• Manage your debtors – Do credit checks; set payment terms in advance offering easy payment methods (consider early payment discounts or late payment penalties); Invoice early; be consistent and methodical in chasing debt; consider invoice finance.
• Get the most from suppliers – Get quotes and compare for best value; negotiate payment terms and consider asking for early payment discounts.
• Short term forecast your bank balance for 1-4 weeks ahead and monitor on a daily basis producing daily action plans. You can get an excel template here
• Longer term forecast to year end and beyond – review historic data, p&l and balance sheet and make predictions as accurate as possible; monitor and review at least quarterly, but monthly if possible; change as and when necessary.
• Other areas – remember to manage stock levels; consider appropriate homes for excess cash, is the availability long or short term.
Other useful information:
http://optimumfinancials.wordpress.com/2010/04/26/help-i-have-no-cash/
http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073924763
Comments
Some very solid advice here. Our sales can vary very significantly month on month, so keeping a careful watch is really important. One of the biggest things that helped us when we first set up was our IT supplier staging payment of what for us was a big capital investment. We also learnt early that things like PR and online marketing work better with a constant drip feed than with one off bursts of activity.
Regards Mike
@fish3em