If your cashflow budget is no longer applicable, rework your strategy using these five tips

43984, 29 Oct. 2014

Tags: cashflow budget, managing cash flow,

If you run a business, you must have a cash flow budget to help you identify potential cash flow problems and manage your cash flow, expenses and income better.
One of the important things you must do when it comes to your cashflow budget is to review it regularly to ensure it’s still applicable and appropriate.
If you find it no longer is, rework your strategy using the following five tips so you can improve your cash flow position.
If your cashflow budget is no longer applicable, use these five tips to revive it
Tip #1: Look into your credit/debtors repayment policy
  • Follow up debtors payments and ensure they pay within their credit period.
  • If possible, allow early payment terms if debtors pay within a certain period.
  • Don’t give long outstanding debtors more credit.
Tip #2: Factoring your debtor’s book
You can factor your customer book to speed up the debtor collection process. This means you sell your debtor’s book to someone else and receive the total value of the debtor’s book less a handling % up front. The debtor’s burden will then fall on the other person or entity.
Tip #3: Stock on hand
  • Don’t hold excessive stock levels;
  • Don’t invest all your liquid cash in stock; and
  • If you have excessive amounts of stock, speed up the selling process with a special promotion.
Tip #4: Look into your gross profit margin
Review your gross profit margins and ensure they’re appropriate. Check if you can possibly increase them.
Tip #5: Look into your operating expenses
Review your operating expenses and see if you can cut some of these.
There you have it: If your cashflow budget is no longer applicable, rework your strategy using these five tips to improve your cash flow position before you find yourself in a financial crisis.

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