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Is your cash flow causing you concern? DECEMBER 2015
Cash Flow is critical to business survival.
HOW TO MAXIMISE YOUR CASH FLOW NOW!!!
Manage the financial resources of your business:
- Ask for a larger deposit on all bookings.
- Retain funds as long as you can before paying suppliers.
- Get your customers on Credit Card or Full Payment upon booking.
- Pay your monthly creditors later than usual.
- Use your company credit card to extend your time to pay suppliers.
- Ask your suppliers for extended credit terms – payment over 3 months or longer.
- Change your GST to payments basis and 6 months if possible.
- Put aside 20% - 30% of your receipts to pay GST and Tax.
- Check your tax calculations and put off payment until you have funds or pay your tax with your GST.
- Fund your tax through your accountant.
- Put surplus funds in a high interest account or on deposit.
- Ask staff to work extra unpaid now and take time off later.
WHEN BUSINESS IS QUIET MINIMISE YOUR EXPENSES!!!
Manage your business expenses better over the low season:
- Decide who can afford to take unpaid leave.
- Reduce the number of paid days per week.
- Pay your telephone bill on a Credit Card.
- Reduce your expenses both business and personal to the minimum.
- When business is quiet get staff to take their holidays – this maximizes productivity when they return.
- Get any projects completed over this time when staff is not so busy.
GET FUNDING IN PLACE EARLY FOR THE LOW SEASON
Manage your funding:
- Request a temporary overdraft well before you need it.
- Obtain a loan using the equity in your property.
- Obtain a loan using the equity in your Insurance policy.
- Obtain a line of credit for emergencies well before your may require the funds.
- Flexirent any Computer purchases.
- Extend the credit limit on your Credit Cards.
WHAT LONGER TERM STRUCTURAL CHANGES CAN YOU MAKE TO IMPROVE CASH FLOW?
Long term solutions
- Match your long term assets with long term debt so you have the cash to pay your bills.
- Ensure that you have good systems in place to capture and bill every booking.
- Bill your service as soon as it is delivered.
- Develop your web presence to get customers direct and improve your margins.
- Prepare accounting reports monthly to keep a close check on your business.
- Prepare a Budget / Cash Flow so you know how much to put aside for the low season.
- If you are a tour operator – open a Trust / Travel Bank account – to enable better management of funds. Only take out what is yours.