Category Archives: Cashflow Management

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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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Increase Your Cashflow

Top Notch Loan Alternatives

We all know the importance of maintaining a positive cashflow from month to month if we want to avoid a liquidity crisis, and all the misery that entails.

There is a lot more to cashflow management than just avoiding a crisis. Actively striving to increase your cashflow can –

  • Make it easier to plan and fund future growth and expansion
  • Reduce the amount of fixed capital you need at any one time
  • Give you the flexibility to move quickly and effectively in response to market changes

The key to successful cashflow management is to optimise the amount of cash available to you at any one time. This means increasing your cashflow as much as you can, without jeopardising other strategies. This means that you have to find a balance to suit you.

Credit

It is also important that you don’t impose too strict a regime, otherwise you could drive away customers, and they won’t want to refer you! You need to find the right balance to suit you and your situation.

The first, and most important, step is to establish a system for tracking and controlling credit. The faster you receive a payment from your customers, the more cash you will have at your disposal; therefore, it is important to bill early, and chase up customers who have failed to pay.

Payments

At the same time, you should also take advantage of any incentives your creditor offers you. If your cashflow will allow it, this is a useful option to have.

Prices

While it is important to keep your prices competitive, you also need to make sure you are increasing your prices to cover any increase in costs; or else your cashflow will suffer. Remember, most customers tend to expect an annual rise in prices, provided it is within an acceptable range.

Call the experts

The key to successful cashflow management is to optimise the amount of cash available to you at any one time. This means increasing your cashflow as much as you can, without jeopardising other strategies. At the same time, you should also take advantage of any incentives your creditor offers you. If your cashflow will allow it, this is a useful option to have.

This is an area in which we have a great wealth of experience. If you are struggling, or would just like a helping hand, please feel free to contact us to discover and arrange a meeting how much we can help improve your cashflow.


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Using A Business Process Outsourcing Firm

The business process involves a lot of things – Use a BPO

It will involve every aspect of your company in order to let your company operate smoothly and efficiently. It will involve business tasks, such as marketing, payrolls, help desks, management, human resources and more.

Because of the growing demands in businesses today, you have to consider that it will be difficult for your company to cope up with today’s competitiveness in the business world. In order to save money, you have to outsource this particular business process to companies that accepts outsourcing.

In the past, handling all these can be easy. Because of the growing demands in businesses today, you have to consider that it will be difficult for your company to cope up with today’s competitiveness in the business world. Your company should maximize its resources in order to remain competitive with other companies.

Business process outsourcing is one of the most popular and the most cost-efficient business solution that you can ever make. By contracting other companies to do a specific business task, you will be taking off extra work involved in your company and focus more on important aspects in running your business.

Through business process outsourcing you will be able to cut some operational costs and at the same time, let your company focus more on important factors in running your own business.

The business process involves a lot of things. It will involve business tasks, such as marketing, payrolls, help desks, management, human resources and more.

Today, there are available call center companies that will be able to provide a help desk for you. They will be the one who will answer your calls and generate reports regarding each caller and providing the reports for your company.

These are the reasons why you should consider outsourcing your business process to offshore companies.

By outsourcing your company’s business process or some of your company’s business process, your company will be able to utilize its facilities to its maximum potential.

Always keep in mind that you should first check the quality of an offshore outsourcing company first before you sign the contract in order to be sure that you will be getting your money’s worth. Remember this and it will pave the way to make your company the best in the industry.

Companies regularly outsource their business process offshore, particularly to developing countries filled with qualified and talented individuals, such as China, Philippines, Mexico and India. These countries offer good quality services for your business process and they charge a very cheap rate for these services.

This will only add to the expenses that your company is making. Your target would be to decrease overall expense in your company. In order to save money, you have to outsource this particular business process to companies that accepts outsourcing.

This particular business process is a way to communicate with your clients and know about their feedback in your products and it is also a way to assist your clients in case they encounter difficulty with your product.

If you handle every business process involved, this would be very expensive or impossible. This is why many companies are now considering outsourcing their business process.

Every company that manufactures products needs one. This particular business process is a way to communicate with your clients and know about their feedback in your products and it is also a way to assist your clients in case they encounter difficulty with your product.


