5 Ways to Supercharge Your Accounts Receivable Collection for Improved Cash Flow Management

- Cash Flow Management and Forecasting

‘Thanks to our friends at EzyCollect for sharing some helpful information about getting paid by customers quicker and improving cash flow’

 

Cash flow management is critical – but collecting on accounts receivable (AR) can be a difficult endeavour.

 

Chasing down invoices and tackling late payments take up valuable time that could easily be spent elsewhere. Fortunately, streamlining your AR processes and reducing time and effort spent on cashflow management is no longer a pipe dream. A full-stack accounts receivable management platform can be an invaluable solution to this struggle and boost your overall cash flow success.

An integrated cloud-based platform automates the entire AR cycle, giving you easy-to-use tools to get on top of payments collection, letting you take back control of your finances without all the manual labour associated with traditional processes. 

 

Here are five ways technology will assist in managing those challenging  ins and outs of accounts receivables:

    1. Enable Automated Workflows: This gives you a structured and efficient payment collection process, making sure that nothing will slip through the cracks. Look for solutions with an AR automation workflow that gives you a comprehensive overview of all aspects of overdue and actionable insights, allowing you to prioritise ageing accounts and phone calls. 
    2. Set Up Personalised, Automated Payment Reminders: Late payments are a common issue in accounts receivable, but automating payment reminders can help reduce them. By automating payment reminders with embedded “Pay Now” buttons to be sent to your customers via email or SMS, you can rest assured that they will reach your customers before their due date. Oftentimes, a personalised follow-up goes a long way.  
    3. Leverage Automated Payment Collection: Getting paid on time can be made easy when you set up integrated direct debit for recurring payments, or specific invoices or sales orders. This will not only take away the hassle of keeping reminders for you and your customer, it also guarantees on-time payments.
    4. Take Advantage of Automated Payment Reconciliation: Reconciling payments manually can be extremely time-consuming. Automating this crucial part of your AR process can save you and your team thousands of hours. An integrated AR automation solution connects with your accounting software or ERP, allowing you to automatically reconcile payments as they come in. This reduces the time and effort required to manage your accounts receivable, giving you more time to focus on other important aspects of your business, such as customer relationships and business growth.
    5. Offer Customers Streamlined Payment Options: Have you ever heard of the law of reciprocity? If you make online payments easy for your customers (e.g. offer them their preferred payment options, such as credit card, bank transfer, and direct debit), your customers will be more likely to pay you promptly in return. Make your business easy to pay by embedding “Pay Now” buttons on invoices, statements and emails that enable a seamless one-click payment. Options like B2B BNPL can also ensure your business gets paid, while giving your customers flexibility. 

 

Managing accounts receivable can be a difficult task for businesses, but with the advancements in technology, it no longer has to be. A full-stack accounts receivable management platform can streamline the entire AR cycle, making the payment collection process structured and efficient.

By leveraging automated workflows, personalised payment reminders, direct debit options, and automated payment reconciliation, businesses can significantly reduce the time and effort spent on cash flow management. Additionally, offering customers streamlined payment options can improve prompt payments and boost customer relationships.

 

As technology continues to improve, businesses must adapt and take advantage of the available tools to improve their overall cash flow success.

 

If you would like to understand how your business could leverage the power of AR automation to boost your cashflow, book a demo with ezyCollect.

How a $2m business improved cash flow by $265K using 7 Key Numbers

- Complimentary E-Books

Check out this example of how a $2m turnover business was able to improve its cash flow by just over $265K… and profit improved by $156K.

 

It’s not ‘rocket science’… it’s a simple plain english strategy that any business can employ.  Once implemented into your business and followed religiously, it can remove the need for business borrowings completely!

 

Oh and it also takes care of the ‘Growing Broke’ syndrome suffered by many growing businesses.

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Top Financial Mistakes Small Businesses Make & How To Avoid Them

- Latest News

Running a business can be an exciting and rewarding journey, but it also comes with daunting challenges. It’s important to be on top of your small business’ financials to create lasting success, but let’s be honest — who hasn’t fallen into a financial pitfall or two along the way?

In this blog post, we’ll dive deep into the most common financial mistakes business owners make and show you how to avoid them. We’ll cover everything from not separating personal and business finances to not keeping track of taxes.

