Consider your pricing method, discounts and allowances, price elasticity and break-even analyses at various prices.
Most crucially, keep that cash flowing!
There is absolutely no point in having large amounts of YOUR money held by slow paying debtors, or in stockpiling inventory that isn’t moving. There are many strategies you can implement to give your cash flow a boost – here are just a few:
- Hasten slowly with new clients – they need to convince you that they are good payers before you allow them to build up a large account with your business.
- Hold clients/customers to agreed payment dates. If a client misses a payment deadline once, call them before each subsequent payment is due, to avoid setting up a pattern of late payment.
- Consider offering early payment discounts and penalties for late payment.
- Utilise online payment options to get cash into your bank account as soon as possible.
- If you have slow moving or excess stock, sell it at a discounted price, both to increase your cash at bank and free up space to use more profitably.
- Consider leasing equipment and assets, to avoid tying up cash in their purchase.
- Deposit cheques the day you receive them, to maximise your cash at bank.
- If you don’t already have one, prepare a cash flow statement and review it weekly
Finally, if you are in a position where you are unable to pay your creditors, make contact with them immediately and come to an arrangement where you can pay in increments, or negotiate extended payment terms.