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Should You Use A CPA

Should You Use A CPA

The following 5 items may be indications that it may be to your advantage to have an accountant.

If your income is under $200,000 then your likelihood of being audited is about.9%. If your income is over $200,000 your odds are 3.7% and if your income over $1 million it increases to 12.5%. Wouldn’t you prefer to have an accountant already on your side if the IRS contacts you?

Many taxpayers do their own tax returns (DIY) by using an off- the-shelf or online tax software. If you expended more than a few hours on your taxes this year, it’s time to ask yourself whether it makes sense to outsource this task to an accountant. Am I preparing the tax returns correctly or am I overpaying my taxes?

Most business and rental properties and take an expense called depreciation on capital assets. A tax accountant will know how to handle capital assets and depreciation. I good tax accountant will assist you minimizing your taxes.

You anticipate selling of stocks or other capital assets. An accountant can help you plan do that the gain is taxed at a lower rate than your ordinary income and help you find other ways to minimize taxes like tax-loss harvesting.

You want to provide for your children’s or grandchildren’s future. Accountants can be instrumental to help choose which vehicles to use for tax tax-free or deferred savings, whether you are considering a 529 plan for college savings or forming a trust for your grandchildren and children.

Available year-round. Most accountant offices are open all year and they will be able to answer important questions that arise not just during tax season but at other time during the year.

An accountant can help you plan do that the gain is taxed at a lower rate than your ordinary income and help you find other ways to minimize taxes like tax-loss harvesting.

A tax accountant is so familiar with the tax system, he or she can swiftly and effortlessly complete tasks that might take taxpayers hours of research. Even if your tax situation is straightforward, engaging a tax accountant will save your time and stress.

Here are some advantages of hiring a tax accountant:

You are too busy to do your own taxes. Having an accountant prepare your returns will allow you to accomplish your other tasks.

Similar to a respectable family doctor that knows your medical history, you can cultivate a rapport with an accountant so that he or she understands your family financial condition and future goals. The value of this advice can certainly exceed the extra cost of consulting with a tax professional.

The bottom line is this: the decision to doing your taxes yourself with software or hiring a tax accountant is a personal decision. If you only have a few W2s and own a residence then you may save hundreds of dollars by preparing your own tax returns, whereas those with business income, other investments and rental properties will discover the expense of hiring an accountant to be worth their peace of mind and potential tax savings.

The bottom line is this: the decision to doing your taxes yourself with software or hiring a tax accountant is a personal decision. Your comfort and knowledge with the tax code will be part of your decision, but the complexity of your finances should be the key determining element. If you only have a few W2s and own a residence then you may save hundreds of dollars by preparing your own tax returns, whereas those with business income, other investments and rental properties will discover the expense of hiring an accountant to be worth their peace of mind and potential tax savings.

A tax accountant is so familiar with the tax system, he or she can swiftly and effortlessly complete tasks that might take taxpayers hours of research. Even if your tax situation is straightforward, engaging a tax accountant will save your time and stress.


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Economic Inflation Isolation

Economic Inflation Isolation

What is inflation actually … According to Wikipedia, in economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer services and goods; consequently, annual inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy

A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.

In my opinion, the only way to deal with inflation is how to divert our funds into the investment world. I only recommend two for your inflation killer weapon investment instruments because of its secure and liquid.

Pure gold is a relatively safe form of investment because its price tends to rise although slowly (within months). Please note the gold price movement over the past five years in goldprice.org The development of the gold price is very promising for investors in this sector.

In my opinion, the only way to deal with inflation is how to divert our funds into the investment world. Something is definitely in the investment, is … he can “kill the inflation” that erode the value of your money:-RRB- so what are you waiting for … before that, it’s better for you to test drive your insurance first, to stay safe with your saving.

Forms are considered more aggressive investments because the stock price changes tend to be more rapidly than gold. Stock market investment is a category of high risk high return, so you have to be more careful for these instruments. The development of the stock price is also very promising.

Investment world is something which is totally unpredictable with certainty, although it can be predicted through various approaches of knowledge. Something is definitely in the investment, is … he can “kill the inflation” that erode the value of your money:-RRB- so what are you waiting for … before that, it’s better for you to test drive your insurance first, to stay safe with your saving. Equip your weapon with third party protection like life insurance.