Top 10 Tips: Managing Cash
by James Davey
Good leaders must lead by example. Through their actions, which are aligned with what they say, they become a person others want to follow. When leaders say one thing but do another, they erode trust, a critical element of productive leadership. Here are 10 of the dozens of ways to lead by example.
1. Chase before the debt is due. Check your customer is satisfied with the product and has received your invoice. Deal with any issues stopping payment and ask for a payment date.
2. Test your suppliers terms. Pay your suppliers 7 days late and see what happens. If they don't chase, try extending terms another 7 days.
3. Maintain a living cash flow forecast. Knowing what your bank balance is today is one thing. You really need to know what it will be every day for the next 8 weeks, so you can take action before you hit a problem.
4. Sell slow or redundant stock. Stock is only an asset if its good stock, otherwise it's a liability. Turn slow or redundant stock into cash and re-invest it in good stock.
5. Sell redundant assets. The same applies to redundant assets. If you don't use them and they are depreciating, turn them into cash.
6. Re-finance capital items. If you have unencumbered assets, investigate the possibilities of re-financing them.
7. Appoint a treasurer. When you are in trouble, cash really is king. Make someone responsible for managing cash on a daily basis and give them the authority to make decisions.
8. Review your terms of business. When did you last look at your standard terms? Tighten up on your terms with new customers and re-visit your existing customers.
9. Ask for customer prepayments. Look for opportunities to ask for cash upfront. Ask for deposits with orders with the balance on delivery.
10. Consider direct debits. Will your customers pay by direct debit? It's a great way of keeping them to terms. Look at small business products like Go Cardless. It will get your money in quicker and with less effort.
© 2016 James Davey at The Sales Masters Guild