3 Reconcile your Cash
Know your cash balance at all times.
Cash is the lifeblood of the business. Do not let it drip away in waste.
Forecast your cash flows on a regular basis. Be in control and manage your cash position.
Conserve all cash and recognize the dangers of:
- spending cash on items that are not necessary in meeting the goals of the business
- buying new when second hand would suffice
- structuring incentive schemes to sales instead of cash and profit
- creditor chase letters and writs may indicate cash outflows not recognized in your forecasts
- a “cheque in post” and post dated cheques mentality may further lead to errors in forecasts
4 Pay on Time – Receive on Time
Make all payments on time. If this is not possible then negotiate revised terms with suppliers. Always avoid late payment of taxes, including VAT, NI and PAYE.
Negotiate acceptable credit terms with your customers, and enforce them as appropriate.
Take control of the situation and not be a bystander!
Avoid:
- unnecessary cost and waste through not acting proactively
- offering credit terms to customers who fail to meet their contractual agreements
- failing to take up credit references for all new customers
- offering substantially improved credit terms to customers who have purchased small but now suddenly want to purchase big
- expensive debt recovery agencies
- failing to communicate with your suppliers should you be unable to meet your payment commitments.
- not meeting with your bank on a regular basis
5 Communicate!
Do you communicate with your staff, customers, suppliers and other groups connected with your business? Do they know you communicate?
How do you communicate? Meetings, letters, email, telephone or other. Are your communications understood and interpreted in the manner that you intend? All too often much communication is not effective.
Consider all management and financial information that is prepared by a business. All too often there may be a cursory read, then filed and not acted upon.
This form of communication is expensive to prepare and no benefit is derived.
Organize yourself to:
- attend regular internal and/or external review meetings with staff, customers and other stakeholders alike
- chair meetings in a constructive manner and follow an agenda.
- avoid a “talk shop or blame” culture
- listen to others
- encourage feedback
- engage an “open door” policy
- ensure action points are recorded, designated to individuals and followed up
6 Re-engineer your processes
Frequently business systems remain unchanged for long periods, become outdated and fail to satisfy the demands of a changing business environment.
This shortcoming is often found in administrative as well as manufacturing processes. Over time processes cease to be appropriate, are tweaked to accommodate changing environments and result in inherent waste.
Review and benchmark your processes to avoid:
- unnecessary work that does not add value
- work duplication that constitutes waste
- stand alone systems - integrate wherever possible
7 Involve your Employees
Often it is quoted that employees are the greatest asset of a business. But also it is found that in some organizations employees are not always respected, involved with or empowered to participate in the decision making processes of the business.
Train your staff and the delegate responsibilities, particularly in a time of crisis:
- in a controlled manner
- involve the appropriate staff in decision making
8 Maintain High Customer Service Levels
Winning customers is hard, retaining customers more so. During a financial crisis, if customer service may be adversely impacted agree with the customer an acceptable level of service that will meet the needs and expectations of the customer.
Customers are more discerning and expect all service to be right first time, do not surprise them by falling service levels after failing to communicate your changed circumstances to them. Be proactive and manage the situation.
Take remedial action when adverse trends are recorded in the following areas:
- delivery times
- customer complaints
- customer returns
- warranty claims
9 Provide an adequate Capital Structure
An expanding business may require additional funding to sustain growth. Ensure that there is the potential to raise long term funds for the business, to enable financial stability and long term planning to materialize.
Examine the following sources of funds:
- increase share capital
- leasing
- hire purchase
- business angels
10 If all else Fails seek Expert Help
If you are unable to quickly resolve your problems – seek HELP. But seek help BEFORE the issue becomes a catastrophe. Time is money, and catastrophes are costly! Consultants, banks and solicitors are examples of organizations that can help you.
