10 WAYS TO HELP CASH FLOW

1. Release surplus assets – sell anything that has a value and isn’t actually earning for you.  That includes the cars for your wife and children, the over sumptuous offices, fish tank in the foyer and the flagpole outside the front door!

2. Sell and lease back fixed assets if owned outright.  You could start with the property.  Even in this market a tenanted company with a good covenant,  should be able to release value from the sale and leaseback of a property.  The same can be said of good plant and equipment, ie. with earning potential for the business.

3. Keep your stock holding as low as possible.  Slow moving stock ties up cash and reduces profit.  You are probably paying for it with lending and paying interest.  In a retail environment be very discerning on the stock you hold as only the most popular lines will sell when credit is tight for your customers.

4. Work with your creditors to keep supplies coming but delay payment as long as possible – remember you are their customers, they need you.

5. If you have let Crown or any other debts build up, speak to them.  Don’t clam up.  Deferred payment arrangements and payment plans can only be put in place if you speak to your creditors and they will only want to put them there if they trust the information coming from you.

6. Factor your debtors to receive up to 70% of the cash immediately but watch, there are strings!  Factoring is great if your business turnover is expanding but it can accelerate the end, by cutting off cash even more quickly than normal borrowings if business turnover declines.  Watch for high termination charges if you wish to exit from a factoring deal.

7. Better still, to improve cash from debtors, really work at your proof of delivery, prompt invoicing and following up debts.  Cash is king.  Be prepared to slightly discount your debtors, and therefore slightly reduce your profit, to keep cash flowing.

8. Remember a “good relationship” with your bank is not when you never speak to them! Keep them informed and they’ll be more ready to help you when you need them.

9. Credit Insurance. If your supplier insures your debt with them keep in touch with the credit insurer or they may cease your supplier’s insurance on you just because of the industry you are in or for the want of figures/business knowledge.

10. Trade profitably – profit generates cash.  Don’t take on bigger contracts/more outlets etc than you can afford with your capital.    From pies to pye in the sky construction projects, whatever you are making or building, check your costings, include all costs and know your scope for profit.  Control your personal costs – live flash no cash!

 Who to Contact

Contact David Hunter on 0141 887 4141 or email david.hunter@campbelldallas.co.uk for further information or advice.