Mike Clark's Business Bites: How to resuscitate your cash flow

The technology has changed but the importance of cash flow has not. Photo / Bevan Conley

Has Covid impacted your business negatively? Are you struggling with cashflow? Do you feel overwhelmed wondering where to even start?

Owning and running a business can sometimes feel like a rollercoaster ride. A very lonely ride. As a business owner you take a lot of risks. The juggle of when to hire more staff, negotiating with suppliers, banks and doing all that is required to keep your business running is largely unseen.

People look at the nice car, house, boat, holidays and assume you have it easy. The restless nights pondering how to pay salaries, wages, tax and bills when you are waiting on payment is just one of the darker spaces business owners have to navigate through.

Add to this mix the challenges brought on by Covid and the lows of the ride can get very low. One of the quickest areas to feel the strain is cash flow. If the golden rule of property is "location, location, location" then the golden rule for business is "cash flow, cash flow, cashflow". If the recent run of Covid-level changes has tightened cash flow here are my top cash resuscitator actions in order.

Call in your debts: This is money that is yours. Ask for it. Keep your debtors to 30 days and look at how to get cash up front or reduce your terms to seven days or payment on delivery.

Look at your stocks: That is money sitting there. Literally converted dollar bills. What can you return, sell, convert and sell? Can you get your suppliers to hold stock for you?

Get paid for products/services delivered: Invoice quickly. Make it easy to pay you. Create incentives to pay sooner. Negotiate payment terms. Get paid sooner and negotiate to pay as late as possible (ideally overlapping getting paid before your supplier bills are due).

Follow up quotes: You have done all the work for interested prospects - follow them up. This is often the quickest way to generate fresh income into a business.

Cross sell to existing clients: Clients who know you and already deal with you are easiest to sell to. Educate them on how else you can help them and what other products and services you offer and how these can help them.

Ask for referrals: Kiwis are famous for our tendency to ask for and rely on referrals. Ask your clients, "Do you know anyone else who could benefit from what we offer?"

Look at pricing - charge more: When was your last price increase? How many price increases have you absorbed? Compare to competitors, look at what clients value and charge accordingly. Pass on increases you receive quickly.

Have a plan and keep abreast of where you are. Do cash flow forecasting. Know what is coming in and expected out. Don't leave it to chance. What gets measured gets actioned.

Times might be tough but you do not need to do it tough. Make a plan and work the plan.
Here's to your success.

+ Mike Clark is director and lead trainer and facilitator at Think Right business training company.