Cash is King... Cashflow management
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Cash is King... Cashflow management
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Cash is King... Cashflow management. Working capital. Working capital. Debtors: speed up cash collection. Put in place credit control procedures Check invoices are being paid before they are due Get commitment re payment date - PowerPoint PPT Presentation
Transcript of Cash is King... Cashflow management
Cash is King...
Cashflow management
Working capital
£'000Sell 100
Cost (40)
Profit 60
0-30 days 30-60 days 60-90 days 90-120 daysPay suppliers (creditor) (40)
Customers pay (debtor) 100
Bank balance (40) (40) (40) 60
Working capital
£'000Sell 100
Cost (40)
Profit 60
0-30 days 30-60 days 60-90 days 90-120 daysPay suppliers (creditor) (40)
Customers pay (debtor) 100
Bank balance 0 100 100 60
Debtors: speed up cash collection
Put in place credit control procedures Check invoices are being paid before they are due Get commitment re payment date Speak to the customer if invoice is likely to be
contentious Don’t include lots of work on one invoice Don’t leave invoicing til month end Concentrate production resources on items which can
be completed and billed in the month Interim bills? Put cash collection at the top of YOUR priority list Be hard with non paying customers – “STOP” Credit checking and credit limits
Stock
Clear out old stock – even if at a loss, convert to CASH Speak to suppliers – “just in time”/consignment
stock/return unwanted stock Resource locally if exchange rate, transport costs,
minimum order quantities and payments in advance are an issue
Extend credit taken from suppliers
Why forecast?
To quantify how much cash you need
To be on the front foot in discussions with your bank
To see if you are going to breach banking covenants
To help fulfil your legal obligations as a director
To force you to review every aspect of your business
Tax
Get accounts done quickly if there’s a loss
File VAT returns on time and pay by direct debit for an extra 10 days credit
For self employed, can you reduce your payment on account?
HMRC more accommodating in cases of difficulty making tax payments
Be ruthless in your review of cost
Make cash YOUR priority
Strong leadership is vital – this is YOUR job
Take control of the cheque book
Take security for directors loans
Do you have surplus assets you could sell?
Other tips
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T: 01332 295544F: 01332 295600
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Nottingham, NG1 6GR
T: 0115 9580212 F: 0115 9588800
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Leicester, LE1 1QH
T: 0116 262 9922F: 0116 262 8219
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