Finding Money Within Your Business
I‘m always on the lookout for articles with the potential to positively change a business. What’s your take on the following points I came across recently?
Most small businesses experience cash flow problems from time to time and urgently need working capital. Many business owners immediately think of the bank or loans when they’re short of money. But there are other resources you can tap before you ask for that expensive overdraft or overdraft extension. The money you need might already be there—locked up in inventory, assets or your debtors’ book.
You can often free up funds from within your business by re-examining your business systems, and these funds might in themselves be sufficient for your immediate needs.
Good management
Even if the funds you free up from within your business are not sufficient, there is another payoff: the effort you make in searching for them helps to ensure that you are running your business in an efficient manner.
To free up funds from within your business, look closely at:
- assets
- customers
- suppliers
Inventory
Do you have excessive capital tied up in stock? This can occur in two ways:
- carrying high levels of items that you could obtain from suppliers at short notice
- having too many slow-moving items (and too few fast-moving items).
Customers
Don’t forget your customers can be a source of business funds. Apart from debt collection improvements already discussed, try these tactics:
Here’s a ‘thinking outside the square’ tactic. Ask some of your credit customers (start with the ones you know best) if they would be willing to use their bank credit cards for purchases from you, instead of using the account facility they have with you. For example, if they purchase say $2,500 worth of goods or services from you, they would pay for this by means of a business credit card. They still get 30 to 55 days credit before having to pay the credit card company, but you get your cash as soon as you sent in the voucher to the bank. You have to pay the (around) 5% commission, but otherwise it’s almost as good as a cash transaction.
I’d be really interested to know your opinion. Check out the full article HERE and then I’d be happy to discuss with you by phone on 0401 714 406 or email at [email protected].
Thanks,
Darren