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Symptoms of failing to manage your Cash Flow!

Symptoms of failing to manage your Cash Flow!

Whether you’re just starting out in business, finding your feet in the market or confidently growing, cash flow management forms a key part to business survival and success. Failing to instil good cash management disciplines can and will threaten the very livelihood and future of any business, almost as quick as it was started.

 

So what are the symptoms of failing to manage your cash flow?

  • You’re struggling to pay your bills on time.
  • You’re struggling to meet the wages bill each week or month, or to pay the rent.
  • You’re forced to pay cash for new stock and supplies due to a poor past credit record.
  • Some suppliers are paid earlier than they need to be.
  • Customers are slow in paying you for work done or products sold.
  • Your struggling to meet your tax requirements; PAYE, GST, or income tax.
  • You’re leaving your invoicing until the end of the month to send out, thereby giving customers extra days of free credit.
  • You have insufficient reserves to handle unexpected additional costs or expenses.
  • Business growth is constrained by the fact that any extra resources needed, have to be paid in advance of extra revenues generated. Places extra pressure on existing funds, resources and reserves.
  • Your management style is more reactive than proactive.
  • You have too much stock and a need to off load quickly, usually at a discount.
  • Your fixed costs are too high which limits your ability to react effectively to a downturn in revenues.
  • Your margins and volumes suggest you simply aren’t covering your cost base.

While not exhaustive, the list is compelling enough to suggest a catalogue of faults in your cash and business management approach can quickly accentuate your cash flow problems, especially those of small businesses who generally have shallower pockets.

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Cash flow challenges for Small businesses.

Cash flow challenges for Small businesses.

There is no greater pain for a small business than not getting paid.

 

Today, data trends extracted using the Xero platform indicates that it is taking longer and longer for small businesses to have their invoices paid.

Late invoice payments are already a huge problem for small business owners. 87% of invoices issued by small businesses in New Zealand are overdue. And this seems to be a mounting issue. In the past year, the number of invoices which were more than a month overdue grew from 24% to 40%.

So what are some things you can do about it?

  • ask customers to make deposit payments at the time of order
  • focus on repeat business
  • change the terms of trade for slow paying customers
  • help customers pay on time by offering discounts for quick payment
  • invoice your customers as soon as the job is done

If your current practices in terms of credit control and debt collection are not working for you then why not call Insight CA Limited to discuss how you might better manager the task of debt collection.

Contact us today – we will help you achieve your business goals!

10 Tips to improve your cash flow

10 Tips to improve your cash flow

Cash Flow Management

Cash flow is one of the main concerns impacting businesses in NZ today. With the global financial crisis now thankfully behind us, there is still a more reserved confidence in the market to that that existed prior to 2007.

Even organisations experiencing significant and sustainable growth are finding they are faced with a range of difficult challenges. None more so than cash flow management.

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