- September 10, 2021
- Posted by: dadmin
- Categories: Coaching, General
As we all know cash is the lifeblood of every business and…
no cash = no business.
Is your business suffering from poor or inconsistent cash flow? it is important to you to understand the underlying reasons so you can take the necessary remedial action?
Here are some of the top reasons for poor cash flow and some solutions. (We have a very special offer for you at the end of this article).
Insufficient Sales (ie: Loss Making)
- Your sales or gross margin is insufficient to cover your fixed overheads so you are in actual fact making a loss
- Knowing your sales breakeven point (Fixed Costs divided by GP%) and using this to work out your sales targets by month, week and day if necessary.
- Sales are a function of Lead generation and Conversion Rate. Measure both of these and put strategies in place to improve them.
Poor Debtors Collections
- Ensure you put a robust collections process in place
- Educate your clients on your payment terms
- Phone the debtors that are overdue and get a commitment from them. Stop hiding behind emails.
- Be the Rash. Customers will always pay “he who shouts loudest first” (not literally).
- Implement minimum stock holding / re-order levels and only order when you reach the minimum, taking lead times into account.
- Ensure there are sufficient controls/processes in place for the ordering of stock. Don’t let a junior member of staff handle this.
High Debt Levels
- Know your cash flow breakeven point (total monthly outflows divided by GP%)
- Pay off the expensive debt first.
- Avoid overspending on items like expensive vehicles etc unless you can afford them.
- Understand your cash gap (the timing difference between outflows of cash and inflows)
- Renegotiate your suppliers terms
- Increase your stock turn (get your stock in and out faster)
- Be mindful of transaction dates (ie: ordering stock on the last day of the month or the 1st day of the month can make a major difference to the payment date.
Excessive Personal Drawings
- Calculate your total take out of the business (sometimes this number runs away from you without you being fully aware)
- Pay yourself a fixed, market-related salary and avoid taking money as you need it (living out of the till)
- Ensure the business can afford your salary.
What we Do
We specialize in helping business owners make more money in their businesses. We do this through the use of a number of strategies and proprietary tools that we own. Click here for client testimonials.
Our offer to You
A “Find my Cash” consultation where we will help you find the cash in your business.
Cost – R 4,500 plus vat which includes a written report of where you can maximize your cash and profits.
Guarantee – If we do not find you at least R 45,000 in cash (We are sure to find way, way more), your fee will be refunded and your consultation is free. You have absolutely nothing to lose and everything to gain.
- Request your session by clicking here.
- Send us your most recent 12 month income statement and latest balance sheet.
- Have your consultation.
- Get your Find my Cash Report for your Business
- Enjoy the Additional Cash