence.

Managing your Property

Isn’t it time you learned how to capitalize on one of the best markets for real estate investing that this country has ever seen? With the recent flood of foreclosures now is the time to learn to invest correctly in real estate from the hosts of the nation’s leading show on real estate investing.

Both multi-family homes and apartment buildings offer you, the real estate investor, the unique opportunity to own property which is generally at a lower risk to you than a single family home. Additionally, both offer you the ability for obtaining monthly passive income as well as appreciation in equity in the building itself. There is generally a strong demand for multi-family homes and apartment buildings by seasoned real estate investors.

Once you have purchased your multi-family home or apartment building you would be well advised to hire a property management company to deal with all of the various tenant issues which will likely arise. This will free up your time for your real estate investment business and not have to deal with the day to day issues of the residents of your building.