Roberts explains how to establish and manage cash flow in order to keep your business successful, profitable, and growing.
How many times have you told your bookkeeper to pay a bill to avoid hassling phone calls from the company waiting for your payment? Become that company. If you let customers slide, they will think that you are a secondary priority over the other bills that need paying, and you will always be last in line. Don’t worry about losing that bad payer to your competition. Force all your bad payers to use your competition, and enjoy the advantage that this will give you in the long run.
Don’t be afraid to ask for COD payments from accounts that are delinquent. If they are willing to pay for their next order upfront while they are going through a bad time, it can work to your advantage in the long run. Set up a payment plan and collect COD on any new orders until things turn around for them. Once this is working well, establish a system of cash transfer with your bank so that you can pay your creditors at the very last possible moment and make sure you stay on top of payments. At its simplest, cash-flow management means delaying outlays of cash as long as possible, while encouraging anyone who owes you money to pay it as rapidly as possible. It’s as simple as that.
My friend sleeps a little better now, and he hopes to be sleeping a whole lot better once he has implemented the cash-flow plan that his accountant drew up for him. It’s not an easy analysis to make and one that should probably be entrusted to a financial professional because of its importance. It’s obvious, though, that if you can achieve this magical balance early on in the life of your business, you will go a long way in establishing your company’s fiscal security, not to mention your own improved sleeping patterns. My friend has decided that the money was well spent. Now his only problem is that he will have to wait out that spending ban before he can buy the bass boat.
Gordon Roberts has a history in screen-printing production management that spans more than 25 years. He has held supervisory positions in shops that represent a broad spectrum of application areas and markets, including printed electronics, apparel, signage, and retail graphics. Roberts has presented training courses on the basics of screen-printing production and on shop management for the Screentech Institute and is presently a consultant for the screen industry. He can be reached at firstname.lastname@example.org.
Did you enjoy this article? Click here to subscribe to the magazine.