How to be a cashflow commando


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The GFC might be over, but the cashflow squeeze on Australian SMEs shows no signs of ending. There are plenty of late payers out there and with many small businesses in expansion mode, growth plans are putting extra pressure on cashflow. In this webinar, SME specialist Marc Peskett from accounting firm MPR and SmartCompany editor James Thomson will discuss:
• How to keep your cashflow in check
• Strategies to keep late payments low
• The tools available to help you recover debts
• The new cashflow challenges – growth

Published in: Economy & Finance
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How to be a cashflow commando

  1. 1. How to be acashflowcommandoJames PeskettMPR Group
  2. 2. James
  3. 3. Marc PeskettPartnerMPR Group
  4. 4. Poll question In the last 12 months has your cashflow got better or worse?
  5. 5. Get the focus right• Many businesses focus solely on – revenue – profits – decision making based on P&L and Balance Sheet• Cash flow: • Keeps you in business • Increases business value • To manage you need to measure
  6. 6. Cashflow KING• Knowing – current cash position and your cash to cash cycle.• Innovating to increase free cash flow – shorten the length of the cash cycle, improve margins, reduce waste• Nostradamus – Seeing problems before they hit – Understanding the future cash needs of the business• Growth – Growth needs cash
  7. 7. Cash to cash cycle Production Sales & & Inventory Delivery Billing & Cycle Cycle Payment Cycle 90 30 60 days days days 180 Cash days Cash Payment Receipt
  8. 8. Measure so you can manage• Liquidity• Cashflow budget• Rolling cashflow forecast (weekly, monthly, quarterly)• Actual vs Forecast• Regular review of aged debtors and payables
  9. 9. Get on the front foot with customers• Set payment terms to suit your business• Communicate your terms up front• Obtain trade references and conduct a credit check• Don’t take on clients that can’t pay• Use COD to test payment capacity• Have an accurate and efficient billing system• Offer convenient payment options• Consistent with sales and customer relationship policies• Sack the client
  10. 10. Handling problems that arise• Active management of debtors• Early communication with creditors, ATO, your bank• Put payment plans in place• Daily or weekly assessment of cash flow management• Share your problems with advisors, mentors, friends
  11. 11. Dealing with problem debtors• Chase late payers immediately• Keep regular contact with debtors using different forms of communication• Escalate your demands• Understand the customer before offering special payment terms• Withdraw credit or get payment upfront before accepting further sales• Use debt collection agencies
  12. 12. Funding growth – where theproblems arise• Profit margins are too low• Long Cash to Cash Cycle – Investment in Working Capital > Growth in Sales• Not enough cash left in the business to fund growth – Owners lifestyle costs• Poor investment decisions• Reactive in seeking funding help – Seeking funding for prior year growth ?
  13. 13. Funding Options • Self funding • Bank lending • Equity • Grants
  14. 14.
  15. 15. Thank you