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Struggling to manage your business’s Cashflow?

Today at 12:00

Many businesses are struggling with cash flow and getting paid in particular at the moment.  Colm O’Grady, one of our Partners provides some practical tips. 

Understanding your current and expected position for the next 12 months is critical.  Do you have a realistic projected cash flow for the 12 months ahead, broken down per month, listing your inflows/outflows? Does this show your business living within its cash flow/banking facilities? If it doesn’t, see where additional cash can come from.   

Look at the following areas:

·          Getting an outside investor/Injecting own equity;

·          Getting extra facilities or repayment moratorium from bank;

·          Grant assistance;

·          Looking at finance houses outside the main banks;

·          Cost cutting/employee reduction; closing unprofitable part of business/products;

·          Outsource; Increase pricing;

·          Scheme of arrangement;

·          Efficiency/waste reduction.  

You now have realistic cash flow projections that show you can live within your facilities. Certain fundamentals need to be put in place:

·          A credit controller who can be a rottweiler;

·          Payroll incentives/penalties for credit days with your account managers;

·          Each account manager completing a monthly target of the cash they are going to collect; Reviewing by their boss and increasing if not ambitious enough;

·          Credit control limits set on each account which automatically stops the accounts if they go over that level or go over their credit days;  

The Finance Department should collate all the cashflow targets for the month and produce a rolling cashflow forecast and they should manage it week by week.   

When dealing with your customers, give this area consistent attention until it is brought under control.  Each customer needs to be dealt with who are outside their terms.  For customers looking for discounts, get better pay terms from them in return; put them on a Direct Debit mandate, it makes such a difference; Work/support each of your managers in dealing with large problem accounts; Change you’re pricing on larger orders, get deposit payments up front; Look at customers who you also purchase from and do contras.   

 Finally, in these difficult times, the old adage of “he who shouts loudest will get paid” is very true. Consistently be in the face of your debtors and extract promises, commitments, post-dated cheques, paid from the next grant cheque etc. A consistent weekly focus on this, from the top down, will keep your cash flow in control – Get help from your financial advisor to assist you to deal with this. Good Luck! 

Colm O’Grady can be contacted at cogrady@rbk.ie or (01) 6440100.