Engine Room Blog

Cash can be elusive in a small to medium sized business.  A surprisingly large number of business that fail are showing good profits but have run out of cash.  Understanding the cash cycle for your business is vital to its ongoing survival.  Do you ask yourself “Where has the money gone?”   Careful management of debtors and stock are often the key.

Having to pay for stock before you sell it or before the customer pays is often a problem for businesses, particularly as they grow, or if there is a sudden downturn in sales.  Understanding the seasonality of your business and planning stock levels to reflect this can help. Quitting surplus stock even at cost can be a lifesaver for businesses - cash is always king.

Debt collection is often difficult for small businesses when they personally know the customer.  Contracting it out can help.  Always make it easy for the customer pay - print bank details on invoices and statements, accept credit card payments for larger sums or don't offer credit at all.  Always credit check new customers.

With products like Xero, the on-line accounting system at www.xero.com, you get daily automatic feeds from your bank so there are no excuses for not keeping in touch with your cash position.  Xero’s innovative dash board tells you how much money is outstanding.  Xero let’s you take control of your financial records and even share it with your accountant – at the same time!