Owning and running a business is a juggling act, at times many business owners or entrepreneurs many find it challenging. One of the biggest obstacles to scaling your company is cash flow. When a company struggles with cash flow they generally have the reaction “We need more sales”. Cash flow problems are normally a symptom of a greater problem within your business. Ensure your business is one step ahead and ask yourself the following questions to justify your thinking and business planning is on point.
Twelve Week Cash Flow Plan
Do you have a 12-week cash flow plan in place? If not, we suggest you set this effective tool to see how much cash is required on a forward rolling basis. Having a sense of your working capital needs gives added impetus to collect cash and to generate revenue.
Collection of Receivables
Are you collecting all of what you are owed? Are you receiving your payments on a timely basis? Most importantly how much are you spending on your collections efforts? Ensure your invoices state full payment terms. Also entice debtors to pay before their due date. Regular review on your receivable and collection practices is a must.
Timing of payments from customers and to suppliers is vital. You need to collect cash from customers much faster than you pay to your suppliers. An option is to give your customers 30-day payment terms and suppliers 60-day payment terms, this will greatly benefit your working capital.
Availability of Finance
More businesses are finding it difficult to obtain credit facilities. Banks are not lending or approving loans to SME’s and they are becoming stricter on compliance. Investors are becoming more selective when choosing investment targets. Traditional forms of borrowing have become less attractive to SME’s. Therefore, the market has responded by creating new and innovative channels of funding. Source crowd funding platforms such as: Eureeca, Zoomal and Go Get Funding. Beehive is the UAE’s first online marketplace for peer to peer lending. Beehive benefits include save up to 30% on finance costs, faster access to capital, lower interest rates, no early repayment fees and much more.
Making small changes along with monitoring and updating your practices can transform a struggling business to become a great business. At Synergy our management consultancy services are dedicated to helping companies achieve measurable benefits through practical application of strategy and operational planning. We provide business planning, consulting expertise, strategic advice and facilitation in all industries and to all size companies. Contact us today on firstname.lastname@example.org or call +971 4 563 7302.