Business financial mistake #1 — Failing to separate personal and business finances

This is a mistake business owners make in financial planning — especially in the early stages. It’s easy to get caught up in the excitement of starting a venture and procrastinate setting up dedicated financial accounts for your small company. 

However, mixing your personal and business accounts can lead to myriad cash flow complexities, and one problem will quickly lead to the next. First, it makes it harder to monitor transactions, which in turn creates tax issues and difficulty in proving business income and expenses. Consequently, this makes it challenging for your company to secure financing in the future.

As an owner, you should immediately open a dedicated bank account and use it exclusively for business transactions. You may also apply for a business credit card to easily keep track of business expenses.

Business financial mistake #2 — Not having enough emergency funds and cash reserves

By analysing data and perhaps employing your natural business intuition, you might be able to predict the outcomes of your operations and campaigns. But even then, every successful businessman will tell you that unexpected expenses can occur anytime — and without adequate cash reserves, it can be difficult to cover them, leaving your business in a precarious financial position.

To avoid this, aim to always have enough cash reserve to cover at least 3 to 6 months of operational expenses. As a budding entrepreneur, avoid making unnecessary purchases when you experience early success and prioritise maintaining a healthy business cash flow instead.

Business financial mistake #3 — Not prioritising collections

This financial pitfall is prevalent in service-oriented businesses, especially those in competitive industries. To gain market share, many owners are tempted to offer “pay-later” terms, which aren’t inherently wrong. What’s damaging is the easygoing attitude when dealing with unpaid invoices, hoping customers will pay eventually.

If this mistake applies to you, the solution is to simply be vigilant with collections and make them an integral part of your operations. You can set up a dedicated collections team or take it upon yourself to pick up the phone and collect. Set up a clear invoicing and payment process, and follow up on overdue payments. It might be flattering to look at a long list of receivables, but cash is king. More cash means less stress and bigger opportunities!

Business financial mistake #4 — Failing to keep track of taxes

Taxes can be complicated and overwhelming, but neglecting them brings severe consequences in the form of costly penalties and interest charges. Your tax obligations as a business will vary depending on many factors, including the size of your company, where you’re located and what kind of business you run.

If you keep in mind how much money you owe and take steps to legally reduce what’s due, it will help your business stay afloat for longer.

Business financial mistake #5 — Not seeking professional advice

Another common financial mistake business owners make in financial planning is not seeking professional advice. It’s easy to think that you can handle everything on your own, but most of the time, you don’t know what you don’t know. Not seeking professional advice can lead to costly mistakes and impede the growth of your business.

To avoid this, small business owners should always be willing to consult a financial professional, such as a seasoned accountant or financial advisor. They can provide valuable insights and help you easily navigate the financial side of running a business. They can also help you identify areas where you may be overspending or losing money and offer solutions to improve your financial situation.

Sidestep financial pitfalls through virtual CFOs

It’s obvious how managing your small business’ financials is crucial in ensuring your long-term success. But as we’ve seen in this blog post, it’s not exactly a walk in the park. The good news is with the proper knowledge and tools, you can avoid the common financial mistakes we mentioned here.

Surely, you’ve heard of a chief financing officer (CFO) — and if you think it’s absurd to hire one for your small business, you’re right. An in-house CFO can easily cost you upwards of $200,000 a year. But what if you can employ one for a lot less money?

Enter CFO On Call — a virtual service that provides the expertise of a chief financial officer at a fraction of the cost. For a monthly fee or one-time engagement, you will have access to a highly experienced CFO trained in large industry practices. We are the most prominent on-call financial control service in Australia and New Zealand, and our virtual CFOs can help you steer clear of common financial mistakes.

Don’t let financial missteps be the downfall of your empire. Contact us to learn more about how a virtual CFO can take your small business financials to new heights.

You can laugh at business cash flow worries if you follow this simple plan

- Cash Flow Management and Forecasting

If your bank balance has taken a hit recently, you probably need a cash infusion and serious cash flow management.  Rather than rushing out and borrowing or putting in your own money – you might find the cash in places you hadn’t thought of.

Cash flow problems often arise due to lack of understanding of how cash moves through a business and the difference between profit and cash flow.

 

Here’s the difference between Profit and Cash Flow:

Profit

You can see on the left that the Income, Costs and Overheads are all accounted for in the same month and we show  a profit of $200.  

