We meet so many businesses at ASE. One of their key worry … “running low on cash”
Cash in the Bank (and/or availability of credit) is essential to keep the wheels of your business turning.
Cash is needed to cover running costs (overheads, supplies, staff etc.) Then of course there is growth.
So many get caught out in the enthusiasm of growing their business that they under estimate the cash resources needed to sustain such growth.
Sometimes, unanticipated or emergency cash needs can also get overlooked.
E.g. A good solid businesses suddenly finding out that their lease is not getting renewed which came as a terrible and challenging wakeup call entailing huge cash drain in relocating and renovating.
Bearing in mind such unpredictability our team at ASE help businesses better plan and manage their cash flows. We guide by helping in pre planning as well as how to best maximize credit availability.
“By failing to prepare, you are preparing to fail.” – Benjamin Franklin
Here are six tips on how to better manage your cash flow.
1/ Monitor your cash – Watch the top and bottom line. We at ASE have helped many businesses in generating and monitoring regular cash flow statements
I sometimes caution businesses that top line can be vanity driven … bottom line is real sanity.
2/ Increase your efficiencies and reduce holding excessive inventories that tie up cash as well as space.
3/ Prepare for unforeseen expenses. An equipment repair or unexpected large contract could put a big strain on cash flow
4/ Understand the financial tools available. Whether you have a line of credit, cash savings or credit cards, you need to understand the interest rates, loan terms including security terms, flexibility and scalability of that tool.
5/Build relationships with suppliers and customers and obtain payment terms. See if you can find ways to leverage payable or receivable cycles to your advantage.
6/ Link cash flow back to Pro forma (a forecasting tool of revenue and expenses that we at ASE help tailor to the needs of the business)
This ability puts you back in charge of your business
It allows you to run your business …. Rather than the other way around!
Shishir Lakhani