Tips & Tricks for Entrepreneurs
DO YOU AGREE?
Revenue is VANITY… Margin is SANITY… But CASH is KING!
Cash flow
It is the movement of funds in and out of your business. Cash flow can be either positive or negative.
That’s why it’s important to always monitor your cash flow – good or bad.
- What if you lose your biggest customer to competitors?
- What if you cannot serve your current customers?
- What if orders for your products dry up suddenly?
Three C’s to remember to better manage your cash flow:
Manage cash effectively:
- Controlling your number of employees
- Keeping tight clamps on all expenditure
- Encouraging your debtors to pay earlier
- Seeking grants and friendly loans
Manage your credit effectively:
- Explore deferred payment measures with your creditors
- Explore a sustainable credit control plan to balance cash inflows with cash outflows
- Weigh the costs of short-term credit from financial
What does communication have to do with cash flow?
- Your creditors and financiers are interested in your survival and sustainable growth.
- Sometimes an outsider’s opinion might help you see what you can’t see from the inside.
Determining the amount of working capital your business needs to operate is the first step to effectively managing your cash flow.
You need to answer questions like:
- How much inventory do I need to hold?
- How many invoices are overdue?
- How much cash is tied up in work in progress?
- How long does it take from paying our suppliers for the materials to extracting cash from the customers?
Remember: You can’t control what you don’t measure!