 

Cash Flow

On the right we can see that we had to pay for the costs before we actually made the sale.  Costs might be products or labour and materials on a job.  We also paid for the overheads in the month that we made the sale.  Overheads are things like rent, admin wages, postage etc.  We then had to wait until the month after we made the sale to get paid by the customer.  Up to the month we made the sale we had paid $800 in costs and overheads before we had received a cent from our customer.  We had to find $800 from somewhere to fund this sale.

This is where many businesses get into trouble with cash flow management.  They don’t allow enough cash to cover the costs and overheads until the time they get paid by customers.

 

Cash Flow Management

This demonstrates there is a need to handle the shortfall of $800. You can do this by various means such as bank borrowing, lending the business money, selling shares in the business to introduce more cash and so on.  Alternatively you can employ better cash flow management of the factors affecting the shortfall. 

 

The Factors Affecting Cash Flow Management

These are sometimes referred to as ‘Drivers of Cash Flow’ and they are:

    • Revenue Growth – as you saw from the diagram, sales creates a need for cash… so it follows that the more sales you make the more cash you will need.  This is an often misunderstood concept.  

 

Lots of sales are being made, but cash is getting tighter.  Interestingly a drop in revenue can sometimes cause a short term improvement in cash flow management, because less costs are being incurred to make the sales or less inventory is being used up.  

    • Costs and Overheads Percentage – the percentage of costs and overheads is important to know, as well as the dollar value.  This is because a percentage indicates how the costs and overheads are moving relative to the revenue.  If you are selling more, but your costs and overheads are growing by more relatively, you aren’t really getting ahead.  If your revenue is growing by 5%, but your costs and overheads are growing by 10% you are missing out on vital profits. Keep a close eye on costs… Every dollar saved in costs goes straight onto your bottom line!
    • Price Change – if you don’t do regular small price increases, your margins are being eroded.  Markets often influence pricing, but you may need to find ways to increase the perceived value of your product or service to justify charging more.  Regular small price increases are much easier to achieve than irregular big ones.  Discounting is a hot topic at the moment, with many businesses offering them to retain business.

 

Have you ever calculated how much more volume you need to sell to compensate for discounting?  If you have a gross profit of 60% and you offer a 10% discount, you need to sell 20% more volume to maintain your 60% gross profit.  It might be better to find a low cost addition to the sale with a higher perceived value than slashing your gross profit.

 

Every dollar in price increase goes straight onto your bottom line!

    • Accounts Receivable Days (Customers) – this is the number of days ‘on average’ that customers are taking to pay you.  This is quite different to the credit terms you offer.  Anything you can do to reduce the number of days that customers are taking to pay you keeps that cash in your bank account for longer and makes cash flow management easier.
    • Accounts Payable Days (Suppliers) – this is the number of days ‘on average’ that you are taking to pay your suppliers.  Anything you can do to lengthen the number of days you are taking to pay suppliers keeps that cash in your bank account for longer.  

 

Obviously you need to manage this against the level of service you receive.  Some suppliers are quite prepared to offer better terms to keep your business.

    • Inventory and Work in Progress Days – this is the number of days ‘on average’ that stock sits in store or jobs are in progress prior to invoicing.  Try to think of stock as dollar bills piled up on the store room floor and ‘Work in Progress’ as dollar bills piled up on the workroom floor. 

 

If you can focus attention on the above ‘Drivers’ of cash flow management, you may not have to borrow or sell shares in your business.

Another really important aspect of cash flow management is forecasting.  We often hear the question “How can I predict when I will receive cash from customers?”  This is a common issue in small business, however you can start by plotting your costs and overheads in a spreadsheet and using that knowledge to calculate what cash you need to cover them.  

You can use prior knowledge of customer payment habits, as well as making follow ups to get the money in quicker.  If you forecast a shortfall in your cash position i.e. an overdraft or exceeding an overdraft, at least you are forewarned and can take action to avoid it. With cash flow management. 

You can focus on selling more or collecting more quickly from customers.  You can look at your purchasing of goods and services and time them to fit in better with your future cash position.  

It can be very tempting if a lump of money comes in to spend it on items that you feel are needed, but a forecast can often demonstrate a need down the track for the funds about to be spent.

 

For more detailed information on how to improve cash flow management, download our eBook ‘How to Improve Your Business Cash Flow and Keep Some For Yourself’ 

 

CFO On Call welcomes Lianne Grove to the team in Perth WA

- Cash Flow Management and Forecasting

We’re delighted to welcome Lianne to the team of Virtual CFOs in Perth.

