Runagood® Methods: Improve Your Cashflow
A powerful but little known fact is the thousands of practical action plans in the Runagood® Online Business System.
So every week we’ll share selected snippets with you which you are free to use with your clients.
We cover a different topic every week from the full range of: ‘Marketing; Operations; Systems; People; Finance; Value; Crisis; Exit; Recovery; Growth; Lifestyle; Effectiveness; Diversifying; Risk Management.
This week we're covering Finance!
Improve Cashflow
This Method snippet shows you how to be more liquid at all times, with money working for you and not you for it.
Learn how to accelerate income, delay payments and eliminate unproductive costs, capital spending, and borrowing. See how a different approach to customer and supplier contracting can make cash ‘king’.
Puts more cash in the bank!
1. Set Up An Accounting Package
It helps greatly if you are using an accounting package. We suggest one of the online ones that cost little.
Our favourites are Xero & Free Agent.
But ask your Runagood® Business Partner who is probably also an accountant and may well already have a partnership with one of these 2 or with the traditional accounting software providers like Sage & Quickbooks who are also online. They will be able to open an account for you and set up your bookkeeping and accounting functions.
2. Recording All Cash Movements
Start a spreadsheet. Decide how far ahead you wish to plan and the time stages e.g. monthly for 12 months or weekly for 3 months or daily for 1 month.
These will be dictated by your reasons for preparing the forecast e.g. investment fundraising pitch, borrowing pitch, very tight finances needing daily attention.
3. Cash In - All The Sources
Sales
These have no value until the cash is received. Wherever possible take payment in advance or on delivery and only provide credit if it's the difference between getting valuable business or not. Write these requirements into your sales contract and terms and conditions so it's agreed to upfront, including payment dates where credit has to be given.
Don't hesitate to enforce your policies and don't worry about consequences as purchasing departments rarely see eye to eye with finance departments in larger organisations. In smaller businesses you can empathise with the owner as to the difficulties in getting paid and cut the right deal in the first place.
Large businesses tend to misuse their power by taking extended credit periods and helping themselves to retrospective discounts and levies. So, if your products or services sell on price alone you are vulnerable, the answer to which is to add something unique that stops you being a commodity and gives you an edge in price negotiations and payment terms.