Collect Bad Debts ASAP
Guest blogger – Rohen Burton, Chief Financial Officer, Fit n Fast
This might be obvious but try to collect bad debts / failed payments as soon as possible. And always target the low hanging fruit first. The highest collection rate for failed payments is immediate and then the rate of collection falls for every day that goes by.
Follow the 31 day Cash Flow Challenge here and on Facebook.
Set up a US Dollar bank account
Guest blogger – Rohen Burton, Chief Financial Officer, Fit n Fast
If you purchase from overseas suppliers (for example the US) consider setting up a Foreign Currency bank account. And plan to buy some currency when the rates are favourable. Don’t exchange more than you need and make sure your AUD cash flow can handle having this amount off sitting in another account. During 2011 there was an opportunity of saving over 5% just on exchange rates alone if they were booked at the right opportunities.
Follow the 31 day Cash Flow Challenge here and on Facebook.
Invest spare cash in a high interest account
During the month of January 2012 Ezypay is sharing our cash flow expertise and running a 31 Day Cash Flow Challenge. Each day we are sharing a cash flow tip for your business. The daily tip will be posted on our blog and our Facebook fan page first. Then each week we will email our clients a summary of the last 7 days tips.
As an outsourced direct debit service provider we know all about cash flow at Ezypay. We offer a variety of payment collection services that assists businesses in the regulation of their cash flow and revenue without the hassle of managing customers’ bills.
Do you have any spare cash in your business? Yes? Then you should invest it in a high interest account.
If you do have any cash that you aren’t using immediately I hope that it isn’t sitting in your business bank account. If it is you are currently earning almost nothing if not nothing on this money. There are a few providers like ING Direct, and Bank West to name a few that has high interest and fast access savings accounts. You can find the right one for you on Google and then many of them you can sign up online. However if you do have to go to a bank to open an account consider it a good investment of your time.
If you don’t have ‘spare cash’ then do you have large amounts of money that you collect from members or customers at different points in the month? If you are an Ezypay client you might be in this situation. You could get Ezypay to deposit this money into a high interest savings account because if you leave it in there for a few days or weeks a month you will earn some interest that you aren’t currently earning.
31 Day Cash Flow Challenge – Update…
Day #1 – Make sure you know your current financial position
Day # 2 – Make sure the price is right and you are covering your costs
Day #3 – Reconcile your membership income on a weekly basis
Day #4 – Reduce non-core-expenditure
Day #5 – Carefully budget payments for essential expenses
Day # 6 – Keep stock levels to a minimum
Day #7 – Set your credit terms carefully
Day # 8 – Planning for the lumps
Day # 9 – Pay your creditors strategically – guest blogger Heather Stone – You’ve Been Promoted
Day # 10 – Are you addicted to lump sum revenue? Guest blogger Justin Tamsett – Active Management
Day # 11 – Don’t incur tax and other statutory penalties
Day #12 – Send invoices on a daily or weekly basis
Day #13 – Invest spare cash in a high interest account
Day #14 – Be really stingy and eradicate unnecessary expenses
Day #15 – Get finance products working to your benefit
Day #16 – Don’t forget about Pro-rata payments
Day #17 – Spread out payments over a reasonable time frame
Day #18 – Do a cash flow projection
Day #19 – Bring in the professionals
Day #21 – Do you know the difference between a balance sheet and profit and loss
Day #22 – get another quote or two
Day #23 – Discount …. but only for profit
Day #24 – Regularly complete an expense audit
To get these tips first like our page on Facebook or subscribe to our blog feed.
About Ezypay
Ezypay is an outsourced direct debit service provider dedicated to offering a payment collection system that assists businesses in the regulation of their cash flow and revenue without the hassle of managing members’ bills.
With close links to the fitness industry Ezypay offer small to medium growth business of all types an easy online payment collection options at www.ezypay.com.au
Use Paretos 80/20 rule
Guest blogger – Rohen Burton, Chief Financial Officer, Fit n Fast
When reviewing the cash flow reports or producing cash flow projections use Paretos 80/20 rule. Spend your time on the most important cash impacts of your business.
Concentrate on these areas of the business for the biggest impacts.
Extract from Wikipedia
The Pareto principle (also known as the 80–20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.
Business-management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population; he developed the principle by observing that 20% of the pea pods in his garden contained 80% of the peas.
Follow the 31 day Cash Flow Challenge here and on Facebook.
Understand the impact of payment cycles on your business
Guest blogger – Rohen Burton, Chief Financial Officer, Fit n Fast
Cash flow projections are most commonly prepared monthly, however not all payment cycles are monthly. For example:
Even if you are projecting a profitable month the timing of payments, at different times during the month, may result in a cash outflow that you will need to cover.
Consider setting up an overdraft facility with the bank for these situations.
Follow the 31 day Cash Flow Challenge here and on Facebook