 

Lianne works with companies to create value including:

    • Overcoming growth challenges
    • Strategic growth planning and forecasting
    • Managing Cash Flow to achieve sustainable growth
    • Finance acquisition to fund growth
    • Systemisation to handle growth
    • Management reporting to ensure growth plans are on track
    • Project and product costing to ensure profitability
    • Feasibility studies to support investment 
    • Establish cash flow focussed contracts
    • Mitigating and minimizing growth risk

 

Lianne believes strongly in doing the necessary work up front to ensure the profitability of a job or project.  Some important items she has in place before contracting and commencing are:

    • A robust well supported financial model, that converts to a project forecasting and financial management tool, ensuring desired results are closely monitored and achieved
    • Cash flow considerations in tender and contractual negotiations to minimise working capital requirements
    • Risk mitigation and management strategies established to avoid costly errors
    • Project/job cost controls to avoid cost overruns and improve profitability

At an offshore construction company where Lianne previously worked all projects were cash flow neutral or positive, and all the projects exceeded bid expectations, with no major variances in forex exposure, insured risk or foreign tax regimes.

 

Lianne has a philosophy of ‘value creation’.  Two of her favourite tools for this are ‘sensitivity analysis’ and ‘scenario modelling’, which she uses before deciding on a significant purchase or business path forward.  This way the most ideal pathway can be chosen and the risks can be understood upfront and managed along the way.

In assessing options for building a processing plant, she developed a financial model that determined, not only the profitability of the plant, but also ran scenarios to determine the best location and type of processing equipment for the plant.  This demonstrated a difference in net present value of the project between $594m and $958m.  Profitability was improved and risk reduced.

 

To learn more about how Lianne is helping businesses download our eBook ‘‘Managing Your Business Through Rapid Growth’ 

 

Click Here to book a Free Chat with Lianne.

Managing Your Business Through Rapid Growth

- Complimentary E-Books

Growing a business is a normal aspiration, but how do you manage growth without putting pressure on current operations and have it all come undone?

 

5 Tips to Manage Your High Growth Business

  1. Plan – have a documented plan with specific targets, rather than a vague notion of growth.  Create an Operational Plan to achieve targets covering marketing, sales, purchasing and supply, logistics, staffing and premises.  Translate your ‘Operational Plan’ into a ‘Financial Plan’
  2. Measure and adjust – to ensure you get the desired results, you need systems in place to measure growth and to be willing to adjust expectations up or down if necessary.
  3. Communicate – your plans with your team, so everyone knows what’s expected and ‘on board’ with the plan.
  4. Keep things up to date – with ‘business as usual’ i.e. don’t get so focused on the growth plans that existing business gets neglected.
  5. Be flexible – this is key and needs to be built into plans.  Plans need to be adjusted sometimes to allow for business feedback  or changes in market conditions.

 

Growth in and of itself is no guarantee of success, but if you manage growth correctly, you enhance your chances of success immeasurably.

 

 

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How to Hire a Top Level Virtual CFO at ‘Zero Cost’

- Complimentary E-Books

When you’re in the hot seat and in charge of making the best decisions for your business, do you rely heavily on intuition and gut feel? That’s fine in most cases, but what about when you need greater certainty in the financial outcome?

Let’s say you have to make decisions like:

  • A new salesperson will help us sell more, but will the extra profit cover the costs?
  • Should we take on that new piece of equipment? What is the cost recovery rate?
  • Is my calculator estimate close to the real figure?
  • What if I reduced the cost of goods sold, or the inventory, or collected debts quicker by 7 days? How much extra cash in the bank would that give me?

Perhaps you have a submission to the bank or lender and you need not just a professional presentation and accurate numbers, but a cost vs benefit or return on investment (ROI) analysis. Would you know the ratios that bankers use to justify your loan to their bosses?

Your internal bookkeeper or accountant may give you monthly totals, keep your invoices going out and provide profit and loss accounts, but can they help you make the big business-building decisions?

A Chief Financial Officer can.

But a full-time Chief Financial Officer (CFO) will cost you, with on-costs, around $150k to $180k a year. This is hard to justify as you don’t need another large cost factor.

A Virtual CFO, however, costs only when you need them, and not when you don’t!

So, what exactly is a Virtual CFO?

