It has been said before by many, but it is worth repeating – ‘Sales are flattery, profits are sanity but cash is king’.
It has been reported that 30 per cent of companies in the South East still suffer from cashflow issues.
It is my plan to enter a series of guidelines which, if followed will help to ensure a business’s liquidity remains robust. The first two are:
1. Plan your Cashflow year – If your business experiences peaks and troughs in demand. Prepare for these and put in place measures to ensure your cashflow reflects the changes.
2. Don’t bulk buy – hold as little stock as you can and turn it over quickly. Agree with your suppliers a right of return of unsold stock. Look at getting stock on consignment (you do not pay before it is sold). Can you get your suppliers to deliver to your customers on your behalf? Careful planning should eliminate this potential drain on cash.
These are my thoughts and information from various other sources. Your comments or observations are welcome.