Cash Is King
By Guy Rigby, Head of Entrepreneurs at Smith & Williamson
Extensive public sector cuts combined with increases in taxation mean that it’s still tough out there. Demand is likely to remain restrained and, even though most economists now think we will avoid a double dip recession, cash remains scarce. So how do you look after this most valuable and essential resource?
Keep your cash flow plans up to date
• Don’t get caught out. Make sure you understand your cash flow and monitor it on a daily basis.
• Don’t take on business that you can’t...
...finance. Remember that an increase in orders will often put pressure on your cash resources.
• Don’t let your cash position go to the wire. Always keep something in reserve to cater for unexpected dips or emergencies.
• It takes time to raise money for your business. Plan ahead - don’t just assume that it will all be alright on the night.
Manage your working capital
• Don’t over-order or hold too much stock. Deal with past mistakes by promoting sales or special offers.
• Everyone likes a bargain. Social networks like Facebook, Ecademy and Twitter can be used to help you stimulate demand.
• Don’t let your customers wreck your business. Good customers are those who pay on time and help you make profits!
• Get customers to pay in advance or on delivery. For service businesses or regular supply contracts, ask your customers to pay monthly by direct debit.
• Do deals with your suppliers to get the best credit, but stick to their terms. You won’t build good relationships if you take advantage.
• Always talk to your suppliers if you need extra time or help. Don’t just ignore or avoid them.
• Look for other opportunities to raise cash, for example, grants and tax credits
• In the Big Society, remember... continued on page two >