A good Virtual CFO is right-hand to the boss, but on the numbers side. Someone who has worked for bigger corporations, sometimes listed companies. Someone who has been the head of finance, is skilled in business numbers and knows how the numbers affect the decision-making process of department managers and the CEO.

They don’t even have to live nearby. These days it’s easier to have a sit down meeting over Skype than in person and it costs a great deal less in travel and out of office time.

Virtual CFOs are becoming more the norm for small/medium businesses for this reason. You can hire a Virtual CFO, someone who gets to know your business, helps you when you need them and the costs would be a mere fraction of hiring someone full time.

Want to find the best Virtual CFO for your business? Download our useful 18 point checklist on what to consider when engaging a part-time CFO.

The best part?

Hiring a Virtual CFO  almost always pay for themselves! Want to learn more? Download our free eBook for street-smart business owners who want the best possible financial help that will pay for itself 2 to 10 times over!

Fill out this form to Download our free eBook ‘How to hire a top-level Virtual CFO for zero-cost’
Virtual CFO

How to hire a top-level VIRTUAL CFO and Zero cost

- Complimentary E-Books

A cheat-sheet written for street-smart business owners… who are ready to grow!

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Are you like the ‘Underpants Millionaire’?

- Covid 19

Most people in business can identify with this image at some point in the life cycle of their business.  We all did it!  Sitting at home (usually at night) crunching numbers on spreadsheets to see how many sales we might make and how much profit could result from our efforts.

 

You remember it I’m sure… thinking about how much stuff you can sell and slotting it into spreadsheets… Setting up your business plan.  The slight ‘unknown quantity’ often, is the cost of sales and the overheads required to run the business.  So you take an informed guess and slot them in too.

 

Then you get busy making it all happen… pounding the streets or keyboard marketing and selling your wares.  You take your eye off the ball when it comes to the financial management side of things… hoping it will all be OK and profit will be the result if you just sell enough.  

 

The issues start to arise when the costs and overheads aren’t covered by your sales and there never seems to be enough profit for your hard work.  To add to the headaches, cash flow is tight and constantly an issue.  There never seems to be enough cash flow to pay for everything when it’s due and you end up not getting paid, or worse still, having to kick in your own money to keep things afloat, because it’s all too hard to get a business loan!

 

This might sound a bit extreme, but it’s pretty typical of what occurs in ‘entrepreneur land’.

 

Why not avert the headaches this year and get yourself some help and a ‘sounding board’ for your business plans.  If you’re thinking of expanding your business, downsizing or exiting in the next year or so, it could be worth its weight in gold to spend a little time with a financially minded person.  They can help you to see clearly what will be the outcome of business plans to ensure you end up with the result you want… not a bunch  more headaches.

 

If this sounds like you and you’d like to chat with a CFO, click here to set a time and get your plans off to a great start in 2023.

7 Steps to Stop Cash Flow Chaos Forever!!

- Cash Flow Management and Forecasting

Are you sick of ‘band aid’’ solutions to cash flow chaos?

Cash flow is one of the biggest issues faced by business owners.  It’s a constant battle to find enough cash to pay everyone on time and at the end of the day there often isn’t enough left to pay yourself.  This can be very disheartening if you allow yourself to be a victim of poor cash flow.  

The way to overcome this situation is to take control of it and treat it as a ‘holistic’ exercise, rather than constantly applying ‘band aid’ solutions.  You need to fix cash flow once and for all, so it ceases to be an issue in your business ever again.

 

I’ve summarised these 7 Steps.  If you’d like to know a bit more detail about each of the steps, feel free to download our eBook:

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The 7 Steps:

 

  • Step 1 – Produce a Cash Flow Forecast.  This can be a simple spreadsheet that plots out in black and white all the cash coming and going in your business.  Trying to figure it all out in your head is just too stressful.  Once you plot it all out on paper in a Cash Flow Forecast, it makes it much clearer and easier to understand where the ‘peaks and troughs’ are going to be in your cash flow situation.

 

  • Step 2 – Customers – One of the biggest issues causing cash flow problems is customers who don’t pay on time. You go through all the expense and effort of delivering a great product or service then you have to chase them to get paid what you’ve earned.  You need a process that allows as little room for manoeuvre for customers who pay late as possible.

