cash Is King And Cash Is The Life Blood Of Your Business Has Never Been More True Than Toda


cash Is King And Cash Is The Life Blood Of Your Business Has Never Been More True Than Toda In all, 42% of FPB members who took part in the survey reported a deterioration over recent months in prompt payments from customers, most typically bigger businesses who have the muscle to do this. The tightening of cash and delay of payments by the bigger businesses is all too clear as is the impact on smaller businesses who can ill-afford to lose a single day of being out of the money.

So if you are facing a cash crunch what can you do? Traditionally the answer would be to turn to your friendly bank for temporary support. Sorry, but Im sure youve heard that getting such support is now akin to getting blood out of the proverbial stone it wont happen!

So its down to you!

Here are some quick actions you can take to plug the cash hole you may be facing.

Know Where You Are

This is usually part of the problem no clear idea of where you exactly stand. All you know is that at the moment there is no cash in the bank to pay your bills. Not good enough. The key to successful cash flow management is knowing exactly how you stand financially.

If you havent done so already list down all your account receivables and payables (thats the money owed to you and by you); this is judgement day! This is no time to try and hide the painful ones and hope they will go away they wont! So get the pile of invoices and bills gathering dust in the corner of your office and list them all one by one with names, dates due and the amounts.cash Is King And Cash Is The Life Blood Of Your Business Has Never Been More True Than Toda

Prioritize Your List

Having done that, as with any good list, the next step is to prioritize it. For bills owed to you, put the overdue ones at the top of the list and so in order of priority get on the phone, write a letter, suspend further deliveries; do whatever you can to get that payment in. Forget about damaging a good relationship with the harsh steps you think you may be taking. By definition, how can they be good if they are prepared to put your business at risk by not paying you? You dont need customers like this in times of crisis. Get your money and get rid of them.

In respect of bills you owe, do the opposite; you now become the one who is trying to delay payment! Look at your list and decide which ones you honestly have to pay. Which are the overdue ones, which if you didnt pay, would put your business at risk? These are your priority one payments.

Which bills are the ones, which if you didnt pay immediately, may cause some problems but not threatening to your business? These are your priority two payments.

Decide which ones you can stretch payment without having to telephone them and explain. These are priority three payments.

The ones you have left, which may not be crucial to your business, you can call and ask for an extension to the payment date. These are your last priorities.

By now you should be feeling more in control just by having a prioritized list.

Monitor Daily

Now you have a clear head as to where you stand, whom you are chasing for payments and when you are due to make your payments, you can move forward.

From here on its all about monitoring your cash position. You have to know exactly what your cash holding is every morning. The first task is to call your bank or look up your account online to check your bank balance.

Step two is to look at the list of people who owe you, and see who paid you the day before and tick them off the list. Who is now your number one overdue account? Do they need chasing again and if so get on the phone.cash Is King And Cash Is The Life Blood Of Your Business Has Never Been More True Than Toda

For the priority payments you owe, looking at your cash position after the payments have been made to you, assess whether you have headroom to make a payment (even if its a partial payment)? If you do, process the payment and make a courtesy call to your supplier to tell them its on the way.

Follow these actions and you should be able to ride out your mini-crisis. If you still have a problem then your crisis is no longer a mini one and that calls for even more drastic action but thats for another time!

by: sahni

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