Here we are 2015, hope it's a great one for all of you, especially after the last few years. It might be your fiscal year end, and with that the dreaded inventory count. This time of year cash flow is tight for a lot of businesses and customers alike. The following are some suggestions to help stimulate your cash flow immediately.
Do you have excessive cash tied up in ageing inventory? If your business is retail and the end of year coincides with your fiscal year end; do you perform an inventory count?
What were the results? Did you discover a lot of aging inventory that you should move?
Any reason is a good reason for an event or sale. That inventory is your cash being tied up. We've said it before and we'll say it again “Look hard at your ageing inventory” If you've counted it several times now would be a great time to discount it and get some of your cash back.
Do some of your suppliers have a policy where you are able to return some of your items in exchange for new product or a credit? Some companies have an agreement with their suppliers which enable them to return a certain percentage of products annually. (There might be a restocking fee) It might still be worth looking at to change the direction of your company.
Ask some of your key suppliers if they would consider exchanging some product.
Do you have company vehicles or equipment sitting stagnant?
You can have a tremendous amount of capital tied up in vehicles and insurance.
Speaking of Insurance. Have you reviewed any insurance policies you might have in place, buildings, equipment etc. to ensure that they are up to date and provide sufficient coverage? Consider asking for a 2nd quote from another insurance provider making sure you are looking at comparable policies. You might have a great repor with your provider, but at the end of the day, they're in business to make money. Don't assume that because you've been dealing with them for years, that they have your best financial interest at heart.
Analyse your cell phone usage and plans.
Do you employ a cleaning service or can some of the staff take turns cleaning certain areas on a rotation?
Are there things in your operation that could be more financially effective to outsource?
Are there task that you are currently outsourcing that you could be doing internally?
Sometimes a new staff member has hidden talents.
This can be a touchy emotional subject for some...review your staffing requirements.
Two people with lots of productive things to do, is better than 3 people with not enough to do.
So let us get this straight, you possibly give your loyal repeat customers a discount, AND you give them 30 day terms plus the cost of administration, which invariably they are late on.
Stop the madness!
As an example: We had the opportunity to do some work for a small business that was doing approx. $500000 a year in retail and consistently carrying $60000 in Accounts Receivable, a lot of that over 120 days. This was their money!
If at all possible don't have accounts (you are not a bank), unless you are a bank...
Some of you are going to disagree with this and say that your customers are used to A/R's, they like it, they won't deal with you. Of course you know your customers best but we think you'll find the customers who protest the loudest are also the ones asking for the deals, always returning things, and consume the most amount of your time. Just food for thought.
Ask "Can we put it on Visa or MasterCard?” we realize there is a cost but you're losing that and more when accounts go past 120 days anyway.
For those customers who absolutely must have accounts offer a discount for early payment. Get their credit card number to have on file and automatically with their written authorization (updated annually) run it through on a consistent date at the end of the month.
Get prepayment for special orders. You invariably order widget "A", it comes in, you contact the customer and they say they don't require it anymore, bought one elsewhere, etc. It's something you normally don't stock, you want to return it to your supplier and you’re charged a restocking fee, or worse they won't take it back at all. It then becomes your cash tied up in something you didn't even want. Prepayment in advance addresses this. This goes for your employees too.
This post is not about gaining popularity, it's about taking control of your money and your business...Don't forget, smile, have fun, instigate some changes and make some money.