 

  • Step 3 – Suppliers – A great way of keeping cash in your bank account for longer is to not pay suppliers any quicker than you need to.  I’m not suggesting just stringing them out without agreement.  Most suppliers will agree to terms for you to pay if you have a good credit history.  Your job is to negotiate with suppliers the best terms possible, because every day you pay them earlier than necessary is a day the money isn’t in your bank account.

 

  • Step 4 – Stock and Work in Progress – Think of stock and work in progress as dollars piled up on the stockroom or workroom floor.  You’ve had to outlay money to pay for the stock to sit there waiting until customers want to buy it.  If it sits there too long it’s precious cash flow that could be used for something else.  Similarly work in progress is labour and materials you’ve had to outlay on jobs that may not be finished yet and able to be invoiced.  Every day jobs aren’t finished and invoiced is a day the money isn’t in your bank account.

 

  • Step 5 – Costs and Overheads – Costs are generally the direct costs of your product or service that you sell.  Overheads are all the other stuff like rent, wages, advertising etc.  These can so easily get out of hand and creep up, so you don’t notice that all your sales are being eaten up and there’s nothing left at the end for profit and to pay for everything.  These need regular review to ensure there’s nothing that shouldn’t be there wasting cash.

 

  • Step 6 – Pricing – A lot of businesses handle pricing in a haphazard way.  They take a stab in the dark often on pricing or copy competitors or try to undercut them.  The big issue about pricing is understanding the ‘true cost’ of what you’re selling.  If it’s a product you need to calculate everything that’s involved in getting it ready to sell, to ensure there’s enough margin allowed for a profit and to cover overheads.  If it’s a job or project you need to factor in all the labour and material costs associated with the job to ensure you’re charging enough to cover them, allowing for some profit and to cover overheads.

 

  • Step 7 – Sales – Funny that I’ve left sales until last isn’t it?  It’s a common reaction to cash flow problems to think “We just need to sell more”.  The issue here is if what you’re selling isn’t profitable and those you’re selling to aren’t paying on time… Making more sales will just increase cash flow problems!  So once you’ve got all the other stuff sorted out you’re then in a position to sell with confidence knowing it will result in profit and good cash flow.

 

If you can proactively work on and manage each of these 7 steps you will be well on the way to better cash flow control and less headaches.  You also may not have to borrow money at all because you’ve got it all under control.  This could save you a fortune in unnecessary interest expense.

 

I’ve summarised these 7 Steps.  If you’d like to know a bit more detail about each of the steps, feel free to download our eBook

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Create Your Best Year in Business!

- Cash Flow Management and Forecasting

To say 2022 has been a ‘turbulent’ year would be an understatement. 

For most businesses worldwide it has been one of the most challenging in living memory!

The end of the year is a good time to pause and reflect on what happened, what went well, what went wrong and how you plan to proceed in 2023.

 

A place to start business planning is to sit down and review your Year to Date financial reports to December.  Compare actuals to budget (if you have one).  Where were targets missed? It’s handy to measure changes by percentage as well as dollars, as percentages highlight more clearly the level of change.  If you don’t have a budget… It’s never too late to start!

 

Are you splitting your revenue e.g. by product/service categories, divisions, branches/locations, customers, salespeople etc.?  If you are, you will be able to see more clearly where action is needed.  If you just lump all revenue into one account in your accounting system, it makes it very difficult to see exactly where the issues are.

 

The new year is a good time to consider a price increase if you haven’t done one recently.  Everyone’s costs are going up and it’s not reasonable to absorb them all yourself.  Sure be a bit less greedy when it comes to profit but don’t be a charity.  If you really can’t achieve a price increase, can you seek alternative supplies or get better prices from current suppliers?  Remember every dollar in reduced costs goes straight to your bottom line.

 

Have a close look at your overheads and how they contribute to business operations.  Are they getting out of hand?  Can some of them be shaved without too much detrimental effect on the business (especially customers).  Remember every dollar in reduced overheads goes straight to your bottom line.

 

How happy are you with the Net Profit?  Is it good enough for all your effort?  How does it stack up against your budget?

 

How is your bank balance looking?  Cash is usually the ‘canary in the coalmine’ when it comes to business financial health.  If cash is tight, a great tool to help is a Cashflow Forecast.  You plot out  money coming in and going out for the future and it shows pretty quickly where the problems will be.  It enables you to work on them before they become a real issue.  A Cashflow Forecast helps business owners to see much more clearly the situation ahead and feel less stressed by it.

