Here at EcovisDCA we are constantly striving to ensure that our clients and friends have the most successful business and financial lives possible. We are not just a faceless company who talk the talk, we walk the walk. We know that your business is a labour of love and we endeavour to ensure the one-to-one advice and care you and your business deserve. With that in mind, we have decided to focus this week on ways in which you can release cash flow from your business. As you know, we are great supporters of Irish SMEs (Small and Medium Enterprises) and these businesses are often the first to suffer any ill-effects of a downturn and as such it is vital that they are protected. Cash doesn’t often flow readily in February after the excesses of the festive season and the January sales, so we are here to discuss the ways you can manage and release business cash flow.
When projecting cash flow, the impulse is to assume regular income, however, the peaks and valleys of business life are often first seen through cashflow, so it is important to take this into account when projecting the year ahead regardless of the size or avenue of your business. Being armed with the knowledge of potential financial issues ahead and projecting a realistic cashflow cycle for the year ahead may allow you to avoid a cash shortage during tighter times.
Enforce Payment Terms:
The payment terms for your business should never be a casual affair, it is essential to create and enforce your payment terms. Create incentives for suppliers to meet your payment terms, and penalties for non-payment. It is worryingly becoming normal for payment terms and dates to be exceeded, if this becomes a problem, we advise strengthening these terms and consistently following up. Having suppliers be consistently late on payments can push you into debt. Enforcing terms will free up cash flow.
Marketing isn’t just a sales pitch; it is the creation of your brand and creates an image of your business in the minds of potential customers. It may seem counter intuitive to spew the adage “You have to spend money to make money” but in this case it is entirely true. Good or bad marketing can make or break your business, so it is worth investing time, money and resources in.
Keep it Simple:
Simplicity is often the key and we regularly find our cashflow tied up in long term projects which are offering no short-term return. Evaluate what are the essential projects your company is budgeted to work on and go from there. The same can be said for many business processes, are there ways your business can be more efficient, are you expending employee time in valuable or invaluable tasks?
Again, it seems counter-intuitive to insist on debt payment to release cash flow but once all company debt is paid, that cash becomes available and can be saved or re-invested into the business.
Occasionally there will be times when it is not possible to finance your business internally. In these cases, applying to schemes, applying for grants or loans etc. can be the reason for the extended lifespan and rejuvenation of your company.
These are just a few of the ways in which you can better manage the cashflow of your business, should you have any concerns or questions about these or any business or financial matters, please do not hesitate to contact us here at EcovisDCA, where we will be happy to help.
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