WHK - Cash is King - Here's How Not to Run out of It
Author: Catriona Knapp | Category: General
Do you know the likely impact of the decisions you make before you implement them?
To thrive in times like these, you need to ensure you have a plan with realistic goals, know where you want to be and understand how you are going to get there.
Cash is King – Here’s How Not to Run Out of It
Do you know the likely impact of the decisions you make before you implement them?
To thrive in times like these, you need to ensure you have a plan with realistic goals, know where you want to be and understand how you are going to get there. Many times, businesses fall short of their plans simply because their decisions result in outcomes they were not expecting.
Here are a few examples of how people may or may not be right:
“If I increase sales revenue, it will generate more cash”.
Well hopefully, but not always! Increasing your sales revenue can have a negative impact on your cashflow if you have to extend your credit in order to be competitive. That in turn may mean that your collection days blow out. Who wins? Not you – your bank balance suffers, your suppliers chase you and if you are too lenient on your customers you may very well end up with not only bad debts but a poor credit rating.
“I should always take the good deals from my suppliers”.
Shop around by all means, but be wary of taking prompt payment discounts or short term credit if you are struggling for cash. Doing so may put even more pressure on your cashflow and shorten the length of time you can hold onto cash received from your customers.
“I need to pay my staff well in order to keep them”.
True in most cases, but are your staff as productive as they could be? Do they know what is expected of them and do you know their expectations? Do you have good human resources management? In other words, are you getting value from them for the way you are paying them?
“All our internal systems are working well”.
When was the last time you did a check to ensure that all jobs that have been completed are invoiced out, all costs have been recovered, statements have been issued and outstanding debts have been chased?
There are so many variables in business and each business can benefit from at least one small change that could significantly improve and maintain performance.
Please note that the information provided is general and should always be discussed with your accountant or lawyer who will be able to put it into context around your business needs.
If you would like to see the impact of even a small change in your business contact WHK Business Growth advisor (and DINZ Secretary) Catriona Knapp, Catriona.Knapp@whk.co.nz.
www.whkbusinessgrowth.com
Posted on 3 November 2009, 11:50 a.m.
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