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TOP TEN TIPS - ACT NOW TO IMPROVE YOUR CASH FLOW
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- Don’t wait for a business recovery before trying to improve cash flow
Use the Cash flow formula to prioritise your investigations into where cash seepages are most likely to occur, and utilise the tools provided to improve the cash flow cycle within your business.
- Understand your business’s working capital cycle
If you understand your business's cash flow requirements you can prepare adequately for the future. The Working Capital Cycle shows the cash coming into the business, what happens to it while the business has it and then where it goes.
- Keep an eye on your key performance indicators both financial and customer centric
Know your market: – background to investments in the sector
Liquidity: – financial ratio analysis
Positioning: – what the customers think
Competitors and company: – what stage are these companies at in their evolution.
Regulatory effects: - interference
Market dynamics: - today’s situation
- Calculate the cash impact of business decisions
How will my decisions affect: Order intake, Provisioning, Debtors, Creditors, Stock Holding, Operational Overheads and Cash Management.
- Keep key stakeholders informed about the health of the company and your business plan’s progress
Avoid surprises, make sure you are regularly checking and communicating your company's performing against its long-term objectives.
- Task people with line responsibility to get their people to systematically look for leaksMonitor closely the Internal accounts. Identifying Cash control problem areas early will expedite remedial action.
- Gear your business to customer orders rather than sales forecasts
Understand which product provides the best financial contribution to your business.
- Don’t expect the Finance Department to alone to deal with company wide cash flow issues
Conserve Cashby getting all employees to look at products and services from a Cash flow perspective.
- Set individual Customer Credit limits and stick to them
Constantly monitor your customers payment habits.
- Create a cash aware culture in your business
Make sure each employee realises the importance of Cash, and understands how they can positively influence the way the company handles Cash ... and your business will begin to enjoy tangible success.
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