 

If you have business borrowings, are they the right type?  Should you investigate other options?  How are lenders viewing your business?  Are they nervous about the indicators?  What can you do to improve them?

 

Are your customers treating you as a bank?  Slow paying customers are ruinous to cash flow.  You need a system that gives them as little room as possible to pay slowly.  Put someone in charge of it and give them targets to meet.

 

Are you taking advantage of all the terms from suppliers they offer?  Paying suppliers too quickly is also ruinous to cash flow.  Spend a little time reviewing the business you’ve done with them and use it as ammunition to seek better terms or investigate other suppliers.  Ensure your bookkeeper or whoever pays suppliers doesn’t pay early unless a discount is offered.

 

How’s your inventory tracking?  Have you got too much cash tied up in slow moving stock?  Do you manage it closely for optimum levels?  Think of stock as dollars piled up on the stockroom floor.

 

How is your Work in Progress (WIP) tracking?  This is another place where cash gets tied up in labour and materials used on jobs that haven’t been invoiced yet.  Think of WIP as dollars piled up on the workroom floor.

 

Have you got too much tied up in assets?  Are you able to free up some cash here and lease or hire instead of paying cash for things.

 

I know these all sound like boringly obvious things but if you take a little time to sit down quietly and review them and set out a plan to implement changes to each early in the new year, you will definitely reap great rewards in terms of profit and cash flow… Not to mention business owner sanity!

 

The end of year is a great time for reflection on what you want to achieve in the new year and how you plan to get there.  Remember the old saying “If you aim at nothing you will reach the target with amazing accuracy”

 

Once you’ve put your targets in place, set aside a little time each month to review the results with someone who understands financial management.  They can repay many times their cost in better results and clarity you get over the situation.

 

 

For more information about the issues mentioned above download your FREE eBook ‘Create Your Best Year in Business’

What a Business Needs to Get Going and Grow

- Complimentary E-Books

Many of us have a dream to run our own business and can see a wonderful vision
of the future where we’re delivering fantastic products and services to happy
customers who love to pay us a fortune. Think of Steve Jobs working away in his
garage to create what many of us enjoy today at Apple.
The sad fact is that over 50% of start up businesses fail within the first 2 years.

Check out our eBook ‘What a Business Needs to Get Going and Grow’.

 

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Tip Sheet for Optimising Your Business Lending Facilities

- Complimentary E-Books

Poorly structured business lending facilities
can create overspend on interest, as well as
missed growth opportunities, due to lack of
funds available.

Check out our Tip Sheet to point you in the right direction!!

 

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6 Steps to Better Job Management & Profit

- Business Growth

With so much going on in business, it can be a daunting exercise to know what to work on first to create improvements.

Everyone is busy doing their job and trying their best to deliver good service to customers, but it’s not quite working the way it should and you’re asking yourself “Why isn’t my business making enough profit?”

The business doesn’t generate enough profit, cash flow is squeezed and you want to know how to handle jobs efficiently and achieve better profit from those jobs.

When a business grows, methods evolve over time and different people begin to do things their own way. The business and your customers are at the mercy of the person delivering the service on the day (and their mood).

If you want to create a better outcome for your customers, and more profitable jobs for your business, CFO On-Call has created a useful eBook, which covers some high-level points to consider.

 

The free eBook ‘6 Steps to Better Job Management and Profit’ includes information about:

  • Handling customers the right way so they not only want to buy from you again, but refer you to others like them.
  • Getting tasks done without hassle and without wasting too much of the owner’s time.
  • Getting rid of inefficiency and waste to boost your bottom-line results.
  • Reporting on numbers and managing by using evidence instead of ‘gut feel’. This saves you time and money.
  • Empowering people to make sensible decisions when a business owner or key staff member is absent for a while.
  • Implementing systems to make life easier, more efficient and make more money on jobs, as well as increasing the value of your business.

This is for time-poor, growth-hungry business owners and managers looking for ways to achieve growth without the headaches that usually occur. It will help you get your thoughts organised around the key issues affecting growth, and give you an idea of how to avoid the pitfalls through job management.

 

Click here to download our free eBook ‘6 Steps To Better Job Management & Profit’

 

 

This is for time-poor, growth-hungry business owners and managers looking for ways to achieve growth without the headaches that usually occur. It will help you get your thoughts organised around the key issues affecting growth, and give you an idea of how to avoid the pitfalls through job management.