Want to improve your company's cash flow position?
If so, the Practical Accountancy Loose Leaf recommends you follow these tips…
Improve your cash flow position using these eight tips
Tip#1: Have a credit/debtors repayment policy
Tip#2: Factoring of debtor's book
You can factor your customer book to speed up the collection process of debtors.
This means that 'you sell your debtors book to someone else and receive the total value of the debtors' book less a handling % up front. The debtor's burden then falls on the other person/entity,' says the Practical Accountancy Loose Leaf.
Tip#3: Stock on hand
Tip #4 Gross profit margins
Review your gross profit margins and ensure they're appropriate. Check if you can possibly increase them. Please note, this might not be possible if the product's already overpriced compared to your competitors.
Tip#5: Operating expenses
Review your operating expenses and see if you can cut some of these.
Tip#6: Shareholders loans
As a business owner, you can help the cash flow position by contributing more cash or loans to the business.
Tip#7: Supplier credit policy
Communicate to suppliers and find out if you can get maximum credit terms.
The supplier's credit policy should be in line with the debtors' policy. This ensures you don't pay your supplier before you've received the cash from debtors.
Tip #8: Loan delay repayment
If you have timing problems with cash flows, there are options available:
There you have it. Using these tips will help ensure you improve your company's cash flow position.