
There continues to be uncertainty in the economic climate. The media is full of commentary about the actions businesses are taking to counter the current climate. There are many actions that a business owner can take to improve their bottom line and cash in the bank. Here are some alternative steps they may consider.
1. Negotiate better prices/discounts with your suppliers
Different industries are seeing a drop off in work, if this is your case suppliers are more willing to negotiate on prices to keep your business. If your current suppliers are unwilling to do so, there is always an alternative supplier who may.
2. Negotiate with suppliers for advertising and marketing support
Suppliers in general are supportive of co-branding, and happy to contribute to your advertising and marketing in return for promoting their brand.
3. Enter into contra arrangements with suppliers
Your products or services may also be used or consumed by your suppliers, which lends itself to entering into contra arrangements with your suppliers. If you enter into a contract arrangement always make sure you agree in writing the contra arrangement, pricing etc.
4. Remove unprofitable products or services
Eliminate unprofitable products and services from your inventory/offering. The only exception should be if you stock the items as a loss leader.
5. Reduce debtor days
If your businesses turnover is $1.2 million then your business has revenue on average of $3,290 per day. When your debtor days are 90 days and you reduce them to say 45 days by streamlining your accounts receivable process and collecting your cash faster, you will have around $148,000 more in the bank ($3,290 x 45).
6. Eliminate bad debt
Until the money is in the bank you did not make a sale – all you had to date is expenses. If your business struggles with bad debts, review your credit policy, ask for deposits and full payment upfront.
7. For Importers
If you are importing goods – use bank guarantees for deposits rather than cash. Same applies for GST – use the deferred GST system.
8. Use finance, not cash
While interest rates have increased it is still affordable to borrow, so it makes sense to finance asset purchases and large bills such as insurance premiums. Pay your other expenses pay credit card and pay off before the end of the interest free period.
9. Look after your customers
If your customers are happy with the goods or services, you provide it will be more likely that they buy more or refer their friends – it’s a win-win for them and your business. Revisit your customer service and invest in training your team on customer service.
10. Capitalise on the misfortune of your fallen competitors
During certain economies, many of your competitors will go broke – unfortunate but inevitable. Seize the opportunity and contact the liquidators or finance companies to hire their top staff, acquire business equipment at bargain prices and see if you can buy their IP addresses and phone numbers – it’s amazing how much business you may get from your no-longer-existing competitors.
There are many more ways to improve your business cash flow – if you need a hand contact Genfocus.
Disclaimer: This information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in the article. Genfocus accepts no responsibility for any loss suffered as a result of any party using or relying on this article.