As outlined in one of Walsh Taylor’s articles in June, managing cashflow is crucial to business success, particularly with start-up companies, where finances are typically tight.
Though a lot of the issues surrounding cashflow tend to stem from a lack of effective planning, problems can arise that are beyond the control of those in charge. Late payment, for instance, has been identified as something that holds organisations back, as has market uncertainty.
Irrespective of the current status of your cashflow, there are some general actions that can help you to be efficient with your incoming and outgoing money. We cover these below:
- Follow up with any clients that are paying late rather than giving them too much leeway.
- Understand all of your repayment terms, and if necessary, make full use of them. If you are struggling to pay and have a 30-day timeframe to do so, for example, then it may be worth waiting until the very last day or asking if a part payment will be accepted.
- Further to the above bullet point, should there be a need to, communicate reasonably with your suppliers to try to negotiate a later payment date.
- Carry out credit checks on customers to assess if they are worth trading with.
- Collect deposits up front as opposed to full payments right at the end of the process.
The above pointers are of course general tips, and it must be considered that each company’s requirements are completely different and unique from one to the next.
Whilst there are numerous complexities to cashflow issues, one recurring situation that our insolvency specialists notice is business owners waiting too long to seek help. As such, we are always keen to remind people that if finances are left to spiral downwards, the less options there will be once expert advice is finally pursued.