Cash Flow

• Plan your cash flow everything else will follow

• Ask suppliers for credit

• Ask suppliers to increase credit period

• Consider leasing machinery (or lease and buyback)

• Consider factoring (releasing 80% of invoice value at invoice date) if you are not effective with your own credit control factoring can provide all the answers

 Stock

• Ask suppliers to buy back stock at cost price, less admin costs (better the supplier helps you now than watch you fold)

• Cut stock levels – Use ‘Just in Time’ (JIT) get supplies 24 – 48 hours before you need them

• Cut stock orders (this will increase deliveries, but also cash flow!)

• Plan purchases: only buy what you need
  Contact similar stock holders for ‘partnering arrangements’: bulk purchasing is a must for small business’s to survive – pick the phone up and make the first move TODAY

Product/Service

• Stop producing dated and low profit products

• Stay within your core product until you production is at peak profitability

• Quality and service has taken a big knock from many Internet e-commerce businesses: give your customers a first class product and service

• They say, ‘what you can’t measure, you can’t manage’: keep perspective

Bank

• Get an audit company to check your personal or business bank account. Did you know that the average ‘error’ on bank statements is £1,500!

• Stop using costly overdrafts (and certainly unauthorized overdrafts) a medium term loan is the most efficient way to use business funds if used as part of a plan to stop using external finance

• Bank managers charge you business fees for some services depending on their assessment of you – this means there is scope to haggle, if you dare!

Credit

Call customers and find out what discount they would accept for cash on delivery, or even for payment in advance (in effect you will reverse the credit relationship). You do you have to allow customers to extend the credit amount by increasing monthly orders: if you allow £1000 per month credit and your customer raises the order after six months to £2000 per month, ask them for a £1000 ‘deposit’. As they say, ‘credit is a privilege not a right’ so don’t be pressured into providing finance facilities that you can’t afford.

Article Index

1. Things You Can Do Today to Help Your Business

2. How to Cut Business Costs