There's a number of ways you can feel as if you're going nowhere in your business.
One of the worst is when you looking at your internet banking and see the overdraft blowing out with little funds available.
When your cash flow is sick it can literally make you feel sick.
But before you succumb, consider a logical approach to review your cash flow.
1. Check the numbers, and then check them again - you should have at your fingertips the ability to bring up or obtain a profit and loss statement, giving you some sort of idea if you're making money.
If something doesn't look right, get your accountant to go through it with you. If you can't get this information easily, find out how hard it is to get this system set up.
If you are feeling stretched it is important not to wait until the end of the year to see what you've made ...
2. Have you been buying assets but not using finance? Buying machinery or vehicles with your overdraft will make your bank account sick.
It's best to seek some sort of finance for those assets - lending is relatively cheap these days and possibly cheaper than your overdraft.
There's a saying: Long-term asset - long-term debt. Keep your cash flow for operating expenses. The asset finance team at your bank might be able to help you refinance some of this debt.
3. Check the debtors or the people who owe you money to make sure they're paying. Who's on that list? Are your credit terms too light? The usual 20th of the month following is probably a standard for larger companies but can you get these terms to seven days, 14 days to keep your cashflow positive. Progress payments or even being paid in advance is becoming common.
There might need to be an incentive and agreement for your client to do this - such as a discount.
Jeremy Tauri is an associate at Plus Chartered Accountants
By Jeremy Tauri
Phone: (09) 438 3322
Fax: 438 8455
134 Bank Street, Whangarei
If we had to sum up Brent and the team at Plus CA it would be - humorous, efficient, professional with a real focus on making your money work to its best ability for you...we will continue to deal with them even though we are moving overseas as we know they have our best interests at heart.
Jeremy thank you for your patience, assistance and general chit chat over the years. I would have absolutely no issue in recommending your services to everyone and anyone – in fact, I do.
We recently employed Jeremy Tauri of Plus Chartered Accountants and have been thrilled with the improved service we have received. Jeremy is really approachable and always available to answer queries. At his instigation we have set up quarterly meetings so that we are regularly reviewing our business and avoiding any ‘end of year surprises’.