Post Pandemic or not – these are basic fundamentals of being well organised.
Ensure Customers Pay – Encouraging your customers to pay in a timely manner is no less important than selling them the goods or services in the first place. This is an important balance that must be struck. If, for example, you have to invoice for multiple items, ensure that you have a deposit that covers your initial outlay upfront. Keep billing times short – as your major suppliers may do to you. Many businesses are generous with terms to their clients, while being harshly treated by their own suppliers.
Reward the Sales Team for ROI – This might seem more like a sales management tip than cash flow, but aligning the goals set for your salespeople with your cash flow plan will simplify cash management issues. For example, help your staff to not solely focus on the ‘lines of least resistance’ by creating a commission plan that pays on sales that deliver higher gross margins, and not just increased volumes. They will hone their sales skills and earn a bonus from your increased gross profit.
Join Trade Associations (specific to your sector or the FSB), and local retail community groups. It’s important to know what your fellow retailers are doing in the community and what benefits may be available. Grants might be available for an array of small retail business needs at local or national level. There are many millions of available funds left on the table each year because businesses don’t know it’s available!
Schedule and Predict Demands – Budgeting is important. Separate your semi-fixed costs, like rent and salaries, from the variable costs that may be driven by seasonality. Ensure that cash is allocated for stock or the quarterly or annual tax demands based upon sales turnover. Look out for deals and have a contingency plan for managing the unexpected. Having a line of credit available is useful as a ‘Plan B’, if an unforeseen opportunity or eventuality presents itself.
Allocate for Big Purchases – With your predictable demands on cash flow, finding the right time to make large capital expenditure like leasehold improvements can be tough. Figure the amount you will need and build it into your budget and forecast. This process gives you an overview of your capital spending and can help you determine if you are spending appropriately for your business income. Many readily available finance products are available today to help spread the cost of growth and expansion, without depleting your cash.
Our Merchant Cash Product works hand in hand with your daily sales – so that you never need to worry about meeting a fixed monthly payment if your turnover fluctuates.
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